IN RE MONOSODIUM GLUTAMATE ANTITRUST LITIGATION, (D.Minn. 2003)

PAUL A. MAGNUSON, District Judge.

This matter is before the Court on Plaintiffs' Application for Attorneys' Fees. In that Application, Plaintiffs' counsel asks for fees in the amount of 1/3 of the settlement fund, and costs of slightly less than $2 million. The settlement fund stands at $81.4 million plus interest. According to Plaintiffs' counsel, the total fee award they seek is $27.1 million. The notice to the class about the proposed settlement distribution stated that the attorneys would seek no more than 1/3 of the settlement fund. No class members have objected to the proposed fee award.

Determining the amount of an award of attorneys' fees is a matter committed to the discretion of the Court. Blum v. Stetson, 465 U.S. 886, 896-97 (1984). The general rule is that "a litigant or a lawyer who recovers a common fund for the benefit of person other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole." Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). Because there is a conflict of interest between the attorneys and the class members with respect to apportionment of the settlement fund, a fee request is subject to heightened judicial scrutiny. In re Flight Transp. Corp. Sec. Litig., 685 F. Supp. 1092, 1094 (D.Minn. 1987) (Weiner, J.). The theory behind attorneys' fees awards in class actions is not merely to compensate counsel for their time, but to award counsel for the benefit they brought to the class and take into account the risk undertaken in prosecuting the action.

The Manual for Complex Litigation notes that, in common fund cases, attorneys' fees are generally awarded as a percentage of the fund. See Manual for Complex Litigation, § 24.121 at 188 (3rd ed. 1985). The Eighth Circuit has specifically upheld this approach. Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1999). Courts may also use a lodestar approach, first set forth by the Third Circuit. See Lindy Bros. Builders, Inc. v. Am. Radiator Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973); see also Grunin v. Int'l House of Pancakes, 513 F.2d 114 (8th Cir. 1975) (adopting Lindy method of calculating fees). The Manual points out that the Supreme Court has never adopted the lodestar method, and that "[i]n recent years, the trend has been toward the percentage of the fund method." Manual § 24.121 at 189.

Most courts applying the percentage-of-the-fund approach award fees in the 25% to 30% range, adjusting up or down for the circumstances of the case. Id. The Manual notes that, where the fund is unusually large, a percentage approach may result in a windfall to counsel. Id. In those cases, courts often determine the fees based on a sliding scale approach, the lodestar, or some combination of lodestar and percentage.

Factors to be considered when determining the amount of the fee award include:

• the size of the fund created and the number of persons benefited [sic];

• the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel;

• the skill and efficiency of the attorneys involved;

• the complexity and duration of the litigation;

• the risk of nonpayment;

• the amount of time devoted to the case by plaintiffs' counsel; and

• the awards in similar cases.

Id. at 190. In this case, the size of the fund is substantial. Indeed, the settlements received from several of the Defendants are more than Plaintiffs' expert's estimate of that Defendants' liability. As noted above, there have been no objections to the settlement or to the fees requested.

The attorneys prosecuted this case very skillfully, often under difficult circumstances. The attorneys took depositions throughout Asia and dealt with highly uncooperative foreign Defendants. The issues in the case are fairly complex antitrust issues, and the case has been pending for almost three years. The Court has been impressed throughout this litigation with the quality of advocacy on both sides. Plaintiffs' counsel points out that, thus far, the class lawyers have spent almost $2 million in expenses in this action, a substantial investment that carried with it the risk that it would never be repaid. Finally, it is clear that the attorneys for the class invested a substantial amount of time on this matter, a fact that is confirmed by the affidavit appended to the Application. Attorney time alone totaled almost 32,000 hours.

The Court is convinced that Plaintiffs' counsel is entitled to a substantial award in the form of a percentage of the settlement fund. In order to determine the proper percentage, however, the Court asked Special Master John Borg to inquire into the figures behind the lodestar calculations in the affidavit. See, e.g., Petrovic, 200 F.3d at 1157. The lodestar approach is outlined below.

"As with percentage fees. An award . . . under the lodestar method should fairly compensate the attorney for the reasonable value of the services beneficially rendered, based on the circumstances of the particular case." Manual § 24.122 at 191. The lodestar calculation first multiplies the number of hours expended with a reasonable hourly rate. Id. The result may then be adjusted either up or down to account for the circumstances of the case. Id. at 192. Some factors courts consider in adjusting the lodestar amount include "the quality of the representation, the benefit obtained for the class, the complexity and novelty of the issues presented, the risk of nonpayment, and the delay in payment." Id.

Here, Plaintiffs' counsel has submitted an affidavit summarizing the time spent by each law firm participating in the case. Attorneys spent 31,923.85 hours on the case, paralegals 11,823.35 hours. (Gustafson and Bruckner Aff. ¶ 45.) According to the affidavit, the lodestar for these hours totals $13,960,274.85.

Special Master Borg, at the Court's request, conducted a "spot check" of these numbers. He concluded that the hours billed are reasonable given the complexity of the case and the extensive travel involved. He also concluded that the hourly rates used in calculating the lodestar were not unreasonable, although he noted that some of the rates were on the high end of the scale. Finally, he examined the number of partner hours billed compared with the number of associate and paralegal hours billed, and determined that the breakdown of hours was reasonable. The Court adopts these conclusions and finds that the lodestar claimed by counsel is reasonable. Under the lodestar method, the total fee award requested amounts to using a multiplier of slightly less than 2 for the lodestar. This multiplier is within the range of multipliers that courts typically use. Thus, the total award requested is reasonable.

The question then becomes what amount will fairly compensate counsel for the time and effort they have invested in this case over the past three years. After careful consideration of the materials submitted, the Court concludes that an award of 30% of the settlement fund is reasonable in this matter. Thus, the Court finds that Plaintiffs' counsel are entitled to an award of $24,420,000, plus the costs claimed in the Application.

Accordingly, IT IS HEREBY ORDERED that Plaintiffs' Application for Attorneys' Fees (Clerk Doc. No. 350) is GRANTED as set forth above.