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November 8, 1996

PETRUZZI'S, INC., formerly known as PETRUZZI'S IGA SUPERMARKETS, INC., Plaintiff,

The opinion of the court was delivered by: VANASKIE



 As the concluding aspect of a class action settlement that yielded a dollar recovery to class members of approximately $ 400,000, counsel for the plaintiff class (hereinafter referred to as "class counsel") requests attorneys' fees in the amount of $ 4.7 million. Class counsel justifies this request by asserting that the full benefit of the two settlement agreements to the class was $ 9.4 million, a sum that class counsel claims represents the settling defendants' exposure under agreements that essentially accorded to class members 10% of their documented sales to the settling defendants over a prescribed time frame. *fn1" Contending that the entire "settlement fund" encompasses the settling defendants' agreement to pay fees over and above payments made to class members, and asserting that a fee of one-third of the "settlement fund" would be reasonable, class counsel arrives at a full settlement "value" of $ 14.1 million. Class counsel thus seeks a fee of $ 4.7 million, or 50% of the hypothetical $ 9.4 million benefit to the class. *fn2"

 Defendant Darling, which is responsible under its settlement agreement for any fee award in excess of $ 1 million, agrees with class counsel that fees should be calculated on a percentage basis, but argues that the dollar multiplicand in the calculation should be the amount actually recovered by class members, $ 399,656.10, as opposed to the mathematically derived hypothetical "benefit" of $ 9.4 million. Under Darling's approach, a fee of one-third of the actual recovery would result in class counsel receiving only $ 120,000 for a ten year old case in which class counsel estimates that hours expended multiplied by 1995 hourly rates approximate $ 2.9 million.

 In short, class counsel asks that I award fees that are approximately 12 times the amount actually recovered by class members. Darling, on the other hand, asks that I award fees that are less than 5% of the gross value of attorneys' services purportedly expended on behalf of the class. Both positions are based on precise arithmetic calculations -- plaintiff's value is essentially the product of multiplying estimated sales made to the settling defendants by the aggregate settlement payment of 10% of those sales; Darling's value is the sum of the claims that have been approved and paid. Both positions suffer from the same fundamental flaw -- they ascribe unrealistic values to the benefit conferred on the class by the settlement agreements. Class counsel sought approval of a settlement that reasonably would not result in anything close to 100% recovery. By the same token, however, the benefit conferred on the class is certainly more than the amount of claims actually paid. The difficulty here is that neither party has presented any basis for determining the reasonable value of the settlement agreements.

 Our Court of Appeals has held that where, as here, "the nature of the settlement evades the precise evaluation needed for the percentage of recovery method [of calculating class counsel fees]," a district court may employ the lodestar method. *fn3" In re: Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir.), cert. denied, 516 U.S. 824, 133 L. Ed. 2d 45, 116 S. Ct. 88 (1995)("General Motors "). Notwithstanding the arguments of counsel pertaining to the appropriateness of the percentage of recovery method, I believe that the penultimate goal of judicial determination of class counsel fees -- the award of an amount that "'is fair, adequate and reasonable,'" Weiss v. Mercedes Benz of North Am., Inc., 899 F. Supp. 1297, 1304 (D.N.J.), aff'd mem., 66 F.3d 314 (3d Cir. 1995) -- is best achieved in this case by using the lodestar method as the "primary determinant." General Motors, 55 F.3d at 821. After all, it has been recognized that "the lodestar is strongly presumed to yield a reasonable fee." Washington v. Philadelphia County Court of Common Pleas, 89 F.3d 1031, 1035 (3d Cir. 1996).

