Forbush v. J C Penney Company

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.

18