UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 95-10975
MARY JANE FORBUSH, Individually
an on behalf of all other similarly situated,
Plaintiff-Appellee
FREDERICK H. SHIVER, Attorney
Appellant
v.
J.C. PENNEY COMPANY, Pension Plan; WILLIAM J. ALCORN;
JAMES P. BRYANT; FRANK ENGELS; JAY P. HUNDLEY;
ROBERT S. GORIN; HENRY H. SCOTT; GERALD L. SHORES
Defendants-Appellees
CATHERINE E. RHODES, Individually
and on behalf of all others similarly situated,
Plaintiff-Appellee
FREDERICK H. SHIVER, Attorney
Appellant
v.
J.C. PENNEY COMPANY, Pension Plan; WILLIAM J. ALCORN;
JAMES P. BRYANT; FRANK ENGELS; JAY P. HUNDLEY;
ROBERT S. GORIN; HENRY H. SCOTT; GERALD L. SHORES
Defendants-Appellees
`
Appeal from the United States District Court
for the Northern District of Texas
October 17, 1996
Before DUHÉ and DENNIS, Circuit Judges, and DUVAL,1 District
Judge.
1
District Judge of the Eastern District of Louisiana, sitting by designation.
DUVAL, District Judge:
BACKGROUND
This appeal is from the district court's apportionment of fees
for plaintiff's local class counsel in a class action case based on
Employee Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C.
§ 1001, et seq. Appellant Frederick H. Shiver was first retained
as local counsel by lead class counsel, Stephen Bruce, in December
1990. Bruce sent Shiver a letter dated March 15, 1991 (hereinafter
“1991 letter agreement”) explaining the terms of his compensation
as follows: (1) at the conclusion of the case, lead class counsel
would submit a request for attorneys’ fees “based on reasonable
hourly rates and a multiplier to account for contingency”; (2) in
the event of a contingency fee award, lead class counsel would
“apply for a multiplier of at least 2.0 on Shiver’s behalf.” (Rec.
1992) (emphasis added).
In the fall of 1994, the parties agreed to a settlement of
the underlying ERISA case that provided for a total settlement
recovery ranging between $45 and $80 million, depending on the
number of claims and size of benefits. In November of 1994 class
counsel requested a 10% award of fees from the common settlement
fund. This request was justified as a pure contingency award under
the “common fund doctrine,” and in addition, as an upwardly
modified hourly rate under the “lodestar” approach. The proposed
order submitted with the fee motion provided:
The common fund fee award shall be paid by the J.C. Penny
Company, Inc. Pension Plan and shall be allocated by the
Class’ lead counsel among the law firms who contributed
2
to the prosecution of this action according to their
prior agreements.”
(Rec. 1959) (emphasis added). Shiver was included as a signatory
to this motion without any reservation concerning the proposed
language and appeared at the hearing without objection. At that
hearing, the district court made clear that it intended to grant
class counsel a straight ten percent fee award at a hearing on
January 30, 1995.( Vol. 12, R.E. 38).
Thereafter, Shiver apparently determined that he was not going
to be adequately compensated for his services. Disagreeing with
lead counsel regarding what prior agreements existed, Shiver filed
two motions on February 16, 1995. In a "Motion for Allocation of
Part of Common Fund Contingent Fees to Plaintiffs' Local Class
Counsel" (Rec. 1945), Shiver sought the district court's assistance
in establishing a procedure to resolve the internecine fee dispute.
In the body of the motion he acknowledged that there was a letter
agreement but contended that it "d[id] not address 'common fund
contingent fees'" such as that which was awarded by the district
court. (Rec. 1946). Thus, he opined that the district court should
determine a process by which this dispute could be resolved. That
request included the provision for the Court to make the
determination.
The second motion styled, "Motion for Entry of Order Awarding
Fees," Shiver specifically took the position that "[h]e was not a
party to any such 'prior agreements' that provided for 'the
allocation by the Class' lead counsel' nor provide for 'allocation'
of common fund contingent fees." (Rec. 1952). In this motion he
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asked the district court to change the proposed wording of the
order for attorneys' fees to read as follows:
The common fund award shall be paid by the J.C. Penny
(sic) Company Inc. Pension Plan to the individual class
counsel to be allocated to law firms who contributed to
the prosecution of this action according to percentages
established by prior Order of this Court.2
(Rec. 1960) (emphasis added). Shiver also argued that if a common
fund contingency fee were awarded, the 1991 letter agreement did
not apply. Thus, in the district court, he disavowed the
application of the agreement with respect to determining his fee.
