Opinion ID: 3168179
Heading Depth: 3
Heading Rank: 2

Heading: The Common Fund Doctrine is Applicable to

Text: RCFC 23 Class Actions Because we find a common fund exists, we turn to the applicability of the common fund doctrine to RCFC 23 class actions. That is a question of law subject to de novo review. See Capital Bancshares Inc. v. Fed. Deposit Ins. Corp., 957 F.2d 203, 209 (5th Cir. 1992). The Government argues that even if we were to find that the “settlement created a ‘common fund,’ the common-fund doctrine still does not apply because there are no non-clients who benefit from class counsels’ efforts in [RCFC 23] class-actions.” 17 Government Br. 38 (emphasis added). In response, the Haggarts argue the circumstances of this case render the application of the common fund doctrine apposite. Specifically, the Haggarts assert that “[c]lass [c]ounsel obtained a sizeable recovery that benefits all of the class members, and equity demands that all class members contribute to [class] [c]ounsel’s compensation.” Haggart Br. 39. The Haggarts also argue that 17 RCFC 23 requires potential class members to optin to the class, whereas FRCP 23(b)(3) class actions are opt-out class actions. See Newberg § 9:48, at 551–53 (“The default rule in class actions is that a class member is included in the class unless she excludes herself; a court cannot, therefore adopt the reverse rule––that only class members who include themselves are part of the class.”). HAGGART v. UNITED STATES 29 “RCFC 23 does not require opt-in class members to share the litigation expenses” and “[c]lass [c]ounsel d[id] not have a fee agreement with all of the class members (although all class members were made aware of the agreement) and all stand to recover substantial sums from the United States.” Id. at 42. The Government’s contention that, because RCFC 23 requires potential class members to opt-in to the class, there can be “no non-clients who benefit from class counsels’ efforts,” Government Br. 38, presents a distinction without a difference. Here, class counsel initially had a thirty-five percent contingency fee agreement with some class members before the class was certified. Haggart IV, 116 Fed. Cl. at 137–38. However, upon certification of the class, “although all class members were made aware of the agreement,” class counsel did “not have a fee agreement with all of the class members.” Haggart Br. 42 (emphasis added). Thus, the fact that these members opted-in and were therefore “parties” to the litigation is irrelevant. Rather, in considering the application of the common fund doctrine, the relevant question is whether an inequity exists. See Boeing Co., 444 U.S. at 478. Of the 253 class members entitled to compensation, we count only sixty-eight members as signing the contingency-fee agreement. Although 253 individuals opted-in to the class, it is clear that 185 (approximately 73%) of those members are not differently situated from absentees in a FRCP 23(b)(3) class action because they were not contractually obligated to contribute to the payment of attorney[] fees incurred on their behalves. Thus, contrary to the Government’s assertion, what matters is not whether “counsel in RCFC 23 class actions can enter into agreements with each member at the opt-in stage,” but whether he actually did. Government Br. 40 (emphases added). Here, because 185 class members did not sign the contingency fee agreement, they were not contractually obligated to contribute to the costs of the litigation. Thus, 30 HAGGART v. UNITED STATES before considering how the URA impacts the application of the common fund doctrine, at this point in our discussion, it is clear that some inequity exists, at least with respect to sixty-eight members of the class. Ascribing significance to the fact that the remaining 185 members “opted-in” and were therefore parties to the litigation elevates form over substance. See Sprague, 307 U.S. at 167 (“[T]he formalities of the litigation . . . hardly touch the power of equity in doing justice as between a party and the beneficiaries of his litigation.”).