Cook v. Niedert

Cook v. Niedert

Opinion

 [*1008]  CUDAHY, Circuit Judge. Members of a pension fund needed a named plaintiff and legal representation to combat fund mismanagement. Archie Cook, the named plaintiff, needed an incentive to bring the suit, and the attorneys he ultimately retained needed a reasonable fee for their services. One might have thought that members of the pension fund and Cook's attorneys would be satisfied with the result in the district court. The pension fund recovered over $ 14 million and underwent substantial structural reforms, Cook received a $ 25,000 incentive award, and the attorneys obtained more than $ 2 million for approximately 5,900 hours of work. But apparently no one feels that he, she, or it received the benefit of the bargain, since the pension fund challenges the propriety of the incentive award and both the fund and Cook's attorneys object to the amount of attorney's fees. On appeal we affirm the district judge in all respects.

I. Background

In [**2]  1992, Archie Cook, a truck driver and participant in the Teamsters Local 705 Health and Welfare Fund, filed a class action  [*1009]  against the Fund, the International Brotherhood of Teamsters Local 705, and the trustees of both entities. He alleged that the Fund had been mismanaged in violation of the Employee Retirement Income Security Act of 1974 (ERISA), and sought damages for the Fund of more than $ 20 million and structural reforms. In September 1995, Cook's attorneys advised the district judge of the possibility of settlement with the defendants' liability insurer. At Cook's request and in an effort to facilitate settlement, Judge Manning referred the case to Special Master Frank McGarr. The parties entered into a settlement agreement in January 1996, which provided that the Fund would undergo extensive structural reforms and receive a cash payment of over $ 13 million. Judge Manning preliminarily approved the settlement and again referred the case to Special Master McGarr, instructing him, in relevant part, to make recommended findings regarding petitions for attorney's fees and incentive awards.

In accordance with these instructions, Special Master McGarr held hearings, reviewed documents [**3]  and then prepared a report for the district judge. In his report, the master concluded that Archie Cook was entitled to a $ 25,000 incentive award because of the time he devoted to the case and the risk he faced in bringing the suit. With respect to attorney's fees, Cook's counsel had requested $ 4,785,000. In evaluating this request, the special master found that contingent fee agreements in the Chicago area typically provide that attorneys will be paid between 25 and 30 percent of the amount they recover for their client. The master determined that, in light of the substantial relief obtained by Cook's counsel and the riskiness of the litigation, an appropriate fee was $ 4,400,000, or 30 percent of the amount recovered for the Fund. ¹ Although the number of hours logged by Cook's attorneys and their hourly rates were not directly relevant to the percentage-of-fund analysis, the special master noted the reasonable hourly rates for the attorneys and paralegals involved in the litigation: between $ 115 and $ 325 for the attorneys and $ 80 for paralegals. Attorneys had logged 4,741 hours and paralegals 1,166 hours, for a total of 5,907 hours. The master acknowledged that a "very small [**4]  part" of the total hours expended may be excessive, but did not pursue the issue further. The attorney's fees and Cook's incentive award were to be paid out of the settlement escrow created for the benefit of the Fund.

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