*1 POWELL, Eddie Mayor City of North Little Rock et al
v. Frank HENRY et al
79-129
Opinion (In Banc) *2 appellants. Hamilton, for Jim Tommy Rogers Harmon, H. A.
John T. Judith by: appellees. Harmon, Russell, for T. John On December Justice. John A. Chief Fogleman, County Chancery a de- entered Court of Pulaski the against brought by Henry and others cree action Frank in an mayor the man- Rock and the and aldermen of North Little holding Department, ager Electric of the North Little Rock city charged improperly electrical customers that their the ordering pro refund, $639,226.24and on a rata basis. The request fees the court denied a for allowance of attorneys representing the in the customers February 25,1977, the resulted in the decree. On stating clarification, the filed motion the action for misinterpreted prayer payment of court neys’ for attor- had their against prayer judgment the as a defendants fees fees, overcharge, when those in addition to the amount of the requested paid actually be from the had fees these 9, 1977, refunds made to the On March customers. chancery city require previous court modified decree to its pay bear all on costs the refund and interest unpaid April due retained refunds but after jurisdiction attorneys’ question of allowance of plaintiffs’ attorneys. chancery April 1, 1977, On presided payment assignment, over ordered the a chancellor on attorneys’ Harmon, $95,884.31 fees to John Tommy Rogers, represented H. who had Russell Judith chancery litigation. May 4,1977, the customers in the On regular presiding, court, with the aside this chancellor set order, 27,1978, it on a rehear- but reinstated December after ing Appellants appeal from last order or on matter. asserting following points decree, for reversal:
I MAY NOT PLAINTIFFS’ ATTORNEYS QUANTUM RECOVER ATTORNEYS’ FEES IN MERUIT, BUT MUST RECOVER ON THEIR CONTRACT WITH PLAINTIFFS.
II ACT (CODIFIED AS ARK. STATS. 84-4601) ANNO. § IS NOT APPLICABLE TO THE PRESENT CONTROVERSY.
III A REASONABLE AMOUNT OF ATTOR- *3 NEYS’ FEES SHOULD NOT EXCEED 5 PER- CENT OF THE TOTAL RECOVERY OF THE TAXPAYERS’ ACTION.
We find no reversible error and affirm the decree.
I Appellants contend the attorneys plaintiffs that for the in the action were limited recovery to the of of of 25% the the original them, relying upon Terral plaintiffs employing Poe, 346, 69, 190 Ark. 2d it S.W. insofar related to a as division of Poole. fees between Terral and We are any unable to see comparison between case and this. Poole, There attorney, accepted by Terral employment as an in the $100 associate trial of per two cases for a fee cause. When large recovery there was a rather in the two cases, sought $775.62, Poole to recover or of the total fees, on quantum the basis of that Poole meruit. We held bound by his contract and limited to the fee to which he agreed in the might contract. some prece- This case furnish dent in a attorneys contest between and the named rate these paying plaintiffs litigation. If are these clients made, complaining of the allowance it is not reflected case, record. As we understand the record in the action this action, was a recovery class which in the of a resulted sub- stantial amount which constituted a common fund. The al- attorneys’ lowance of fees from a common fund established augmented or through attorneys of the to whom efforts the fee recognized practice proper. is allowed is a well and is Rock, 316; Bradshaw v. Bank Little 89 S.W. Ark. Valley 915; Marlin Oil 531, 199 v. Ready, Co. 131 Ark. S.W. Marsh, 2d S.W. 965. City Ft. Smith We do not our holding consider that Co., Telephone Southwestern Bell 247 S.W. Ark. here, holding it to the contrary is or that is applicable just in the cases cited. to have the sought There nine cities they their for a attorneys paid proceeding refunds successfully protested a rate increase and telephone subscribers were ordered. The of that decision basis cities, that these were not the rate representing payers. quite Here the situation different. The is representing litigation against were the rate payers in city. arguing