Class counsel in response contended that under the 1991
agreement itself,3 Shiver would receive a total lodestar (hours
worked multiplied by the appropriate hourly rate) of $86,944 out of
a total lodestar of $858,471 as of October 31, 1994. This ratio
demonstrated that Shiver's proportion of services performed was
approximately 10% to that of the other attorneys involved. Then
the same multiplier would be applied as the multiplier for all
counsel to this lodestar "to account for contingency." With a ten
percent award of attorneys' fees, that multiplier would range from
4.6 if the common fund were $45 million to 8.2 if the common fund
were $80 million. A multiplier of "2" was never urged by class
2
No such "previous order" existed at the time of filing, indicating again that
Shiver sought a judicial determination of the proper fee.
3
A second letter dated February 8, 1995, has been referred to in the appeal. (See
Rec. 1990) This letter is lead class counsel's memorialization of the fee dispute
and his belief that under the letter agreement, Shiver would be entitled to a
contingent fee that ranged from 4.6 times each attorney's hourly lodestar if the
common fund was $45 million to 8.2 if the common fund was $80 million. The letter
does not constitute an "agreement" as the first letter did, rather it was an offer
to work out a resolution of the matter that was not accepted by Shiver.
4
counsel to be applied with respect to determining Shiver's portion
of fees.
Class counsel further demonstrated that if there were no
agreement, the Texas Disciplinary Rules of Professional Conduct on
dividing fees would also result in the identical method for
dividing fees as the 1991 letter agreement. Rule 1.04(f), Texas
State Bar Rules, Art. X, § 9.
Shiver then filed "Local Class Counsel's Reply to Class
Counsel's Response to Motions of Frederick H. Shiver" (Rec. 2006).
Shiver specifically rejected the position that he should receive
the same proportionate amount as the other counsel; rather, he
contended that he should receive "the reasonable and customary fee
for local counsel in a percentage contingent fee case in this
community" which would be between 15% and 33 and 1/3%. With this
motion, two affidavits from local counsel were presented to support
his position.
Class counsel again responded and opined that Shiver had not
addressed the salient fact that he had been brought into the case
under an agreement which provided that he was to be compensated
based on his hours with a multiplier "to account for contingency."
(Rec. 2052). Class counsel argues that the fallacy in Shiver's
last position was that even a "contingency fee" of the type
described in the affidavits (15%-33 1/3 %) would be contingent upon
an agreement to that end. There was no such agreement for Shiver
to receive a flat contingency fee between 15% and 33 1/3%. Thus,
5
the Court concurs that Shiver's flat contingency argument has no
valid basis.
On September 20, 1995, Judge Kendall specifically denied "in
all things" Shiver's Motion for Entry of Order Awarding Attorneys'
Fees and Brief in Support Thereof.4 (Rec. 2070). Judge Kendall
also formally entered a judgment awarding class counsel a common
fund contingency fee of 10% of the settlement. (Rec. 2071). A
credit against that fund was made for the attorneys' fees awarded
under ERISA section 502(g), 29 U.S.C. § 1132(g).
Finally, in a third order issued the same date, styled "Order
Denying Motion for Allocation of Part of Common Fund Contingent
Fees to Plaintiffs' Local Class Counsel," the district court
rejected Shiver's contention that no agreement existed concerning
common fund contingent fees. Thus, the district court sought to
apply the letter agreement in the context of Shiver's request for
the district court to make a determination of the fee to which he
was entitled.
The district court declined to award his requested fees of 15%
to 33 1/3% of the gross recovery. Instead, it awarded Shiver
double his hourly rate for every hour he worked on this case.
The district court reasoned that the March 1991 letter from Bruce
to Shiver clearly addressed common fund contingent fees citing this
specific language:
. . . Under the heading of Compensation, Mr. Bruce states
“[t]he question then becomes the multiplier that is to be
4
This motion was the one requesting the Court to provide a method for the
resolution of the fee dispute.
6
applied to account for contingency. A number of recent
Title VII and ERISA cases have used a multiplier of 2.0.
Thus, if your hourly rate was $200, I would apply for a
multiplier of at least 2.0 or $400 per hour.” . . . If
Mr. Shiver was concerned about the letter and about how
the contingent nature of this action would be taken into
account when the time for fee-splitting arrived, the time
to speak up was in 1991, not February of 1995.
(Rec. 2075).
In determining Shiver’s fee award, the district court stated
that it considered the factors set forth in Johnson v. Georgia
Highway Express Inc., 488 F.2d 714, 716-17 (5th Cir. 1974).
