Denial of Attorney's Fees in Securities Class Action Affirmed
In In re: Adelphia Communications Corp. Sec. & Deriv. Litig., No. 08-4904, a securities and derivative litigation, the court affirmed the denial of non-lead class counsel's petition for increased attorneys' fees following a settlement, on the ground that a standard counseling consideration of lead counsels' allocation of fees did not in any way limit the district court's ability to engage in a meaningful review of the fairness of the allocation and the overall reasonableness of fees, and such a review occurred here.
As the court wrote: "Under the common fund doctrine, attorneys who create a fund for the benefit of a class of plaintiffs are entitled to reasonable compensation from that fund. Plaintiffs-Appellants, represented by the firm of Chimicles & Tikellis LLP ("C&T"), filed two class action complaints alleging securities fraud by Adelphia Communications Corporation. The class action complaints were consolidated with other securities class actions filed against Adelphia, and Abbey Spanier Rodd & Abrams, LLP ("Abbey") and Kirby McInerney LLP ("Kirby") were appointed lead counsel. The class ultimately reached a settlement of $245 million with a number of Adelphia's lenders and underwriters. From that amount, the United States District Court for the Southern District of New York (McKenna, J.) awarded lead counsel $52.4 million in attorneys' fees, a substantial multiplier over their lodestar amount. Abbey and Kirby then allocated $155,610 of the attorneys' fees award to C&T, an amount that represents C&T's lodestar with no multiplier. C&T petitioned the District Court for an increase to $17 million in fees, arguing that but for the claims it had raised, a settlement would not have been reached. The District Court denied C&T's request. This appeal followed. We affirm."