In is point, appellants complain that it ex tremely difficult for the court to determine the value service of these attorneys, in view of fact did not keep time records only provided subjective self-serving estimates the time on the Ap case. pellants then assert that the burden of accurate and providing ascertainable records of time spent on behalf should be on these attorneys. argument, only This which is stated, without citation authority, convincing is not *4 State, might be disposed of under the rule of Dixon well 857, 260 Ark. 2d S.W. 606. It would have been desirable records, to have had time they if kept, were but there is not now, been, and never has of procedure rule law or in this state that requires submission of time support records of request for payment of attorneys’ fees. While the time spent is an important element to be in determining considered the services, reasonable value of an it is not the con trolling factor and is sometimes a one. Love F. v. U.S. minor Co., & G. 263 Ark. recently S.W. 2d 746. We have had occasion to address our to the of relationship attention time records and the of expenditure time relation the allowance of attorney’s fees in Lytle Lytle, 266 Ark. (1979). S.W. 2d 1 There we found that other were factors just as important as the time devoted to a case. In Marlin Marsh, supra, pointed we out that the amount of the recov- court properly that the trial
ery important was and indicated counsel, nature and the ability took into consideration the the result obtained. extent of the services rendered and here, whose action made chancellor who the allowance chancellor, these factors by regular the took was reinstated should not be Although such allowances into consideration. basis, they be such that contingent on a should entirely accept employment would not refuse to competent lawyers Co. v. Alexan- Old Insurance Republic in cases of this sort. der, Naturally, uncer- the 436 S.W. 829. tainty is element to be considered recovery of ultimate do consider We accomplishing purpose. on a recovery put the allowance allowance 15% of dis- means contingent appropriate fee basis. It was an tributing the burden.
II 822 of that Act agree appellees We with appellants effective, after the passed, which was became case, is entry inapplicable. decree in this original Furthermore, do decree to be based we not understand the upon the act.
Ill the failure of the Appellants again emphasize according out that keep They point detailed time records. 25 hours to their estimated that he testimony, Harmon week, week, Rogers per per estimated 12 hours Russell week, pend- average during of 10 per estimated hours multiplying ency Appellants then calculate cases. 16 weeks that the these hours for the period estimated hour, which $75 a factor of pending per at the say shown to be reasonable two- $58,800, is than less hearing, produces total award, considerably more than thirds but *5 time rec- accurate Although consider appellants reasonable. considering the reasonable- would have been in helpful ords case, our position in it is ness of the fee allowance consid- in such only significant time is one factor case are Lytle Lytle, in this v. Other factors supra. erations. equal least consid- carry at in importance, may perhaps erably greater weight. position seek to for their
Appellants establish a basis that 5% the refund was allowance a reasonable fee to referring involving us cases class where fund actions $137,600 ranged $7,200,000 involved from to and attorneys’ fees were not allowed a By basis. arithmetical percentage calculation arrive from percentages ranging at 4% 5% cases, of the funds involved in those allowed against in this case. reduc- Appellants then somehow translate our $15,000 $10,000 tion from apartition allowed in Scott, (Cole 149) suit 264 Ark. 2d into 575 S.W. expression of this court’s intention that will consti- 4% 5% tute the outer perimeters of chancellor’s in discretion awarding attorneys’ fees from a common fund. We find no language that opinion of any indicative such intention. As fact, a matter of we are not aware of any recent decision which this court has passed upon attorneys’ allowances of fees where the percentage of or recovery the fund has been given any significance. We pertinent have enumerated fac- See, tors on several occasions. e.g., Lytle Lytle, supra; Robinson v. Champion, 677; 2d S.W. Equitable Rummell, Society Assurance Ark. Life S.W. 224. chancellor,
It seems to us that the assigned whose award chancellor, was regular reinstated took into many consideration of these He made these factors. find- ings:
1. There been has a substantial economic benefit class; bestowed upon the
2. There personal was professional hardship record; incurred by the 3. There vindication an economic right; 4. ligitation novel;
5. The plaintiffs’ case was difficult and there was case; time substantial devoted to the 6. Counsel possessed extraordinary skill com- petence. dealing