Although the court did not explain how it applied each Johnson
factor, the court stated that it knew “who pulled the wagon and who
took the chances during the course of this case.” The district
court then acknowledged that Mr. Bruce’s February 1995 letter to
Mr. Shiver stated that “the actual multiplier which will be applied
ranges from 4.6 to 8.2 depending upon the actual size of the common
fund.” However, at this proposed rate, the court concluded that
“Mr. Shiver’s customary hourly fee will mushroom from $275 to
either $1265 or $2255 per hour,” a fee for local counsel that
“would be outrageous under this record.” (Rec. 2076) (emphasis
added).
Finally, the court noted:
Mr. Shiver’s actions bring to mind two old adages. Bears
make money and bulls make money, but hogs get
slaughtered. The Court had hoped that counsel could work
this out amongst themselves. However, that did not
happen and the dispute is presented to this Court for
resolution. A deal is a deal. Mr. Shiver’s motion is
denied and he will be compensated more than adequately at
twice his normal hourly rate under the agreement
presented in the 1991 letter.”
(Rec. 2076). It is from this order that Shiver appeals.
7
Shiver, contrary to his previous position, now argues not that
he did not get the between 15 and 33 1/3% that he moved for below,
but that he got less than the amount that lead class counsel was
willing to request for him out of the common fund. Thus, contrary
to his position before the district court, Shiver argues that (1)
the 1991 letter agreement does apply; (2) it fixes his “uncontested
minimum” fee; and (3) the district court did not follow the 1991
letter agreement.
DISCUSSION
We review an award of attorneys’ fees for abuse of
discretion. Auclair v. Sher, 63 F.3d 407, 410 (5th Cir. 1995).
This Circuit utilizes the “lodestar method” to calculate
attorneys’ fees. Initially, the district court must determine
the reasonable number of hours expended on the litigation and the
reasonable hourly rate for the participating lawyer. Louisiana
Power & Light Co. v. Kellstrom, 50 F.3d 319, 324 (5th Cir.),
cert. denied, 116 S. Ct. 173 (1995). The lodestar is then
computed by multiplying the number of hours reasonably expended
by the reasonable hourly rate. Id. The district court may then
adjust the lodestar upward or downward depending on the
respective weights of the twelve factors set forth in Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.
1974).
Because the district court gave Shiver credit for every hour
he expended in this case at his hourly rate, Shiver does not
8
argue that the district court erred in its computation of his
lodestar. Nor does he contest the 10% fee award to class
counsel. Rather, Shiver complains only that when the district
court adjusted his lodestar upward by a multiplier of two, it
erroneously excluded him from his “minimum, uncontested” portion
of class counsel’s contingency fee.
Shiver argues that no record evidence supports the district
court’s decision. He points out that his integral role as part
of the class counsel team is undisputed. Shiver also argues that
no party or counsel took the position that Shiver was owed less
than approximately 10%5 of the total fee award (with a multiplier
range of between 4.6 and 8.2). In fact, lead class counsel wrote
to Shiver in 1995 and explained that pursuant to the 1991 letter
agreement, Shiver “will receive the same percentage of total fee
award (approximately 10 percent) as the services he performed
bear to the total.” Because this 1995 letter established his
“minimum, uncontested” fee, Shiver contends that no evidence
supports the district court’s decision to reduce his share of the
award.
This court rejects the basis for Shiver's appeal. As noted,
Shiver argued exactly the opposite to the district court--that is
he specifically rejected the applicability of the 1991 letter
agreement. Instead, he insisted that the court determine his
award based on the customary percentage fee for serving as local
5
The parties dispute the exact percentage. Appellant says it is 10.1% and
Appellees say 9.7%.
9
counsel in his community. This Court will not address an
argument raised by a party for the first time on appeal, even if
it concerns the same issue (attorneys' fees) unless it meets the
plain error standard. United States v. Calverly, 37 F.3d 160,
163 (5th Cir. 1994) (en banc); Douglass v. United Services Auto,
Assoc., 79 F.3d 1415, 1424 (5th Cir. 1996) (en banc). That
standard is not met here. The determination of a fair attorney
fee award is not a "purely legal issue." Furthermore, the Court
will not allow a party to raise an issue for the first time on
appeal merely because a party believes that he might prevail if
given the opportunity to try a case again on a different theory.
Citizens Nat'l Bank v. Taylor (In re Goff), 812 F.2d 931, 933
(5th Cir. 1987).
Even if the Court were to entertain this reversal of
position on appeal, Shiver can show no abuse of discretion in the
district court’s judgment. Although it is true that lead counsel
would have been willing to compensate Shiver based on a
multiplier equal to his percentage of the lodestar (9.7%), the
1991 letter agreement promised only that lead class counsel would
apply for “a multiplier of at least 2.0.” Moreover, any award
required court approval, regardless of the agreements existing
between the parties. “A district court is not bound by the
agreement of the parties as to the amount of attorneys’ fees.”