 In calculating the lodestar for this case, hours expended in connection with claims asserted against dismissed defendants Herman Isacs, Inc. and Standard Tallow Corporation will be excluded. Furthermore, in light of our Court of Appeals' pronouncement that the Supreme Court's rejection of a risk enhancement multiplier in City of Burlington v. Dague, supra, is applicable in the context of a class action settlement similar to that involved in this case, General Motors, 55 F.3d at 810, n.27, 822, class counsel's request for a fee enhancement will be denied. On the other hand, the protracted course of these proceedings militates in favor of use of 1995 hourly rates for purposes of calculating the lodestar amount. Moreover, interest on the lodestar amount will be awarded from the date of the approval of the class action settlements, December 20, 1995, at the rate prescribed by 28 U.S.C. § 1961.

 Unfortunately, the record in the present matter does not permit ascertainment of the lodestar. Specifically, class counsel has not identified those hours expended in pursuing claims against the dismissed defendants. Accordingly, the parties will be afforded an opportunity to supplement the record on this and on any other issue concerning the reasonableness of hours expended. If necessary, an evidentiary hearing will be conducted. *fn4"


 On March 14, 1986, Petruzzi's, Inc., formerly known as Petruzzi's IGA Supermarkets, Inc. (hereinafter referred to as "plaintiff" or "Petruzzi's"), commenced this class action against Darling, Moyer, Standard Tallow Corp. ("Standard Tallow"), and Herman Isacs, Inc. *fn5" The complaint alleged that the defendants had conspired to allocate customers in the fat and bone rendering industry in violation of section 1 of the Sherman Act, 15 U.S.C. § 1.

 Members of the putative class were butcher shops, supermarkets, restaurants, hotels, etc. that sold inedible fats, bones, suet, and meat trimmings ("raw material") to the defendants in the pertinent geographic area during calendar years 1977 through 1985. *fn6" Petruzzi's contended that although the defendants competed for new raw material accounts, they had agreed to refrain from soliciting accounts that had been secured or "loaded" by another defendant.

 The case was vigorously litigated on both sides. A substantial number of discovery and procedural issues were contested and required court determination. During the years of ongoing litigation the parties engaged in extensive discovery and motion practice. On July 31, 1992, the Honorable James F. McClure of this Court granted summary judgment in favor of the three defendants. Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 1992 U.S. Dist. LEXIS 13054, No. 86-0386, 1992 WL 212230, 1992-2 Trade Cas. (CCH) P69,937 (M.D. Pa. July 31, 1992). In an opinion filed on July 13, 1993, the United States Court of Appeals for the Third Circuit reversed the Order of July 31, 1992 insofar as it had granted summary judgment in favor of Moyer and Darling. Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224 (3d Cir. 1992). As to Standard Tallow, however, our Court of Appeals concluded that plaintiff had failed to present evidence sufficient to withstand its summary judgment motion. Id. at 1241. *fn7" On November 29, 1993, the Supreme Court denied the Petition for Writ of Certiorari that had been filed on behalf of Moyer and Darling. Moyer Packing Co. v. Petruzzi's IGA Supermarkets, Inc., 510 U.S. 994, 126 L. Ed. 2d 455, 114 S. Ct. 554 (1993).

 On remand, plaintiff was authorized to provide notice to members of a class certified under Federal Rule of Civil Procedure 23(b)(3). *fn8" The notice approved by Order dated January 12, 1994 informed members of the class of their right to "opt out" of the class. Of the approximately 1,250 class members, only 21 elected to be excluded from the class.

 On March 2, 1994, this case was reassigned to me. Trial was scheduled for October, 1994. During the intervening period the parties were to complete expert witness discovery and file motions in limine.

 A court-conducted settlement conference was convened on June 6, 1994. Negotiations between plaintiff and Moyer continued after that date. In September, Plaintiff and Moyer indicated that a settlement between them was likely. A final Settlement Agreement was executed by counsel for Plaintiff and Moyer on September 29, 1994.

 Essentially, Moyer agreed to provide up to $ 2 million in "premium certificates," which were to "be claimed by class members based on the dollar value of their sale of raw materials to Moyer within the [relevant] geographic area in up to 5 of the 9 calendar years 1977 through 1985, for eleven (11%) percent of the dollar value of such sales to Moyer." The certificates were redeemable over a 36 month period "for a premium payment on new sales of raw materials to Moyer, up to 20% of the actual dollar value of such sales of raw materials." Moyer also agreed to pay up to $ 1 million in cash for attorneys' fees, as approved by the Court, in six installments over a 36 month period.

