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In re BankAmerica Corp. Securities Litigation

United States District Court, E.D. Missouri, Eastern Division

November 12, 2019

IN RE BANKAMERICA CORP. SECURITIES LITIGATION,

          MEMORANDUM AND ORDER

          CATHERINE D. PERRY, UNITED STATES DISTRICT JUDGE

         NationsBank class representative David P. Oetting moves for Class Counsel to forfeit and disgorge the nearly $59 million in attorneys' fees that were awarded in this securities class action in 2002 and, further, asks that I redetermine the fee award at an amount equal to the lodestar calculation, that is, $20, 188, 345, 75. Oetting also asks that a vacated award of $98, 114.34 in post-settlement fees incurred by former Lead Counsel, the now-defunct law firm of Green Jacobson, P.C., not be reinstated. Because the doctrine of laches bars Oetting's claim for Class Counsel to forfeit and disgorge the 2002 award of attorneys' fees, and the fees incurred by Green Jacobson post-settlement are reasonable and presently compensable, I will deny Oetting's motion.

         Background

         The history of this litigation has been thoroughly summarized in several court opinions, including In re BankAmerica Corp. Sec. Litig., 350 F.2d 747 (8th Cir. 2003); In re BankAmerica Corp. Sec. Litig., 775 F.3d 1060 (8th Cir. 2015); and In re Green Jacobson, P.C., 911 F.3d 924 (8th Cir. 2018), and will not be repeated here except where necessary to resolve the current motion.

         The issue now before the Court is whether the class is entitled to a partial refund of attorneys' fees. When the underlying multi-district class action settled in 2002, the Court at that time approved an award of attorneys' fees to Class Counsel that equaled 18% of the net settlement fund for each respective class.[1] For the NationsBank classes, the net settlement fund (Fund) was $326, 841, 246.48, which resulted in a $58, 831, 424.38 award of attorneys' fees to Class Counsel. Lead Counsel for the NationsBank classes, the law firm of Green Schaaf & Jacobson, P.C., [2] was charged with the duty of distributing the fee award to other Class Counsel who participated in the case. The other law firms participating as either Co-Lead Counsel or as an Executive Committee Member for the NationsBank classes were Chitworth & Hartley, Stull Stull & Brody, Entwistle & Cappucci LLP, and Wolf Haldenstein Adler Freeman & Herz LLP.[3]

         The first distribution from the Fund to the NationsBank class members began in July 2004. In June 2008, the Court authorized a second distribution to NationsBank class members, but that distribution was stayed in August 2008. The Court lifted the stay in April 2009 and ordered the second distribution to begin under the terms of the June 2008 Order. Under the terms of the settlement agreement itself, the Court was permitted in its discretion to contribute to non-sectarian, not-for-profit organizations all unclaimed settlement funds that remained in the Fund after distribution was completed. (ECF 588 at header p. 37.)

         In September 2012, after three-and-a-half years of additional proceedings - which included motions and orders regarding the reissuance of distribution checks, the filing of several status reports, litigating the filing of a supplemental complaint, and addressing several pro se filings made by Oetting - Lead Counsel Green Jacobson moved for cy pres distribution of the nearly $3 million that remained in the NationsBank Fund and to terminate the case with respect to the NationsBank classes. Green Jacobson also moved for an award of post-settlement attorneys' fees in the lodestar amount of $97, 790.00, representing work performed from December 1, 2004, to April 3, 2012. With $324.34 in expenses, Green Jacobson sought a total award of $98, 114.34. Oetting objected to the motion in toto and to the fee request in particular, asserting that Green Jacobson did not earn these supplemental fees. The Court granted Green Jacobson's motion in June 2013, ordered cy pres distribution of the remaining Fund, and awarded Green Jacobson $98, 114.34 in fees and expenses. (ECF 802.) In January 2015, the Eighth Circuit vacated the cy pres distribution and likewise vacated the attorneys' fee award given that, without cy pres distribution, money from the Fund remained to be distributed to class members thereby rendering the award of supplemental fees premature.[4] The cy pres and attorneys' fee/expense monies have since been returned to the NationsBank Fund.

         In March 2015, shortly after mandate issued on the Eighth Circuit's decision, Green Jacobson entered into bankruptcy, which was triggered by an unrelated state-court malpractice judgment. The Court thereafter removed Green Jacobson as Lead Counsel for the NationsBank classes and appointed Frank H. Tomlinson as Lead Counsel.

         In August 2019, NationsBank class representative Oetting filed the motion now under consideration, requesting that I redetermine the amount of attorneys' fees to be awarded in this case, in toto. Specifically, Oetting requests that I order all Class Counsel to forfeit and disgorge the $58, 831, 424.38 in fees that were awarded back in 2002 and, further, that I make a determination that fees equal to the lodestar amount calculated in 2002 - that is, $20, 188, 345.75 - are fair and reasonable in the circumstances of this case. Oetting contends that Class Counsel is entitled to no fee other than these lodestar fees. The bankruptcy trustee for the Green Jacobson law firm opposes the motion as do the law firms of Chitworth & Hartley, Stull Stull & Brody, Entwistle & Cappucci LLP, and Wolf Haldenstein Adler Freeman & Herz LLP. Individual attorneys Martin M. Green and Joe D. Jacobson likewise oppose the motion.[5]

         Discussion

         In class action litigation, a district court “may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement.” Fed.R.Civ.P. 23(h). The court has an affirmative duty to assure that the award of attorneys' fees is fair and proper. In re Green Jacobson, P.C., 911 F.3d at 930. Where class lawyers recover a common fund for the benefit of all members of the class, they are entitled to a “reasonable attorney's fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). Federal courts award attorneys' fees under this “common fund doctrine” as a matter of federal common law, based on “the historic equity jurisdiction of the federal courts.” Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 164 (1939). The guiding principle is that attorneys' fees “be reasonable under the circumstances.” Rodriguez v. Disner, 688 F.3d 645, 653 (9th Cir. 2012). This guiding principle of reasonableness is applied “even more assiduously in common fund class action cases . . . because the district court has a special duty to protect the interests of the class[.]” Id. at 655 (internal quotation marks and citations omitted).

         Given its duty to protect the class, a federal court's equitable power regarding attorneys' fees in a class action may include a determination whether attorneys' fees previously awarded by the court should be disgorged. See In re Green Jacobson, P.C., 911 F.3d at 930. A class member's claim for disgorgement, however, may be barred by equitable defenses such as laches or preclusion principles. Id.

         Disgorgement of 2002 Award of Attorneys' Fees

         As an initial matter, I note that Oetting requests that all Class Counsel be ordered to disgorge their respective share of attorneys' fees awarded by the Court in 2002. To the extent Oetting requests that firms other than Green Jacobson forfeit and disgorge their fees, Oetting neither alleges nor shows that these firms engaged in any of the purported misconduct in administering the Fund, which Oetting claims justifies the disgorgement. Indeed, the approved settlement agreement itself designates only Lead Counsel (Green Jacobson) and the claims administrator as those responsible for the administration of and disbursements from the NationsBank Fund. (ECF 588 at header p. 27.) On its face, therefore, ordering the non-Green Jacobson law firms to disgorge their fees for the reasons asserted by Oetting would be inequitable. See In re E. Sugar Antitrust Litig., 697 F.2d 524, 534 (3d Cir. 1982) (“[N]either attorney discipline nor deterrence of future misconduct . . . would justify disgorgement ...


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