Opinion ID: 197312
Heading Depth: 3
Heading Rank: 1

Heading: PSC-Office Costs16

Text: 59 Appellants contend that the $913,503 fee paid to Attorney Thomas H. Foulds by the PSC for services rendered as a putative insurance expert should not have been treated as a PSC-office cost, see Order No. 520 (Jan. 28, 1994), but as an attorney fee chargeable against the fifty percent share of the attorney-fee fund already recovered by PSC members. The district court determined that Foulds, who had worked for twenty years as an insurance claims manager before attending law school, had been hired not as an attorney, but primarily to consult with PSC attorneys regarding the nuts-and-bolts interpretation of various insurance policies. The PSC concedes that Foulds handled certain litigation tasks normally performed by attorneys (e.g., depositions in the liability case against defendant Alexander and Alexander), but nonetheless insists that this was the most cost-efficient approach, especially given Foulds' intimate understanding of the pertinent insurance policies. 17 Although the parties cite no authority regarding the appropriate criteria for determining whether one in Foulds' position should be considered an insurance expert or an attorney, we are persuaded that the district court ruling constituted error in these particular circumstances. 18 60 As a general rule, a PSC member who serves simultaneously as an IRPA in a mass-tort MDL is entitled to recover separate compensation from the common fund for the legal services performed in each distinctive role. See Thirteen Appeals, 56 F.3d at 300 n. 2. The prospect of more lucrative returns for their services prompted many IRPAs to compete for these coveted PSC appointments in 1987, respectively urging upon the district court their particular experience and expertise in previous mass-tort suits. See Nineteen Appeals, 982 F.2d at 605 ([A]ppointment to the PSC was much coveted....). 61 On the other hand, all the unsuccessful IRPA candidates for PSC appointment must nevertheless contribute toward defraying PSC attorney fees/costs, since the district court's decision to establish a PSC diverts a significant portion of their respective contingent fees toward funding the PSC. Cf. id. at 310 (noting that though the PSC may be a necessary concomitant to skillful case management of mass tort suits, it nevertheless significantly interferes with [the respective IRPAs'] expectations regarding the fees that his or her client has agreed to pay). Accordingly, due regard should be had for these nonmember-IRPAs' diminished fee expectations, at least to the extent that the judge ... attempt to avoid any perception of favoritism in mediating disputes between PSC members and nonmember IRPAs. See Nineteen Appeals, 982 F.2d at 605. 62 At the time the nine original PSC members were appointed, from among forty applicants, the district court expressly directed, inter alia, that the PSC shall neither be enlarged nor diminished in size or membership without Court approval, Pretrial Order No. 127, at 29, that the PSC conduct all pretrial liability and damage discovery, id. at 30, and that only two members of the PSC, or counsel duly authorized by them, may question [ ] deponent[s], id. Given the acknowledgement by the appellees that Foulds, on occasion, served as a de facto PSC attorney without prior district court authorization, his retention, to that extent at least, directly contravened the explicit pretrial orders prohibiting any de facto expansion of PSC membership. Thus, the district court's subsequent authorization of reimbursement to the PSC for the Foulds fee as an insurance expert cannot cure the PSC's unauthorized, unilateral expansion of its attorney ranks, without inviting similar circumventions in the future. 63 We therefore reject the suggestion that we remand to permit the district court to apportion the $913,503 fee as between the insurance expert and attorney services performed by Foulds. We wish to make clear, however, that the PSC was not precluded from retaining Foulds based on a reasonable belief that he was the best qualified insurance expert available, simply because he happened to be an attorney. Nonetheless, once the PSC did retain Foulds, it owed nonmember IRPAs a duty of fair dealing to ensure that he undertook no unauthorized attorney tasks which might have been performed by some disappointed candidate for PSC membership.