 Only one class member, Robzens' Inc. ("Robzens"), objected to the proposed partial settlement. Following a hearing that was conducted on December 28, 1994, I declined to approve the partial settlement. See Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 880 F. Supp. 292 (M.D. Pa. 1995). The principal reasons for disapproving the partial settlement were the absence of evidence to reasonably assess the settlement's value to class members and the fact that only Moyer's accounts, approximately 50% of the class, would receive premium certificates, but all class members would be required to release Moyer from any further liability. In expressing concern for the absence of evidence pertaining to the actual value of the premium certificates, I noted:


It is also important to be able to estimate the actual value of the settlement in order to assess the appropriateness of making up to $ 1.2 million in cash available for attorneys' fees and expenses. If, for example, the actual value of the premium certificates is only 10% to 20% of their face value, it would seem inappropriate to make available to class members approximately $ 200,000 to $ 400,000 while providing $ 1 million for attorneys' fees and reimbursement of up to $ 200,000 in litigation expenses.

 Id. at 298.

 The reaction of Moyer and plaintiff to the disapproval of the partial settlement was to re-negotiate the terms of an amicable resolution of Moyer's involvement in this matter. A settlement agreement was reached on February 28, 1995, the essential terms of which were as follows:


-- Moyer agreed to pay class members 5% of the dollar value of their sales of raw materials to Moyer and Darling within the relevant geographic area in up to four of the nine calendar years 1977 through 1985, subject to a cap of $ 2 million.


-- Class members were required to submit verifiable settlement claims documenting their sales in order to be paid.


-- Moyer agreed to pay up to $ 1 million for attorneys' fees, as approved by the Court, and up to $ 200,000 for litigation expenses.

 Preliminary approval was given to this settlement on March 2, 1995.

 Thereafter, settlement discussions with Darling proceeded in earnest. Finally, on September 14, 1995, plaintiff and Darling executed a Settlement Agreement, the essential terms of which were as follows:


-- Darling agreed to pay 5% of the dollar value of class members' documented sales of raw materials to Darling and Moyer within the relevant geographic area in up to 4 of the 9 calendar years 1977 through 1985, with no payment cap.


-- Class members were required to submit settlement claims of sales made that were subject to verification as a condition of being paid.


-- Darling agreed to pay all attorneys' fees above $ 1 million as may be approved by the Court and to pay 50% of litigation expenses, but Darling's obligation in that regard was not to exceed $ 200,000.

 By Order dated October 12, 1995, preliminary approval was given to the Darling settlement.

 On December 20, 1995, I conducted a hearing to consider approval of the settlements of the class action claims and class counsel's request for attorneys' fees and costs. Following the hearing, the settlements were approved and final judgment accordingly entered. (See Dkt. Entry 425.) In a separate order dated December 20, 1995, I found that class counsel's unreimbursed costs of $ 162,453.41 were necessary, reasonable and proper, and that counsel was entitled to an award of those costs. (Dkt. Entry 424.) *fn9" A ruling on class counsel's request for fees, however, was deferred. (See Tr. of 12/20/95 Hearing (Dkt. Entry 435) at 71-74.)

 By letter dated January 22, 1996, class counsel provided a schedule of the claims filed by class members. Of the approximate 1,200 class members, less than 40 submitted settlement claims, the aggregate value of which was roughly $ 507,000. (See Dkt. Entry 431.) When the settlement claims were resolved, payments totaling $ 399,656.10 to thirty class members was ultimately approved. (Order of Aug. 21, 1996, Dkt. Entry 444.) In addition, the Order of August 21, 1996 authorized reimbursement of supplemental class counsel expenses in the amount of $ 16,855.34. On October 15, 1996, plaintiff certified compliance with the August 21, 1996 Order that had authorized distribution to class members and reimbursement of supplemental expenses.