John Harmon testified about experience his *6 utility pro- with with and rates and class actions anti-trust ceedings gen- practice public utility previous and his law erally. anticipated upon practice He a in harmful effect his North attitude Little Rock because he detected adverse city ap- toward him members council when he of the peared practice he before them in connection with his after necessity engaged litigation. became for in this He related the lengthy discovery processes protection the of confi- and gained employees dential from of the sources of information department, complex. electric the as classified Expert testimony given Messrs. Walter David- County son and Price of the Bar Association. Dale Pulaski utility experience public practice Davidson told of in his scarcity period years, a to and of over three four the attorneys engaged type practice, in that he called a per “specialty-type” rate hour $70 item. He considered a figure designed promote in that a work as a conservative to higher continuing relationship client, but felt that a with a appropriate this, the where basis in a case such relationship In his was not factor. establishment of such a opinion, any collecting considering the and the fact that results upon dependent of the termination fee was a favorable litigation, recovery He consid- of the was reasonable. 25% experience complexity case, of the attor- ered the of the the urgency neys accomplished, involved, of the the the results continuing case, lost, client of a other business the lack relationship contingency compensation as the of the fixing pertinent of the fee. factors in the amount utility specialized rate Price the nature of considered lawyer-client continuing prospect cases, the of a of a lack contingency urgency relationship, case, of the the entity political against in fee and the fact that the suit was recovery arriving opinion 20 to of the at that a fee of his opinion expressed fees He that would be reasonable. hourly upwards” per hour, fair were a $100 “even $75 hourly fixing rate, locality, in the and said rate discarding necessity political potential other factor, urgency important business, factors case were hourly $100, determining $75, rate should be whether more. or even us,
In view of the record
say
before
we are unable to
there was
abuse of discretion in the allowance of attor-
’
case,
neys which we should have
do in order
*7
modify
reverse or
that award. An
in
important
factor
our
consideration of the fee allowance in
is the
this case
realiza-
tion that inadequate compensation
attorneys
will cause
who
it,
are
competent
handle this
of
to shun
or if
type
it,
they accept
fail to devote
adequately
sufficient
time to
prepare
present
or
the case. This is an
consid-
appropriate
eration in
of
Republic
Old
Insurance Co. matters
this sort.
Alexander,
245 Ark.
The trial court had making considerable discretion in allowances. We are say unable to that the fees allowed were indicative any abuse the discretion of the chancellors. The decree is affirmed. J., not participating.
Hickman, McAllister, Jr., Special A. Justice D. in.part concurs and dissents in part. Jr., Justice,
A. D. in concurring Special McAllister, part, dissenting part. appeal On this second this case claim fees in the appellants that the allowance of $95,884.31 efforts in a amount to three whose fund of taxpayers’ class action had established common $639,226.24 first is appeal and excessive. The improper Powell, Henry 561 S.W. reported in regu from the appeal (1978), this court reversed wherein chancellor’s setting special aside a lar chancellor’s1 order fee) appealable of an want (initially allowing order Powell, was handed Henry supra, opinion order. The Thereafter, 13,1978. regular chancel February down pay order approving chancellor’s special lor reinstated of the fee. ment bar, county representing
Three of the Pulaski withdrew) on a (5 subsequently whom 12 named recovered, filed a amounts contingent fee basis similarly situated” for their clients and “all others complaint moneys alleged to have accounting and refund of all of North department exacted the electric illegally been attorney’s fees. recovery Little Rock and for reasonable *8 in the best person court has the one This said fees to award of position evaluate and make an were the chancellor before whom the entire proceedings 817, 475 S.W. Champion, conducted. Robinson v. 251 Ark. (1972). intimately acquainted 2d 677 is more And that no one per- services with the formed, the character of the proceedings, than part and the who took Marsh, & tried the case. Marlin v. Marsh the chancellor who (1934). 