Source: http://il.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19881014_0040195.C07.htm/qx
Timestamp: 2017-05-22 21:34:11
Document Index: 522222644

Matched Legal Cases: ['§ 78', '§ 1640', '§ 2310', '§ 7604', '§ 2000', '§ 2000', '§ 3612']

ARLIE GLEN SKELTON, ET AL., ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,v.GENERAL MOTORS CORPORATION, DEFENDANT-APPELLEE. APPEALS OF SACHNOFF, WEAVER & RUBENSTEIN, LTD. AND LAW OFFICES OF BEVERLY C. MOORE, JR
Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 79 C 1243, 80 C 2151, and 85 C 4805--John A. Nordberg, Judge.
Traditionally in the United States, parties to a lawsuit bear their own expenses. Thus, each litigant must pay its own attorney's fees without regard to the outcome of the litigation. This has become known as the "American Rule." By contrast, for centuries British statutory authority has allowed an award of fees and costs to the prevailing party. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247-64, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975) (thoroughly discussing the history and present status of attorney fee awards). The American Rule continues to govern most of the cases in this country. However, there are many cases where the court may determine not only the amount of fees but which party shall pay them, based on statutory requirements or equitable doctrines. In some of these cases the court's determination may take the place of, supersede or modify fee agreements between a party and its counsel.
For example, Congress has created exceptions to the American Rule by inserting fee-shifting provisions in certain statutes. See, e.g., 15 U.S.C. §§ 78i(e), 78r(a) (Securities Exchange Act of 1934); 15 U.S.C. § 1640(a) (Truth in Lending Act); 15 U.S.C. § 2310(d)(2) (Magnuson-Moss Act); 42 U.S.C. § 7604(d) (Clean Air Act); 42 U.S.C. § 2000a-3(b) (Civil Rights Act of 1964, Title II); 42 U.S.C. § 2000e-5(k) (Civil Rights Act of 1964, Title VII); 42 U.S.C. § 3612(c) (Fair Housing Act). Thus, a plaintiff that prevails in an action brought under a statute with a fee-shifting provision recovers the amount of its attorney's fee from the defendant.
In contrast, when a case results in the creation of a common fund for the benefit of a plaintiff class, a court will exercise its equitable powers to award plaintiffs' attorneys' fees out of the fund. Alyeska, 421 U.S. at 257-58. In this type of case, the defendant deposits a specified amount with the court for the benefit of the class in exchange for release of its liability. The attorneys' fee award is then taken as a share of the fund, thereby diminishing the sum ultimately retained by the plaintiff class. Similar to the way a plaintiff's attorney may be compensated by a contingent fee, a plaintiff class pays its attorneys by sharing its recovery with them.
Because there is a difference between statutory fee-shifting cases and common fund cases with respect, inter alia, to who bears the direct burden of compensating plaintiffs' attorneys, different policies may govern the two types of cases. The common fund doctrine (also known as the "equitable fund" doctrine and the "fund-in-court" doctrine) is "based on the equitable notion that those who have benefited from litigation should share its costs." Report of the Third Circuit Task Force, Court Awarded Attorney Fees 14 (Oct. 8, 1985), reprinted in Appendix of Appellants at 435, 453; see Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 62 L. Ed. 2d 676, 100 S. Ct. 745 (1980) ("[A] litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole."); Insurance Co. of N. America v. Norton, 716 F.2d 1112, 1115-16 (7th Cir. 1983). Statutory fee-shifting provisions, in contrast, reflect the intent of Congress "to encourage private enforcement of the statutory substantive rights, be they economic or noneconomic, through the judicial process." Report of the Third Circuit Task Force, Court Awarded Attorney Fees 15 (Oct. 8, 1985), reprinted in Appendix of Appellants at 454. Defendants who have violated plaintiffs' rights may be required to compensate plaintiffs for the costs incurred in enforcing those rights. Thus, in statutory fee-shifting cases, only parties (usually plaintiffs) may seek reimbursement whereas in common fund cases attorneys may seek compensation.
The district court in this case reasoned, however, that "regardless of any theoretical distinctions between common fund and statutory fee cases, the courts in this circuit employ the same general standards to calculate attorneys fees in both types of cases." Skelton, 661 F. Supp. at 1376. To the extent that, in this circuit, both fee arrangements generally require the court to employ the lodestar approach, this observation is correct. See, e.g., Gekas v. Attorney Registration & Disciplinary Comm'n, 793 F.2d 846 (7th Cir. 1986) (statutory fee case); In re Folding Carton Antitrust Litigation, 84 F.R.D. 245 (N.D. Ill. 1979). However, when a court must decide whether ...