 A thorough judicial review of fee applications is required in all class action settlements. General Motors, 55 F.3d at 819. The award of reasonable attorney's fees is within the discretion of the district court. Hensley v. Eckerhart, 461 U.S. 424, 437, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983); Silberman v. Bogle, 683 F.2d 62 (3d Cir. 1982); Lindy Bros. Builders, Inc. of Phila. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102, 115 (3d Cir. 1976) (Lindy II). "A district court may not set attorney's fees based upon a generalized sense of what is customary or proper, but rather must rely upon the record." Coleman v. Kaye, 87 F.3d 1491, 1510 (3d Cir. 1996).

 Generally speaking, attorneys' fees may be awarded either on a lodestar or percentage of benefit basis. The lodestar method is typically employed in the statutory fee shifting framework. The percentage of benefit approach is usually appropriate where the efforts of counsel have generated a "common fund" from which the plaintiffs and counsel are to be compensated. General Motors, 55 F.3d at 821.

 Statutory fee shifting provisions reflect congressional intent "to encourage private enforcement of statutory substantive rights, be they economic or non-economic, through the judicial process." Report of the Third Circuit Task Force, Court Awarded Attorney Fees, 15 (Oct. 8, 1985), reprinted at 108 F.R.D. 237, 250. The "lodestar" method typically used in the statutory fee shifting context calculates fees by multiplying the number of hours reasonably expended by the hourly rate appropriate for the geographic region and the lawyer's experience. General Motors, 55 F.3d at 819 n.37. *fn10" The Supreme Court has "established a 'strong presumption' that the lodestar represents the 'reasonable' fee" in statutory fee-shifting cases. Dague, 505 U.S. 557 at 562, 120 L. Ed. 2d 449, 112 S. Ct. 2638 (quoting Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 92 L. Ed. 2d 439, 106 S. Ct. 3088 (1986)). It has also stated that it has "'generally turned away from the contingent-fee model' -- which would make the fee award a percentage of the value of the relief awarded in the primary action -- 'to the lodestar model.'" Id. at 566 (quoting Venegas v. Mitchell, 495 U.S. 82, 87, 109 L. Ed. 2d 74, 110 S. Ct. 1679 (1990)).

 In a case resulting in a common fund for the benefit of a plaintiff class, a court may exercise its equitable powers to award attorneys' fees out of the fund. Skelton v. General Motors Corp., 860 F.2d 250, 252 (7th Cir. 1988) (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257-58, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975)), cert. denied, 493 U.S. 810, 107 L. Ed. 2d 22, 110 S. Ct. 53 (1989). The Supreme Court has long recognized that "a litigant who recovers a common fund for the benefit of persons other than himself or his client is entitled to reasonable attorney's fees from the fund as a whole." Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 62 L. Ed. 2d 676, 100 S. Ct. 745 (1980). The common fund doctrine is "based on the equitable notion that those who have benefited from litigation should share its costs," Skelton, 860 F.2d at 252 (quoting Third Circuit Task Force, 108 F.R.D. at 237), and that unless the costs of litigation are spread to beneficiaries of the fund they will be unjustly enriched by the attorney's efforts. Swedish Hosp. Corp. v. Shalala, 303 U.S. App. D.C. 94, 1 F.3d 1261, 1265 (D.C. Cir. 1993); see also Boeing, 444 U.S. at 478; Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 164, 83 L. Ed. 1184, 59 S. Ct. 777 (1939); Sala v. National R.R. Passenger Corp., 128 F.R.D. 210, 212 (E.D. Pa. 1989). In common fund cases a district judge can award attorneys' fees as a percentage of the fund recovered. General Motors, 55 F.3d at 822; see also Blum, 465 U.S. at 900 n.16 (1984); In re SmithKline Beckman Corp. Sec. Litig., 751 F. Supp. 525 (E.D. Pa. 1990). No general rule exists for determining the appropriate percentage. Fee awards have ranged from fifteen to forty-five percent of the settlement fund. Weiss, 899 F. Supp. at 1304; SmithKline, 751 F. Supp. 525 at 533; see also Sala, 128 F.R.D. at 214; In re TSO Fin. Litig., 1989 U.S. Dist. LEXIS 8253, No. 87-7903, 1989 WL 80316 (E.D. Pa. July 17, 1989). It has been noted that "the normal range [for attorneys' fees in] common fund securities and antitrust suits is between 20 and 30 percent." See In re GNC Shareholder Litig., 668 F. Supp. 450, 452 (W.D. Pa. 1987). *fn11"

