Opinion ID: 338426
Heading Depth: 2
Heading Rank: 1

Heading: Fee Application and Appeal

Text: 17 The propriety vel non of an award from the fund for services relating to the fee application itself 6 turns on considerations of the basis for, and the nature of, the award from the settlement fund. 18 Federal courts have long recognized the historic power of equity to permit the trustee of a fund or property, or a party preserving or recovering a fund for the benefit of others in addition to himself, to recover his costs, including his attorneys' fees, from the fund or property itself or directly from the other parties enjoying the benefit. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257, 95 S.Ct. 1612, 1621, 44 L.Ed.2d 141 (1975); see, e. g., Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939); Central Railroad & Banking Co. v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885); Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 (1881). See generally 7A C. Wright & A. Miller, Federal Practice and Procedure § 1803 (1972); Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds, 87 Harv.L.Rev. 1597 (1974) (hereinafter cited as Dawson). As we said in Lindy I, (t)he award of fees under the equitable fund doctrine is analogous to an action in quantum meruit: the individual seeking compensation has, by his actions, benefited another and seeks payment for the value of the service performed. 487 F.2d at 165. Accordingly, a benefit to the fund is supposedly required. . . . The standard formula (of benefit) . . . mix(es) together three distinct ideas: that a fund can be benefited by being 'created, increased or protected' (or 'preserved'). Dawson at 1626. Generally, where litigation involves the competing interests of claimants to a common fund, no attorneys' fees should be awarded. The reason is that, if the interests are in conflict, success for one side means no benefit for the other and for a charge against a fund a benefit is required. Ibid. at 1638 (footnote omitted). 19 We subscribed to these general views in Lindy I, where we said: 20 (T)here are two possible causes of action that may be urged as the basis for award of attorneys' fees. One of these causes belongs to the plaintiff who brought the underlying suit. His claim is that by instituting the suit he has performed a service benefiting other class members. . . . 21 The second cause of action for award of attorneys' fees under the equitable fund doctrine belongs to the attorney. The attorney's claim is that his conduct of the suit conferred a benefit on all the class members, that one or more class members has agreed by contract to pay for the benefit the attorney conferred upon him, and that the remaining class members should pay what the court determines to be the reasonable value of the services benefiting them. 22 487 F.2d at 165; 7 see SEC v. Aberdeen Securities Co., 526 F.2d 603, 607 (3d Cir. 1975); cf. Merola v. Atlantic Richfield Co., 515 F.2d 165 (3d Cir. 1975) (Merola II ) (discussing non-pecuniary benefit as factor affecting lodestar award). 23 The district court concluded that time spent in pursuing the fee application was a part of the administrative expense necessarily incurred in administering the fund. . . . Services performed in this connection are indeed of benefit to the class as a whole because they enable the Court to make its determination on the basis of a full and accurate presentation of all relevant facts. 382 F.Supp. at 1012. 24 Services performed in connection with the fee application are necessary to the attorney's recovery. They benefit him, for without them, the attorney cannot, since Lindy I, recover. But such services do not benefit the fund they do not create, increase, protect or preserve it. Accordingly and in the circumstances of this case, we accept the prevailing rule for litigation involving the competing interests of claimants to a common fund. See page 110, supra. There being no benefit to the fund from services performed by appellees in connection with their fee application, there should be no attorneys' fee award from the fund for those services. The district court, therefore, erred in awarding $29,806.25 for the fee application work prior to March 20, 1974, in awarding $40,654 for work after March 20, 1974, and in awarding $320 for fee application work by paraprofessionals and law students. 25 Having made a determination of the applicable rule of law for the case before us, it is important to emphasize that which is not before us. We do not decide today what the rule should be where the fee application is pressed by the client himself, and competing interests among claimants surface. Cf. Dawson 1634 n.126. Nor do we decide the rule for the situation where a competing claimant to a common fund persuades the court in the first instance to set an attorney's fee inadequate under Lindy I, thereby necessitating an appeal. 8 We specifically reserve these issues.