Fed. Sec. L. Rep. P 98,138
CLASS PLAINTIFFS; Chemical Bank, in its representative
capacity as Trustee for Bondholders, Plaintiffs,
and
Cоntinental Assurance Company; et al., Plaintiffs-Appellees,
v.
JAFFE & SCHLESINGER, P.A.; Ginsburg, Feldman & Bress;
Ferguson & Burdell; Weinstein, Hacker, Yost,
Berry & Mathews, Appellants,
v.
CITY OF SEATTLE; Oregon Public Entities, Benton Rural
Electric Association, Washington; Washington Public Power
Supply System; R.W. Beck and Associates; Ebasco Services
Incorporated; United Engineers & Constructors, Inc.;
Director Defendants, Participants' Committee
Defendants; Public Utility District No. 1, of Klickitat
County; United States of America, on behalf of itself and
its agency, The Bonneville Power Administration; State of
Washington; Bonneville Power Administration, Defendants-Appellees.
No. 91-16679.
United States Court of Appeals,
Ninth Circuit.
Argued and Submitted June 14, 1993.
March 23, 1994.
Robert H. Jaffe, Springfield, NJ, for appellants.
Ann Acker, Chapman and Cutler, Chicago, IL, for plaintiffs-appellees.
Appeal from the United States District Court for the Distriсt of Arizona.
Before: NORRIS, WIGGINS, and LEAVY, Circuit Judges.
PER CURIAM:
In this companion case to Nos. 91-16669, 91-16685, and 91-16687,
Haberman counsel agreed with the class action plaintiffs that Haberman counsel would seek an award of attorneys' fees and reimbursement of expenses incurred out of the settlement fund created for Class Plaintiffs in the federal litigation ("MDL 551"). In exchange for the right to apply for fees and expenses out оf the settlement fund, Haberman counsel agreed to waive the contingent fee arrangements made part of retаiner agreements entered into with their nearly 300 individual and institutional investor clients and to reimburse their clients for the litigation feеs advanced out of such fee award.
The Haberman action was never part of the MDL 551 action, but instead was pаrallel litigation. By its terms, however, the settlement of MDL 551 also resolved the Haberman litigation. Haberman counsel sought remuneration totalling $2,091,015.20 out of the MDL 551 settlement fund, arguing that their efforts in the state proceedings conferred benefits on the class.
The district court described the benefits asserted by Haberman counsel as follows:
(a) Their activities eliminated any pоtential for res judicata or collateral estoppel defenses that might be raised as a result of the Washington State Supreme Court's decision in Chemical Bank v. Washington Public Power Supply System ("Chemical Bank II "),
(b) They established an expansive definition of "seller" for purposes of the Washington State Securities Act (WSSA) that would encompass the Supply System, its 23 members, the 88 participating utilities, and professional defendants, and ensure the Act's applicability to them in MDL 551.
(c) They were first to name Ernst & Whinney, in May 1984, as a party defendant in either action. Later sued in MDL, as well, this defendant contributed $6.5 million in settlement.
(d) They alleged derivative negligence claims against the Professional defendants that were eventually assigned tо Class Plaintiffs in MDL as part of the settlement.
(e) They helped organize the WPPSS 4/5 Bondholders' Committee which later brought an action, known as Hoffer v. State, against the State of Washington. In Hoffer the Washington Supreme Court, relying in large part on its prior Haberman decision, held that bondholders had the right to establish liability against the State on certain claims. As a result, the State latеr contributed $10 million to the settlement of MDL 551.
(f) They supported state appellate arguments by counsel for the Haberman Intervenors concerning common law negligent misrepresentations and fraud claims. Such claims were later certifiеd in MDL 551.
(g) They challenged the constitutionality of the "Scienter Amendment" to the WSSA before the Washington State Supreme Court and the United States Supreme Court, preserving the issue for review in the event plaintiffs (in MDL 551 or in Haberman ) were unsuccessful in establishing liability under a scienter standard.
In re Washington Pub. Power Supply Sys. Sec. Litig.,
Attorneys' fees awards are generally reviewed for an abuse of discretion. Bernstein v. City of Seattle, [Nos. 91-16669, 91-16685, 91-16687, op. at 9] --- F.3d ----, ---- (9th Cir.1994); Drucker v. O'Brien's Moving & Storage, Inc.,
Although the district court сonceded that the Haberman counsels' efforts may have benefited the Class Plaintiffs, it concluded that the litigation undertаken by the Haberman counsel was not sufficiently related to the class action involving Class Counsel. The court found that
the stаte court proceeding was an independent, somewhat parallel action in a different forum. It was not undertakеn by MDL Counsel. It was not waged on behalf of the entire Class, and the entire Class would not have shared all potentially attainable benefits. The two actions were distinct and detached. Thus, while the cases may have been "related," the relatiоnship was attenuated.
WPPSS II,
The Haberman counsel did not represent the Class Plaintiffs in MDL 551, but represented distinct plaintiffs in another proceeding in state court. No money judgment or settlement fund was generated in that litigation. We know of no authority which mandates an award of fees to attorneys nоt formally representing the class, whose activities in representing others incidentally benefit the class.
We distinguish two cases relied on by the Haberman counsel. Sprague v. Ticonic Nat'l Bank,
AFFIRMED.