Piambino v. Bailey, 610 F.2d 1306, 1328 (5th Cir.), cert. denied,
449 U.S. 1011 (1980). The court must only consider “whether the
attorneys’ fees proposed are reasonable.” Id. In this case, the
10
court, on Shiver’s own motion, independently evaluated the value
of Shiver’s contribution to this case and then entered an award
consistent with that contribution, and further, consistent with
the 1991 letter. Thus, the district court’s judgment is entitled
to this Court’s deference.
Shiver contends that the district court slashed his fee as a
punishment for his having raised the fee dispute in the district
court. Shiver alleges that the absence of both legal and factual
support “to justify singling Shiver out of the pack of other
plaintiffs’ counsel” proves this proposition. However, the
record does not bear out this position. The district court,
provided the following factual and legal rationale for its
decision:
The Court is not ignorant as to who pulled the
wagon and who took the chances during the course of
this case. The Court considers the typical factors
which go into an attorney’s fee determination. The
Johnson factors, as they are commonly called, instruct
this Court to consider a variety of circumstances,
including, the time and labor required, the novelty and
difficulty of the questions at issue, the skill
required to perform the legal service properly, the
preclusion of other employment, the customary fee,
whether the fee is fixed or contingent, the results
obtained and the experience, reputation, and ability of
the attorneys.
(Rec. 2076). The district court then concluded that the
multiplier Bruce was willing to apply to Shiver’s lodestar would
result in a fee “for local counsel [that] would be outrageous
under this record” and further found “payment of no more than
$550 [twice his customary hourly rate] to be a reasonable and
appropriate fee under the circumstances.”
11
Shiver argues that the district court’s reasons for his fee
award lacked the requisite degree of specificity. “To avoid the
risk of remand the district court should explain with a
reasonable degree of specificity the findings and reasons upon
which the award is based, including an indication of how each of
the Johnson factors was applied.” Von Clark v. Butler, 916 F.2d
255, 258 (5th Cir. 1990). Here, the district court listed
substantially all the relevant Johnson factors, but did not
explain in detail how each factor applied to these particular
facts. In addition, Shiver contends that the district court’s
“hogs are slaughtered” doctrine is not a Johnson factor, and that
therefore, the “hog” theory’s application in this case was an
abuse of discretion.
Although the district court could have used more details and
fewer adages in its opinion, it considered the Johnson factors
and viewed Shiver’s fee request as “outrageous” considering his
minor role in the litigation. “A district court’s Johnson
analysis . . . need not be meticulously detailed to survive
appellate review:
If the district court has articulated and clearly
applied the criteria . . ., we will not require the
trial court’s findings to be so excruciatingly explicit
in this area of minutiae that decisions of fee awards
consume more paper than did the cases from which they
arose.
Louisiana Power & Light Co., 50 F.3d at 331 (quoting Blanchard v.
Bergeron, 893 F.2d 87, 89 (5th Cir. 1990)). As this Court stated
in Cobb v. Miller, 818 F.2d 1227 (5th Cir. 1987):
12
while our cases indicate that the district court must
utilize the Johnson factors in its analysis on the
issue of attorney’s fees, we are not required to
reverse summarily a district court finding which omits
discussion of one of the Johnson factors so long as the
record clearly indicates that the district court has
utilized the Johnson framework as the basis of its
analysis, has not proceeded in a summary fashion, and
has arrived at an amount that can be said to be just
compensation.”
Id. at 1232.
Moreover, a review of each Johnson factor demonstrates that
the district court was justified in its decision to adjust
Shiver’s lodestar upwards by a multiplier of two.
1. The time and labor required
Of the total attorney time spent handling this case,
Shiver’s contribution of time (as a percentage of the lodestar)
is approximately 10%. However, Shiver’s time records reveal that
of the 350 hours he billed to this case, substantially more than
half were spent “receiving and reviewing” documents prepared by
others and on telephone conversations after receiving those
documents; approximately 25% of the remaining hours were spent
attending depositions that he did not take; preparing for or
relating to mediation, at which he was also not the lead lawyer;
and doing legal research; and the remaining 15% or so were spent
on various matters such as making court filings, preparing and
sending cover letter correspondence and faxes, and attending two
hearings. (Rec. 1724-1743, 1995-2001, 2017-2056). In addition,
pursuant to the Local Rules of the Northern District of Texas,
Shiver had to be “authorized to present and to argue the client’s
13
position at any hearing called by the Court on short notice.”
Shiver’s services averaged about 1.6 hours per week.