 "Judges [have] employed a variety of factors to set the reasonable percentage; the most common factor [has been] 'the size of the fund or the amount of benefit produced for the class.'" In re: Unisys Corp. Retiree Medical Benefits ERISA Litig., 886 F. Supp. 445, 457 (E.D. Pa. 1995) (quoting Third Circuit Task Force, 108 F.R.D. at 242). Courts have also considered the following factors: the range within which attorneys' fees usually fall; counsel's experience in class action litigation; counsel's competency; whether counsel acted in the class' best interest; the stage of the litigation at which the settlement was obtained; the novelty of the issues; and the factors unique to the particular case. Id. at 462.

 The settlement agreements in the instant matter present features that are found in both statutory fee and common fund cases. For example, the fee award will not be taken from the class members' actual recovery, but instead will be borne directly by the settling defendants. Thus, the principal rationale underlying common fund awards -- "the class would be unjustly enriched if it did not compensate the counsel responsible for generating the valuable fund bestowed on the class," General Motors, 55 F.3d at 821 -- is absent here.

 On the other hand, the "economic reality" is that the agreement to pay verified settlement claims of class members as well as counsel fees yields a mathematically calculable amount that can be regarded as "a constructive common fund." Id. at 820. Indeed, "courts have relied on 'common fund' principles and the inherent management powers of the court to award fees to lead counsel in cases that do not actually generate a common fund." In General Motors, supra, our Court of Appeals suggested that the preferred "primary determinant" of an award of attorneys' fees in a "constructive" common fund case is the percentage of recovery method. Id. at 821.

 A key factor distinguishing the matter sub judice from General Motors is that a settling defendant in this case contests the fee award, whereas General Motors did not. The paradigmatic common fund case involves a situation where a defendant has no interest in the allocation of the settlement fund between class members and class counsel. Judicial determination of a percentage of recovery ensures an adequate recovery for both class counsel and class members. But where class counsel and the settling defendant dispute the fee award, the lodestar method that is typically employed in "conventional bipolar litigation" appears more appropriate. Id. at 821. Moreover, because the class members' recovery is not affected by the fee award, this case does not present the classic conflict of interest between class counsel and class members that animates the percentage of recovery method. Id.

 Perhaps most importantly, the difficulty in ascribing a reasonable value to the settlement militates against use of a percentage method. The difficulty in assigning a value to this settlement is exacerbated by the absence of controlling authority on whether the percentage of attorneys' fees is to be paid on the basis of the actual recovery or on the basis of the potential benefit conferred by the settlement.

 In Boeing Co. v. Van Gemert, 444 U.S. 472, 62 L. Ed. 2d 676, 100 S. Ct. 745 (1980), the Court addressed the issue of whether attorneys' fees could be assessed against the unclaimed portion of a judgment. In affirming the award of counsel fees from the entire judgment, the Court explained:


In this case, [class counsel] have recovered a determinate fund for the benefit of every member of the class whom they represent. . . . To claim their logically ascertainable shares of the judgment fund, absentee class members need prove only their membership in the injured class. Their right to share the harvest of the lawsuit upon proof of their identity, whether or not they exercise it, is a benefit in the fund created by the efforts of the class representatives and their counsel. Unless absentees contribute to the payment of attorneys' fees incurred on their behalves, they will pay nothing for the creation of the fund and their representatives may bear additional costs. The judgment entered by the District Court and affirmed by the Court of Appeals rectifies this inequity by requiring every member of the class to share attorneys' fees to the same extent that he can share the recovery. Since the benefits of the class recovery have been 'traced with some accuracy' and the costs of recovery have been 'shifted with some exactitude to those benefitting,' we conclude that the attorneys' fee award in this case is a proper application of the common-fund doctrine.