76 965 S.W. to though usually superior Even defers court of the trial assessment of the various perspective judge enumerated in determina majority opinion any factors fees, not hesitated tion reasonable we have when, upon based reduce an allowance for record, for the adequate the entire we cannot find support Equitable Society the United Assurance allowance. Life Runnell, 90, 514 (1974). States Willie 257 S.W. 2d 224 Ark. case did not originally Since the chancellor who heard this attorney’s fees, allowance of a review of the entire make the Hickman, reported in Judge as Judge Bullion regular 1 The chancellor was assigned by Powell, order Judge Taylor special chancellor Henry supra. was the through April 28 March justice the week of hold courtfor chief of this disqualified properly Judge Judge Hickman Bullion. in the absence Powell, Henry case. well as in this himself transcript of the trial court is in order. original complaint August 10,1976 was filed on
subsequently interrogatories, requests amended. No objections responses facts, thereto, admissions of or or dis- covery depositions are A shown in the record. motion for preliminary hearing, page answer, answer, amended summary pre-trial memorandum and brief and motion for judgment city. 8-page were filed filed An brief was attorneys. Although one for the three a summons was issued appearance bookkeeper of the North Little Rock testify on behalf of the at trial on November hearing 1976,there nois evidence in the record that the stenographically recorded. appropriately plead- 17, 1976,
On November under the ings, appointed attorney, Jerry Jackson, the trial court D. chancery evidence, as master in “to examine the hold hearings, investigate the records ... or do other acts necessary report charges to determine what the extra . . were. findings
to the court his in dollars and cents ...” The study specified order instructed the master to certain among exhibits others and authorized the master to hire an necessary. page report accountant if The master filed his and on December Judge 28, 1976, December finding Hickman entered a final order that the master’s re- *9 port “accepted objections by party”. without either The city city’s order $639,226.24 directed the to refund to the pro-rata electric customers on a of basis. The master’s fee approved, plaintiffs $1500.00 for 14.1hours of work was but request attorney’s for fees was denied. Judge
As Hickman a became member of court this on January remaining proceedings 1,1977, the the trial court by Judge Judge Bullion, were conducted elected to succeed by Judge Taylor, Hickman, special and the chancellor. my opinion, attorneys In the three should be al- lowed a fee for their to efforts obtain or to enforce collection proceedings of their own fees. The record of the before the trial court reveals the of efforts the master and the may itself have well of exceeded the “in court” efforts the of the fund leading to the establishment attorneys
three of the three 30, of court” efforts 1976. The “out December the fund is not the of attorneys leading to establishment sufficiently documented. for the prayer compliant Since the plaintiffs ’ than from the city from the rather
recovery attorney s fees Hickman why Judge it readily apparent common fund is to statutory authority existing was no concluded that there city. against assess to effort” serious John Harmon testified the “first amount recover fees in excess March for the 8 named came after plaintiffs recovered Act 822 of which authorized the effective date of refund actions taxpayer fees for the of record in or county, city town before illegally by monies exacted class. of the to the members distribution balance at fund is shown establishing The order the common remaining pages page transcript. 157-8 of the 395 exclusively efforts of pages reflect and almost principally of their the three to and enforce collection obtain garnishment. execution efforts include the These two appeals special to this court and the actions taken order city Judge master and the with Bullion’s comply had with- city entered 1977 which found that the March rehearing drawn its and review previously filed petition Judge ap- Hickman’s order of December Price, Co., account- pointed public & certified Waterhouse ants, to the electric calculate and oversee the refunds “for By jurisdiction customers. order court retained out of plaintiffs clarification fees due pertaining the fund.”