2. The novelty and difficulty of the questions
Although this case involved novel and difficult questions,
the substantive ERISA work was performed by lead counsel not
Shiver.
3. The skill requisite to perform the legal service properly
Shiver is a competent attorney. However, Shiver, as local
counsel, prepared no independent work product and appeared before
the court only in a limited role.
4. The preclusion of other employment by the attorney due to
acceptance of the case
Shiver passed up some contingent fee work, such as
representation of some plaintiffs in breast implant litigation,
due to his participation in this case.
5. The customary fee
Initially, in his fee declaration, Shiver submitted that
“the fair and reasonable hourly fee that is charged by other
attorneys with an excess of 20 years trial experience is $275 per
hour to act as local counsel in a case of similar magnitude and
difficulty as this case.” Later, Shiver claimed that the
customary award of a contingent fee was somewhere between 15 and
14
33 1/3 percent of the total fee. The district court awarded
Shiver $550 an hour for his services.
6. Whether the fee is fixed or contingent
“The fee quoted to the client or the percentage of the
recovery agreed to is helpful in demonstrating the attorney’s fee
expectations when he accepted the case.” Johnson, 488 F.2d at
718. When he accepted the case, Shiver had an expectation that,
in the event of a contingency fee, Bruce would apply, on Shiver’s
behalf, “for a multiplier of at least 2.0.” Appellant, of
course, counters that in 1995 Bruce told Shiver he would receive
ten percent of the common fund, for a multiplier range of between
4.6 and 8.2.
7. Time limitations imposed by the client or the
circumstances
The district court’s order does not list this factor as one
that influenced its decision. However, it does not appear that
any such limitations existed.
8. The amount involved and the results obtained
There is no question that the amount involved here is
substantial and that the results obtained are extraordinary.
However, the district court felt that lead class counsel “pulled
the wagon” and “took the chances.”
15
9. The experience, reputation, and ability of the attorneys
All class counsel are experienced lawyers. Shiver does not
contend, however, that he possesses significant experience in
ERISA and class action litigation.
10. The “undesirability” of the case
Shiver admits that this is a desirable case.
11. The nature and length of the professional relationship
with the client
Shiver had no relationship with the clients in this case.
12. Awards in similar cases
The district court did not discuss this factor, and Shiver
does not provide an example of an award in a similar case.
The majority of these factors demonstrate that lead counsel
really did “pull the wagon” and supports the district court's
actions. Indeed, as some of these factors favor Shiver, the
district court did increase (rather than decrease) Shiver’s
lodestar by a multiplier of two. There is no doubt that the
district court’s opinion would have benefitted from a more
thorough analysis of the Johnson factors; however, the decision
is adequately supported by the record. As a result, this Court
finds no abuse of discretion on the part of the district court.
Shiver further argues that the district court abused its
discretion by awarding him a specific portion of the common fund,
16
leaving the remainder to be allocated by lead class counsel.6
This Court, however, upheld a similar award in Longden v.
Sunderman, 979 F.2d 1095 (5th Cir. 1992). In Longden, class
counsel (Susman) filed a joint petition on behalf of all class
counsel for fees benefitting the class as a whole. Then, one of
the class counsel (Massie) disagreed with Susman’s calculations
and filed her own petition fee. The district court awarded the
full amount of attorneys’ fees requested by Susman (27.5 % of the
settlement funds), but excluded Massie and awarded her a stated
sum amounting to 40% of her requested fee (to be paid out of the
27.5%). Massie argued that the district court erred when it
awarded a percentage amount to the Susman attorneys and then
excluded her from sharing in this award. This Court held that
the district court acted well within its discretion in
apportioning an aggregate award of 27.5% by awarding a single sum
to the Susman attorneys that was based on their collective
efforts (“leaving apportionment up to the Susman attorneys
themselves”) and apportioning another sum to Massie (which was
less than she had requested). Id. at 1101.
CONCLUSION
Although anyone who has seen the movie “Babe” recently might
be offended by the district court’s insensitivity to the plight
of swine, the court did not abuse its discretion. Shiver cannot
6
Shiver does not argue that the district court lacked discretion to make a lump
sum attorney’s fee award to all class counsel and then allow counsel to divide the
total award among themselves in accordance with their contractual agreements.
17
argue that the same 1991 letter agreement he disclaimed before
the district court controls this dispute. Even if he could, the
record support's the Court's decision. The district court, as
was its duty, independently evaluated the value of Shiver’s
contribution to this case and then entered an award consistent
with that contribution. The Court was justified in its
evaluation of a fair value for counsel's labor.
For the foregoing reasons, the holding of the district
court is AFFIRMED.
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