 Id. at 479-81. This rationale has been applied to justify an award of counsel fees in a class action settlement in which claims asserted did not exhaust the full settlement fund. See Fickinger v. C.I. Planning Corp., 1989 U.S. Dist. LEXIS 14448, No. 81-951, 1989 WL 146695 (E.D. Pa., Dec. 1, 1989). *fn12"

  Boeing, however, specifically declined to "decide whether a class-action judgment that simply requires the defendant to give security against all potential claims would support a recovery of attorneys' fees under the common-fund doctrine." 444 U.S. at 479 n.5. The settlement agreements in this matter essentially provided security against potential claims. For example, Moyer agreed to place $ 2 million in escrow, with any escrowed funds remaining after payment of claims returned to Moyer. Boeing simply did not address the propriety of using the maximum payable, as opposed to the dollar amount of an actual fund within the court's control, for purposes of calculating class counsel fees.

 It must also be noted, however, that there is no clear authority for the proposition that the fee should be awarded solely on the basis of the actual amount recovered by class members. In In re: Chrysler Motors Corp. Overnight Evaluation Program Litig., 736 F. Supp. 1007 (E.D. Mo. 1990), the court apparently based the fee award on the value of verified claim forms submitted by class members. *fn13" The court, however, did not address the question of whether the fee should be based on the maximum exposure to the settling defendant. Thus, Chrysler Motors does not provide any rationale for basing the percentage award on the actual amount recovered by class members.

 General Motors directs that if fees are to be awarded on a percentage basis "some reasonable assessment of the settlement's value" must be made. Settlements of the type involved in this case are rarely ascribed a value that is equivalent to the face value of potential claims. For example, in Weiss, 899 F. Supp. at 1304, the court valued a settlement that called for a $ 100 million fund for coupon redemption to be approximately $ 75 million, and awarded 15% of that amount. In this case, class counsel has assigned a face value to the settlement that is 23.5 times greater than the actual recovery. Class counsel derived a value of $ 9.4 million as the class benefit by using information showing that Darling purchased approximately $ 35 million of rendering materials in the relevant geographic area in 1984 and multiplying that figure by four to determine Darling's aggregate purchase over a four year period. To this amount was added the top four years of Moyer's purchases, which totaled $ 7,559,287. This sum was multiplied by five percent to determine the potential class recovery from Darling. The resulting number is $ 7,434,280. Because Moyer's liability was limited to $ 2 million, class counsel claimed a total potential benefit to the class of $ 9.4 million. But "there is virtually a statistical certainty that not all class members will file statements or proofs of claim when such filing is a precondition to sharing in a common recovery." 2 Newberg on Class Actions § 10.14 (2d ed. 1985). A table accompanying Newberg's treatise indicates that response rates are often very small, and rarely exceed 50%. In this case, class counsel had some basis for projecting claims to be made because settlement claims had been submitted in connection with the first Moyer settlement agreement. Yet class counsel never attempted to forecast a reasonable response rate for this settlement. While counsel should not be penalized because class members fail to exercise their rights, class counsel should not claim a benefit value that simply does not exist. Clearly, the realistic value of the settlement in this case does not remotely approach class counsel's estimate.

