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Fed. Sec. L. Rep. P 98,138 Class Chemical Bank, in Its Representative Capacity as Trustee for Bondholders, and Continental Assurance Company v. Jaffe & Schlesinger, P.A. Ginsburg, Feldman & Bress Ferguson & Burdell Weinstein, Hacker, Yost, Berry & Mathews v. City of Seattle Oregon Public Entities, Benton Rural Electric Association, Washington Washington Public Power Supply System R.W. Beck and Associates Ebasco Services Incorporated United Engineers & Constructors, Inc. Director Participants' Committee Public Utility District No. 1, of Klickitat County United States of America, on Behalf of Itself and Its Agency, the Bonneville Power Administration State of Washington Bonneville Power Administration

Citation: 19 F.3d 1306Docket: 91-16679

Court: Court of Appeals for the Ninth Circuit; March 22, 1994; Federal Appellate Court

Narrative Opinion Summary

In this case, counsel for individual and institutional bond purchasers, known as the Haberman counsel, appealed the district court's denial of their application for attorney fees and expenses. The fees were related to their work in state court litigation involving the Washington Public Power Supply System's bond default. The Haberman counsel had agreed to seek fees from a federal settlement fund (MDL 551) in exchange for waiving contingent fee arrangements with their clients. Despite their litigation's resolution being tied to the MDL 551 settlement, the district court ruled that the Haberman counsel's work was independent and not directly beneficial to the MDL class. The court applied the Lindy II standard to evaluate whether the counsel's services conferred a benefit on a common fund. Although the Haberman counsel argued that their actions, such as preventing certain legal defenses and broadening legal definitions, indirectly benefited the class, the court determined these efforts did not warrant a fee award from the MDL settlement. Consequently, the district court's decision to deny fees was upheld, emphasizing the separation between distinct litigation efforts and the benefits to class action plaintiffs.

Legal Issues Addressed

Attorney Fees and Common Fund Doctrine

Application: The district court evaluated attorney fee awards based on whether specific services benefited a common fund, applying the Lindy II standard.

Reasoning: The district court evaluated attorney fee awards based on whether specific services benefited a common fund, applying the Lindy II standard.

Constitutionality Challenges to Amendments

Application: The Haberman counsel challenged the constitutionality of the 'Scienter Amendment' before both the Washington State Supreme Court and the United States Supreme Court.

Reasoning: They also challenged the constitutionality of the 'Scienter Amendment' before both the Washington State Supreme Court and the United States Supreme Court, preserving this issue for potential future review if liability under a scienter standard was not established in related cases.

Derivative Negligence Claims

Application: Haberman counsel raised derivative negligence claims against professional defendants, which were later incorporated into the MDL settlement.

Reasoning: The district court noted several benefits claimed by the Haberman counsel: (d) they raised derivative negligence claims against professional defendants, which were later incorporated into the MDL settlement for class plaintiffs.

Entitlement to Attorney Fees in Separate Litigation

Application: The court found no entitlement to fees for attorneys representing distinct plaintiffs in separate litigation that did not generate a settlement fund for the class.

Reasoning: The court found no entitlement to fees for attorneys representing distinct plaintiffs in separate litigation that did not generate a settlement fund for the class.

Inclusion of Defendants in Litigation

Application: The Haberman counsel was the first to include Ernst & Whinney as a defendant, contributing to a $6.5 million settlement.

Reasoning: The district court noted several benefits claimed by the Haberman counsel: (c) they were the first to include Ernst & Whinney as a defendant, contributing to a $6.5 million settlement;

Res Judicata and Collateral Estoppel Defenses

Application: The Haberman counsel claimed their efforts prevented res judicata or collateral estoppel defenses by addressing prior state court decisions.

Reasoning: The district court noted several benefits claimed by the Haberman counsel: (a) they prevented res judicata or collateral estoppel defenses by addressing prior state court decisions;

Securities Law and Definition of 'Seller'

Application: The Haberman counsel broadened the definition of 'seller' under the Washington State Securities Act to ensure its applicability.

Reasoning: The district court noted several benefits claimed by the Haberman counsel: (b) they broadened the definition of 'seller' under the Washington State Securities Act to ensure its applicability;