We of 8 named considering rights plaintiffs, are here 32,400 attorneys, their 3 more unnamed rights than had no participate who did not in the the pro- notice of Most proceedings. importantly *10 which, fees, attorney’s ceedings involving thé allowance of would reduce the to the unnamed payable plain- total refund by tiffs the amount of such allowance. Judge Henry supra, Powell, noted in
This court Taylor attorney’s $95,884.31 fee of out awarded hearing April fund, 1, 1977 at on common a stenographically reported. reflect The record does not plaintiff rea- whether the unnamed had received members opportunity issue sonable notice of and an to be heard on the may attorney’s of such notice allowance fees. The lack procedural process, well due violate traditional standards process but due is not in issue here. May Judge ap- 4, 1977,
On Bullion an order entered proved Judge Taylor’s setting all of record counsel aside awarding attorney’s order court in fees which was reversed
Henry supra, Powell, appealable for want order. Judge 27,1978
After remand and on December Bullion hearing evidentiary conducted of attor- the allowance ney’s plaintiffs. fees without notice to the The unnamed expert attorneys, three and two witness who had nothing litigation, Judge do to with the all testified before stenographically reported hearing. Bullion at potential The of a class action case for abuse in award attorney’s recognized fees out of common fund first Greenough, Trustees U.S. 527 where the Su- U.S. preme attorney’s Court warned that court awarded jealous regard should be “made with moderation and to the rights of those who are interested in the fund.” numbering plaintiffs,
The unnamed 32,400, over had opportunity little or no to exercise measure of control litigation by over the conduct of the or in the three opportu- the nity allowance their fees. Without this (the and little incentive individual refunds have would per customer) been $20.00 less than the unnamed hardly expected register any complaints. could be longer belonged established, common fund itself once no city city oppose any so had little incentive to allow- ance of fees out of the fund. In both the Love and Lytle majority opinion, cases, cited in the the awards vigorously opposed adversary fees were in an *11 by represented parties proceeding both two named between attorneys. their own including
Although own, courts, have our most state involving the allowance action cases considered few class struggled attorney’s fees, with the the federal courts have years. problem many for judges group experienced prominent and
An and lawyers prepared the federal action cases in for use in class Complex Litigation.2 courts a Manual subjects associated with The states that “few Manual generated much critical the class action device have commentary years in recent as the matter exacting urges compliance standards with fees.”3 It strict by approved that awards of the courts to insure fees are not abused. determining attorney’s
Although fees the standards courts are some- in class actions enunciated the federal requiring many appellate varied, what federal courts are evidentiary hearings to award federal trial courts to hold only findings upon specific of facts based proper upon discre- standards rather than unsubstantiated coupled considered. tion with a recital of the various factors Lindy Builder, Inc. trend is Brothers
Illustrative Sanitary Corp., 487 F. 2d v. American Radiator & Standard (C. 1973), I), (Lindy case, 161 A. class action 3. an antitrust court’s “fail- in which the Third Circuit held that the district ure to hold an evidentiary hearing follow and its failure to awarding proper constituted standards in fees to listing discretion”, “the mere an abuse of and found that Complex Litigation, 1.47, reprinted § 2Manual for in Volume Part Practice, (2d pages 1948). Moore’s Federal 77-85 Ed. Miller, Wright (1976 3See7A C. § and A. Federal Practice and Procedure Supp.); Lawyers Involuntary Litigation, Clients In Public Interest 88 Harv. L. (1975); Attorney’s Litiga- Rev. 849 Fees in Individual and Class Action Antitrust tion, (1972); Handler; L. Cal. Rev. 1656 The Shift from to Pro- Substantive Suits; Twenty-Third cedural Innovations in Antitrust Annual Antitrust Re- view, (1971). 71 Colum. L. Rev. 9-10 meaningful makes the court consideration four factors guidance gives little difficult review claimants.” (C.A.2. In F. 2d 448 Grinnell, City Detroit
1974),
case, the
Circuit
also a class action
Second
observed
duty
that the
of
trial
“to
the
initial
the
court was
ascertain
attorney
spent
number of hours which the
and his firm
on
step
place
case,”
the
next
the
was “to
a value on that time
hourly
being
proper
. . . with a
index
the
rate to which
typically
like
of
skill in the area would be
entitled
given type
hourly
for a
of
on the
of
work
basis of
rate
compensation.”
court,
Like the
the
Lindy
Detroit
objective
then considered several “less
factors such as the
litigation,
evidentiary hearing
risk of
and concluded that an
of the
facts on
relevant
the issue of
fees was a
necessity.”
also
See
Georgia Highway Express,
Johnson
(C.A.
1974)
Inc.,
488 F.
and Merola v. Atlantic
(C.A.
1974).