  In General Motors, Judge Becker observed that the percentage of recovery method "rewards counsel for success and penalizes it for failure." 55 F.3d at 821. Darling's position is that the small recovery that resulted here reflects a lack of success on class counsel's part. But in a settlement of the nature presented here, the limited actual recovery does not necessarily reflect the "failure" of class counsel. The settlement at issue was achieved approximately ten years after the alleged conspiracy to restrain trade ended. It is evident that a number of class members either no longer exist or are not in business. *fn14" It is also evident that records to substantiate sales dating back to 1977 may have been lost, discarded, or destroyed. *fn15" Class counsel should not be penalized because the passage of time in this protracted litigation reduced the size of the class and made it probable that the dollar expenditure by the settling defendants would be substantially less than their hypothetical exposure.

 General Motors also established that the court has discretion in determining whether to use the lodestar method in the "constructive common fund" setting. 55 F.3d at 821. This position is consistent with the rulings of a number of other courts of appeals, which "have recognized that the appropriate method for use in common fund cases depends upon the circumstances of each case." Rawlings v. Prudential-Bache Properties, Inc., 9 F.3d 513, 516 (6th Cir. 1993); see, e.g., Johnston v. Comerica Mortgage Corp., 83 F.3d 241, 246 (8th Cir. 1996); Florin v. Nationsbank of Georgia, N.A., 34 F.3d 560, 566 (7th Cir. 1994); Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990); Florida v. Dunne, 915 F.2d 542, 545 (9th Cir. 1990). "The lodestar rational 'has appeal where, as here, the nature of settlement evades the precise evaluation needed for the percentage of recovery method.'" In re Chambers Dev. Sec. Litig., 912 F. Supp. 852, 864 (W.D. Pa.1995).

 In Greenhaw v. Lubbock County Beverage Ass'n, 721 F.2d 1019 (5th Cir. 1983), a jury verdict in a class antitrust action had a treble value of approximately $ 2 million. Claims asserted against the judgement, however, totaled only $ 17,482. The court awarded the lodestar amount of $ 246,517, rejecting the defendant's contention that the award was disproportionately large in relation to the actual recovery and class counsel's contention that the award was disproportionately small in relation to the potential class recovery. Id. at 1032; see also Johnston, 83 F.3d at 246 (given difficulty in estimating value of settlement, use of lodestar approach was not an abuse of discretion). The Fifth Circuit ruled that the district court's use of an unenhanced lodestar to award fees to the Greenhaw class counsel reflected a sound exercise of discretion.

 Having carefully considered the arguments of counsel and studied the applicable precedents, I am firmly convinced that the lodestar approach is preferable where, as here, there is a substantial divergence between the actual recovery and the potential benefit; the benefit is not reasonably calculable; and the defendant who is obligated to pay the fee contests class counsel's claim. By requiring payment of an unenhanced lodestar as counsel fees in the context of this hybrid common fund settlement, defendants are not rewarded for the effects of delay. Moreover, the lodestar approach affords certainty to both sides during settlement negotiations by enabling the parties to assess the defendants' probable liability for attorneys' fees. A settling defendant can then estimate both its probable payments to class members as well as its payment of counsel fees in determining whether to settle or proceed to trial. Judicial scrutiny of the settlement and determination of the fee award in an adversarial setting assure that the class has not been "sold out" by counsel for an exorbitant fee. Class counsel are assured of "presumptively reasonable" compensation in negotiating in a difficult case a settlement based upon the presentation of verified claims by class members.

 Contrary to class counsel's arguments, I find that use of a risk enhancing multiplier is foreclosed by General Motors. As recognized in Lake v. First Nationwide Bank, 900 F. Supp. 726 (E.D. Pa. 1995):


In City of Burlington v. Dague, . . . the Supreme Court ruled that a contingency multiplier based on the risk of the plaintiff's success could not be used to increase the lodestar under two federal fee-shifting statutes. This prohibition has subsequently been extended to common fund cases, making the likelihood that the plaintiff would not succeed irrelevant for purposes of enhancing the lodestar.

