In Re Thirteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litigation

56 F.3d 295
CourtCourt of Appeals for the First Circuit
DecidedJune 30, 1995
Docket94-1156, 94-1409, 94-1414, 94-1422, 94-1423, 94-1426, 94-1427, 94-1438, 94-1439, 94-1440
StatusPublished
Cited by144 cases

This text of 56 F.3d 295 (In Re Thirteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litigation) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Thirteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litigation, 56 F.3d 295 (1st Cir. 1995).

Opinion

SELYA, Circuit Judge.

These appeals require us to revisit the war zone where two groups of plaintiffs’ lawyers have struggled over the proposed allocation of roughly $68,000,000 in attorneys’ fees.' One camp, dissatisfied with the district court’s latest formula for distributing the fees, attacks the court’s order on three fronts. The disgruntled lawyers contend that the district court (1) violated their due process rights, (2) used an improper method to determine the awards, and (3) divided the available monies in an arbitrary and unreasonable manner. We find appellants’ first two plaints to be without merit, but we agree with them that allocating 70% of the fees to the appellees constituted an abuse of the trial court’s discretion. And, because we are reluctant to prolong a matter that, like the proverbial cat, seems to have nine lives, we take matters into our own hands and reconfigure the fee awards.

I. BACKGROUND

The lay of the land is familiar. We explored much the same terrain in an earlier encounter, see In re Nineteen Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litig., 982 F.2d 603 (1st Cir.1992), and a plethora of opinions describing the details of the underlying litigation pockmark the pages *300 of the Federal Reports, see, e.g., id. at 605 n. 1 (offering partial listing). Thus, a brief overview of the litigation will suffice.

In 1987, the Judicial Panel on Multidistrict Litigation consolidated over 270 cases arising out of the calamitous conflagration that had ravaged the San Juan Dupont Plaza Hotel on the evening of December 31, 1986. See In re Fire Disaster at Dupont Plaza Hotel, 660 F.Supp. 982 (J.P.M.L.1987) (per curiam). The designated trial judge, Hon. Raymond L. Acosta, handpicked certain attorneys, denominated collectively as the Plaintiffs’ Steering Committee (PSC), to act as lead and liaison counsel for the plaintiffs. In Nineteen Appeals, we summarized the roles played by the PSC and the individually retained plaintiffs’ attorneys (IRPAs), respectively:

The PSC members looked after the big picture: mapping the overarching discovery, trial, and settlement strategies and coordinating the implementation of those strategies. The IRPAs handled individual client communication and other case-specific tasks such as answering interrogatories addressed to particular plaintiffs, preparing and attending the depositions of their clients, and taking depositions which bore on damages. The IRPAs also worked with Judge Bechtle [the “settlement judge”] on a case-by-case basis in his efforts to identify and/or negotiate appropriate settlement values for individual claims. When Judge Acosta determined that the plaintiffs should try twelve representative claims as a means of facilitating settlement,- a collaborative composed of three PSC members and four IRPAs bent their backs to the task.

Nineteen Appeals, 982 F.2d at 605.

The combined efforts of all concerned generated a settlement fund approximating $220,000,000. The district court computed the payments due under the various contingent fee agreements, deducted the total (roughly $68,000,000) from the overall settlement proceeds, and placed that sum in an attorneys’ fee fund (the Fund). 1 In his initial attempt to disburse the Fund, Judge Acosta used an enhanced lodestar to compute the PSC’s fees, and awarded some $36,000,000 (52% of the Fund) to PSC members in their capacity as such, leaving the balance to be distributed among the IRPAs. A group of lawyers (mostly, but not exclusively, “non-PSC” IRPAs) 2 succeeded in vacating this award on the ground that the proceedings were procedurally flawed. See id. at 610-16.

The victory proved to be illusory. On remand, the district court abandoned the lodestar approach, adopted the percentage of the fund (POF) method, and recalculated the fees based on what it termed “the relative significance of the labor expended by the IRPAs and PSC members in instituting, advancing, or augmenting the plaintiffs’ settlement fund.” Using this methodology, the court awarded 70% of the Fund to PSC members in their capacity as such, thereby increasing their share of the fees by some $11,000,000, while simultaneously reducing the IRPAs’ share of the Fund by the same amount. These appeals ensued.

II. ADEQUACY OF THE PROCEEDINGS

In a virtual echo of the claims advanced in Nineteen Appeals, appellants (all of whom are IRPAs) characterize the proceedings by which the district court determined the allo *301 cation of the Fund as unfair. Specifically, appellants assert that the revamped procedural framework violated their rights to due process, and that, in all events, the court abused its discretion in erecting the framework. We consider these assertions in sequence.

A. Due Process.

In Nineteen Appeals, 982 F.2d at 610-16, we discussed the due process considerations implicated in the fee-setting aspect of this litigation. We again use the triangular construct of Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), to determine whether the district court afforded the IRPAs “the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’” Id. at 333, 96 S.Ct. at 902 (quoting Armstrong v. Manzo, 380 U.S. 645, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965)).

The first Mathews factor involves a specification of “the private interest that will be affected by the official action.... ” Id. at 335, 96 S.Ct. at 903. Rehashing this point would serve no useful purpose. We conclude, for precisely the same reasons articulated in our earlier opinion, that the IRPAs have a salient private interest in the fees due them for services rendered. See Nineteen Appeals, 982 F.2d at 612.

The second Mathews factor requires us to examine the risk of error presented by the district court’s procedures. See Mathews, 424 U.S. at 335, 96 S.Ct. at 903. The last time around we determined that the hearing format invited error. See Nineteen Appeals, 982 F.2d at 612-13. Appellants urge us to find that the proceedings on remand represented no real improvement and again presented an intolerable risk of error— this time because the district court refused to hold an evidentiary hearing, to allow free-form discovery, or to permit cross-examination of PSC members. We conclude, for reasons described more fully in Part 11(B), infra, that the format revisions cured the infirmities that led us to invalidate the district court’s earlier effort.

The third Mathews factor necessitates an assessment of the public interest, including “the fiscal and administrative burdens” that improved procedural requirements would entail. Mathews, 424 U.S. at 335, 96 S.Ct. at 903.

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Bluebook (online)
56 F.3d 295, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-thirteen-appeals-arising-out-of-the-san-juan-dupont-plaza-hotel-fire-ca1-1995.