Co.,
The Manual for states imposed impera standards in the federal decisions “make it required keep precise tive that counsel be records of the spent working specific hours case and of tasks performed which were in the time Manual recorded.”4 The also states that the award fees must be based upon upon these records and not estimates recommends beginning that the trial courts order counsel at the of the keep describing precisely action to accurate time sheets how activity much time was in each and whether the activ- Practice, page 4See Volume Part Moore’s Federal at 1.50. resolution toward of the case.
ity itself was of benefit
In the recent case of In Re Anthracite Coal Antitrust
Lit.,
(1979),
In Miller Mackey
v.
“Because the interest of specifi- the class members is cally adverse lawyers to interest of their who seek an attorney’s fund, be from the awarded settlement the class attorney members must be protected. the defendant has little concern the manner which the fund is divided. Consequently, appointed the court experienced attorney for mem- guardian as ad litem bers of the . . . class this procedure pro- both achieves tection for members of the class and enables trial judge to remain an impartial position.” Bank, See also: Haas v. Pittsburgh Nat. 77 F.R.D. (1977).
The following against my factors militate affirmance the full amount of the award of in this case:
1. The of any failure to record their time, time and furnish to the court a breakdown of who court, and in so to avoid both in and out what endeavor Corp., v. of effort. See Colson Hilton Hotels duplication 1972). Ill. (N.D. F.R.D. with attorney supply
2. The failure of one
any
relating
hourly
information
to his
rate. See
standard
Pancakes,
v.
supra.
Grunin
International House of
3. The two
who
judges
presided
hearings
over the
which resulted
the allowance of
fees had not
presided
proceedings
over the substantive
which culminated
in the establishment of the common fund. See
White
Auerbach,
(C.A.
4. Much of the leading work to the establishment of the necessarily common fund was performed by a master objection any court without of the parties. Alpine See Co., Inc., Pharmacy, Inc. 481 F. 2d Chas. & Pfizer (C.A. 1973).
5. Supervision of distribution of the per- refunds was formed a second appointed by master the court without objection of parties. Alpine See Pharmacy, Inc. Co., Inc., Chas. & supra. Pfizer
6. That no notice of the evidentiary hearing allowance of given fees was plain- the unnamed tiff members class. See In Re Anthracite Coal Anti- *14 Lit., supra. trust
7. The unnamed plaintiff members of the class not were represented by guardian counsel i.e. a ad litem at the two hearings on Cohen, the award of fees. See Flast 83, 1942, 392 U.S. 88 S. Ct. 20 L. Ed. (1968). 2d 947 hearings 8. Both on the of attorney’s issue fees resulted in an identical award of 15% the common fund suggestive of an arbitrary discount of the contingent fee contract. See v. Harper Publishers, Inc., Illinois & Row 55 F.R.D. (N.D. 1972); Ill. Manual Complex Litigation, For re 1, printed Practice, Vol. Part § Moore’s Federal 1.47 (2d 1974). Ed. shows of the trial record transcript The
9.
attorney’s time
most,
court”
of the “in
much,
not
if
of their own fees. See
collection
enforce
to obtain and
spent
Sanitary
and
American Radiator
Builders
Lindy Bros.
II).
(3d
1976) (Lindy
47 hours $95,884.31, hourly their rate On the award of 752 hours. experience qualifications $127.50. The would have been witnesses, was Davidson, two expert one of the of Walter Mr. Harmon. to that of John nearly comparable the most hourly customary testify did as to his usual Harmon not customary his testified that usual Mr. Davidson rate but had knowl- witnesses no hourly expert $70.00. The rate was attorneys. Neither of by the three of the time edge utility had handled testified that expert witnesses action cases. rate class the entire trial transcript consideration
Upon (enumer- factors light in the of the affirmative court record (enu- factors majority opinion) negative ated in attor- I would award a reasonable opinion), in this merated $52,640.00, for the in the amount ney’ fee to counsel class s court, rendered, in and both out their services De- of the fund on concluded with establishment were would award fee for 1976. I cember the three after December exerted efforts own fees. collection of their to obtain and enforce by reduction of allowance As modified $95,884.31 $52,640.00 (752 estimated hours from hour), I affirm. per would $70.00 times joins in this George opinion. Rose Smith Mr. Justice