Sampson v. Eastman Kodak Co.

552 N.E.2d 1194, 195 Ill. App. 3d 715, 142 Ill. Dec. 453, 1990 Ill. App. LEXIS 338
CourtAppellate Court of Illinois
DecidedMarch 21, 1990
Docket1-89-0205
StatusPublished
Cited by6 cases

This text of 552 N.E.2d 1194 (Sampson v. Eastman Kodak Co.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sampson v. Eastman Kodak Co., 552 N.E.2d 1194, 195 Ill. App. 3d 715, 142 Ill. Dec. 453, 1990 Ill. App. LEXIS 338 (Ill. Ct. App. 1990).

Opinion

PRESIDING JUSTICE DiVITO

delivered the opinion of the court:

Plaintiffs filed a class action suit against Kodak to recover damages for the loss of use of their instant cameras as a result of an injunction issued in a separate patent lawsuit brought by Polaroid Corporation. That suit was settled, and plaintiffs’ counsel petitioned the trial court for an award of attorney fees. The trial court awarded fees based on a lodestar amount and a risk multiplier of three. Kodak appeals, challenging only the amount of fees awarded.

The issues raised are (1) whether this court has jurisdiction to hear Kodak’s appeal pursuant to Supreme Court Rule 303(a)(3) (107 Ill. 2d R. 303(a)(3)); (2) whether Kodak has standing to bring this appeal; (3) whether the trial court erred in applying a risk multiplier of three in determining the amount of attorney fees awarded; and (4) whether the trial court erred in applying a risk multiplier to hours between the date the settlement agreement was reached by the parties and the date it was approved by the court. We affirm.

In September 1985, an injunction was entered in a patent lawsuit brought by Polaroid Corporation prohibiting Kodak from manufacturing or selling film for over 16 million “instant” cameras it had sold. In January 1986, Kodak announced that it would implement an “Exchange Program” under which camera owners who called a toll-free number by December 31, 1986, and registered their names could exchange their cameras for either a Kodak “disc” camera and film, a $50 rebate coupon, or one share of Kodak stock.

On January 21, 1986, Joyce and William D. Sampson filed this class action suit. The complaint alleged that Kodak was liable in damages to the owners of instant cameras as a result of the patent lawsuit injunction and that the Exchange Program was unfair. Thirteen similar suits against Kodak were subsequently filed in other State and Federal courts. On February 13, 1986, this action was certified as a class action, the other actions were enjoined, and Kodak was prohibited from implementing the Exchange Program.

On August 5, 1986, an eight-count amended complaint was filed naming over 100 plaintiffs from throughout the United States and alleging breaches of express and implied warranties, fraud, and violation of Federal and State consumer laws. Seven of the eight counts were dismissed for failure to state a claim. The first count alleging breach of an implied warranty of freedom from a patent infringement survived Kodak’s motion to dismiss, and plaintiffs were granted leave to file a second amended complaint. Plaintiffs’ second amended complaint was filed on April 22, 1988, and, again, alleged breaches of express and implied warranties, fraud and violations of State and Federal consumer laws. Cross-motions for summary judgment were filed but never resolved due to a settlement arrived at by the parties.

Settlement negotiations began once the class was certified. On May 16, 1988, the parties filed a “Stipulation of Settlement” to pay out benefits to class members. The trial court then entered an order approving notices of the proposed settlement to the class. Notices were sent to over four million class members and published all over the country. About 200 class members formally objected to the proposed settlement. One objector, Steven Baird, appeared through counsel Torshen, Schoenfield & Spreyer, a Chicago firm, and Marc L. Goldstein and Albert E. Levy from California.

The proposed settlement required Kodak to (1) pay $108 million into a settlement fund; (2) make an additional payment of $42 million, provide rebate coupons worth $126 million, or provide a combination of cash and coupons; (3) pay $400,000 for the cost of publication of notices; (4) pay $1,180,000 for the cost of printing and mailing notices; (5) pay $15,811,000 for the cost of operating a toll-free telephone system; and (6) pay $8 million for costs of administering the settlement agreement exceeding $8 million. The settlement also provided that plaintiffs’ counsel could petition the court for an award of attorney fees up to $6 million.

On September 20, 1988, the trial court held an evidentiary hearing on the fairness of the settlement, and on September 26, 1988, issued a memorandum opinion finding the settlement to be fair, adequate, and reasonable. A final order of dismissal was entered on September 30,1988. No appeal from that order was taken.

On September 12, 1988, plaintiffs’ counsel, represented by William J. Harte, Ltd., filed a joint petition for attorney fees and expenses. Plaintiff’s counsel sought a fee award of either 4% of the $150 million settlement or an amount based on a lodestar of $2,289,686 and a risk multiplier of three. Kodak challenged the use of the percentage of recovery method and the lodestar amount claimed by Cohen, Shapiro, Polisher, Shiekman and Cohen. Kodak also challenged the application of a risk multiplier of three, claiming that the multiplier was excessive in light of the existence of the Exchange Program, and that no multiplier should be applied, in any event, to post-settlement hours.

On October 6, 1988, counsel for Steven Baird filed a petition for fees and expenses based on a lodestar amount in excess of $180,000 and a multiplier of three. Kodak challenged the lodestar amount and objected to the use of a multiplier.

On October 31, 1988, the trial court held an evidentiary hearing on the fee petitions. Three expert witnesses testified for plaintiffs’ counsel. Herbert B. Newberg, author of the well-known treatise on class actions, testified that in his opinion a reasonable fee would be the lodestar multiplied by Sxk to 4 and that the requested fee of $6 million “readily falls at the modest end of the reasonable range of fee awards in cases of common fund recoveries of comparable magnitude and risk.” Newberg testified that the Exchange Program “should not delimit in any way petitioner’s right to a substantial multiplier” because it was not a formal offer approved by Kodak’s board of directors and because camera owners would receive little if any cash for Kodak stock and no cash if they received coupons or a disc camera. Newberg described the litigation as “a highly contingent *** venture for Class Counsel which remained contingent until [the trial court’s] approval of the stipulation of settlement on September 26, 1988, and involved a major risk of time and money during the entirety of the litigation.”

Richard W. Austin, a partner at Winston & Strawn, testified that a reasonable fee for plaintiffs’ counsel would be the lodestar amount times a multiplier of 2.75 to 3.25. He also testified that the Exchange Program did not affect his opinion as to the reasonableness of the requested fee and that plaintiffs’ counsel remained at risk until the settlement was approved by the court. Finally, Michel A. Coccia, a former partnef at Baker & McKenzie, testified that in his opinion a reasonable fee for plaintiffs’ counsel would be the lodestar amount times a multiplier of 3 to 3.25.

On December 20, 1988, the trial court read its findings into the record. The trial court awarded objector Baird’s counsel $100,000 and plaintiffs’ counsel $6 million dollars, the maximum amount allowable under the settlement agreement.

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Bluebook (online)
552 N.E.2d 1194, 195 Ill. App. 3d 715, 142 Ill. Dec. 453, 1990 Ill. App. LEXIS 338, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sampson-v-eastman-kodak-co-illappct-1990.