 Id. at 736; see also Hirsch and Sheeley, Awarding Attorneys' Fees and Managing Fee Litigation at 71 (Federal Judicial Center 1994) ("In light of [the Supreme Court's] clear desire to facilitate administration and avoid arbitrariness, it seems likely that the Court would reject risk enhancements in common fund cases").

 Even if a risk enhancement multiplier was not foreclosed, I would not award an upward adjustment in this case. "Risk multipliers tend to penalize the parties with the strongest defenses." Skelton, 860 F.2d at 253. The settlements negotiated in this case reflected the weakness of plaintiff's case. Class counsel should not be rewarded simply because some settlement was achieved. At all times, the settling defendants recognized that the amount they would be required to pay to the settling class would be substantially less than the value ascribed to the settlements by class counsel. At no time did the settling defendants express a willingness to establish a multi-million dollar fund that would be divided among class members and class counsel. On the contrary, efforts to negotiate a lump sum settlement were met with stubborn opposition. The settling defendants insisted on a claims-made settlement, obviously relying upon the "statistical certainty" that only a fraction of class members would submit verifiable claims. While some settlement may have been preferable to no settlement, the result achieved militates against an upward adjustment in the lodestar.

 It is, however, appropriate to calculate the lodestar based upon current rates to compensate for the fact that services have been rendered over an 11 year period. *fn16" See Missouri v. Jenkins, 491 U.S. 274, 284, 105 L. Ed. 2d 229, 109 S. Ct. 2463 (1989). It is also appropriate to award interest from the date that judgment was entered in this case, December 20, 1995, to the date of the attorneys' fee award. In calculating the lodestar, hours expended with respect to defendants who have been dismissed from this action will not be compensable. See Rode v. Dellarciprete, 892 F.2d 1177, 1185 (3d Cir. 1990); see also Hensley v. Eckerhart, 461 U.S. 424, 440, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983). Moreover, the fee application must be scrutinized to "exclude from this initial fee calculation hours that were not 'reasonably expended,'" including, "excessive, redundant, or otherwise unnecessary" work. Id. at 434. Because the parties have not addressed these issues, time will be afforded to supplement the record and an evidentiary hearing, if necessary, will be conducted.


 This Court is charged with the task of determining a fair, adequate and reasonable fee. Weiss, 899 F. Supp. at 1304. In making this determination, interests in the administration of justice must be considered. See Fickinger, 646 F. Supp. at 633. In this regard, the amount of the fee in relation to the actual recovery realized by the class is indeed a pertinent consideration. But so too are the efforts of class counsel over a protracted period in confronting a difficult adversary. While "common fund awards are not intended to reward a Don Quixote who tilts at windmills no matter how noble the motives or how extensive the efforts," Fickinger, 646 F. Supp. at 637, counsel who wrangle a judicially-approved settlement should be fairly compensated for their labor. "Presumptively reasonable" compensation is afforded through the lodestar method. *fn17" Accordingly, the parties will be directed to supplement the record with respect to the calculation of the lodestar in this case, consistent with the principles set forth above.

 Thomas I. Vanaskie

 United States District Judge

 DATE: November 8, 1996



 1. Within ten (10) days from the date of this Order, class counsel shall provide to settling defendants class counsel's time records in this matter, and within thirty (30) days from the date of this Order, class counsel shall file with the Court a memorandum setting forth their position with respect to hours to be excluded from the lodestar calculation.

 2. Within twenty (20) days after receipt of class counsel's submission to this Court, settling defendants shall file with this Court a memorandum setting forth their position with respect to hours to be excluded from the lodestar calculation.

 3. Class counsel may reply to settling defendants' submission within ten (10) days after service thereof.

 4. Robzens, Inc.'s motion for an award of counsel fees and costs (Dkt. Entry 409) is GRANTED IN PART. Robzens shall be awarded fees under the lodestar method in an amount that will be determined by further order of this Court.

 Thomas I. Vanaskie

 United States District Judge

 DATE: November 8, 1996

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