Opinion ID: 685182
Heading Depth: 3
Heading Rank: 4

Heading: Objector-Appellants

Text: 44 The Welches generally challenge the fee award to class counsel, and they argue the court erred in failing to appoint a guardian ad litem to protect the interests of the class in the fee award proceedings. The Welches' counsel also argue that the district court erred in denying them the opportunity to apply for a fee award, and in rejecting the special master's recommendation to award them some fees. 45
46 We have effectively mooted many of the Welches' specific arguments concerning the district court's calculation of Class Counsel's fee award by reversing the district court's decision on this matter and holding that the percentage of the fund selected by the special master provides a reasonable fee. 14 47 One argument we must still address is the Welches' claim that no interest should be paid on the fee awards, or, if interest is paid, that it should not exceed that paid on the settlement fund itself. The district court awarded interest on fee payments to accrue at the current statutory rate of 3.54% compounded annually. Mem.Op. & Order at 19, Appellants' J.A. at 1523. The Welches essentially seek the reinstatement of the special master's interest calculation, for he awarded each fee applicant a portion of the interest on any settlement funds on deposit, as determined by multiplying the appropriate percentage [of the total fee award] for said applicant times 22.5% of the total amount of interest earned. Report at 32, Appellants' J.A. at 1488. We agree that such an award of interest is appropriate in this case, and direct interest to be calculated on that basis. 15 48
49 The Welches filed a motion for the appointment of a guardian ad litem to protect the interests of the class in the fee award process. The district court denied the motion, and the Welches now argue that denial was wrong. 50 The rationale for appointing a guardian ad litem in the fee award proceeding following the settlement of a case like this is that the guardian fulfills the advocate's role abandoned by the defendant: 51 Having agreed to contribute a fixed sum of money in settlement of the suit, the proportion of the fund allocated to counsel fees is of no moment to the defendants. Consequently, defendants do not participate in the fee determination proceedings. The unfortunate result is the necessity for the judge to assume the advocate's role left unfulfilled by the defendants' departure. The dilemma thereby created for the Court finds the judge playing devil's advocate on behalf of the disinterested defendants, while at the same time attempting to exercise his impartiality in making a just determination of reasonable fees. 52 Haas v. Pittsburgh Nat'l Bank, 77 F.R.D. 382, 383 (W.D.Pa.1977). While the need may indeed be compelling in some cases, we find few cases in which courts actually use guardians ad litem. See Lu, supra, at 64 (A survey of reported cases reveals that there are few examples of judges appointing a class guardian in a fees dispute.). 53 In this circuit, we have observed that [t]he trial judge in a common fund case must 'act as a fiduciary for the beneficiaries' of the fund. Brown, 838 F.2d at 456 (quoting Report of the Third Circuit Task Force, Court Awarded Attorneys Fees, 108 F.R.D. 237, 251 (1985)); see also Uselton, 9 F.3d at 854. There is no indication that the district court failed to act in that capacity in the fee proceedings in this case. Moreover, the district court initially referred the fee applications to a special master, an impartial observer who himself could insure that the class' interests were protected. 54 Though the importance of safeguarding the class' interests cannot be underestimated, the Federal Judicial Center report [on attorney's fees in class actions] rightly questions whether such a function could be performed equally well by masters or magistrates. It is up to the individual judge's preference as to whether he uses a disinterested observer (e.g., magistrate or master) or an interested advocate (e.g., guardian). 55 Lu, supra, at 66; see also In re Continental Ill. Sec. Litig., 962 F.2d 566, 573 (7th Cir.1992) (observing that appointment of a special master in fee proceeding is especially appropriate in a case such as this that lacks an adversary setting). 56 We find no error in the district court's refusal to appoint a guardian ad litem. 57
Denial of Fees 58 The Welches' attorneys argue that the district court erred in not awarding them any fees, and in refusing to permit them to make a fee application following the special master's recommendation that they receive some fee award. The special master recommended such an award because he found their arguments challenging the fee applications of various counsel were presented cogently and competently, and that some of their arguments resulted in reductions in the fees and expenses awarded to several of the applicants. Report at 31, Appellants' J.A. at 1487. Although the district court held that no factual finding of the special master was clearly erroneous, it implicitly rejected the master's findings concerning the effect of the Welches' counsel's arguments, concluding that [t]he legal arguments presented by objectors did not contribute to maintenance of the fund. Mem.Op. & Order at 17, Appellants' J.A. at 1521. 59 The district court failed to articulate why the special master's findings concerning the effect of the Welches' counsel's arguments were clearly erroneous. Further, the record supports the master's conclusion that those arguments did in fact result in a reduction of certain fee and expense awards, and thereby benefitted the class. We therefore reverse the district court's refusal to award any fees to the Welches' counsel, and we remand for entry of an amount awarded by the special master. In view of this decision, we need not address the propriety of the district court's refusal to permit the Welches' counsel to file a fee application. 16