Attorney's Fees, Unclaimed Funds, and Class Actions: Application of the Common Fund Doctrine
![handle is hein.journals/flr48 and id is 384 raw text is: ATTORNEY'S FEES, UNCLAIMED FUNDS, AND CLASS ACTIONS:
APPLICATION OF THE COMMON FUND DOCTRINE
INTRODUCTION
The award of attorney's fees has been a central issue in the development of
class action litigation. I The success of the class action as a procedural device
may depend on the ability of courts to strike a balance between the desire to
achieve the broader social purposes of class action suits,2 and the need to
regulate attorney profits.3 The difficulty encountered in reaching an accept-
able solution has produced a fundamental and often vehement controversy
between the advocates and the opponents of class actions.4 High awards
of counsel fees in contrast to miniscule recoveries by individual class
members in some suits have generated the harsh criticisms that class actions
are lawyer's lawsuits'6 and that attorneys are the recipients of a golden
harvest of fees.'7 Courts and commentators have frequently expressed the
1. See, e.g., Van Gemert v. Boeing Co., 590 F.2d 433, 435 (2d Cir. 1978) (en banc), cert.
granted, 99 S. Ct. 2158 (1979) (No. 78-1327); Alpine Pharmacy, Inc. v. Chas. Pfizer & Co., 481
F.2d 1045, 1049-50 (2d Cir.), cert. denied, 414 U.S. 1092 (1973).
2. One purpose of class actions under Fed. R. Civ. P. 23 is to give individuals the
opportunity they would not otherwise exercise to obtain relief for small injuries. See Free World
Foreign Cars, Inc. v. Alfa Romeo, 55 F.R.D. 26, 30 (S.D.N.Y. 1972). In addition, courts have
recognized the utility of class actions in complex litigation which commonly involves small
individual economic interests. For example, class actions provides one means of vindicating the
congressional purpose underlying federal securities and antitrust laws. Individuals would be
unable to afford such litigation, and therefore, class actions based on violations of these laws
demand the award of sufficient counsel fees to encourage the initiation of suits. 3 H. Newberg,
Class Actions § 6924b, at 1146 n.08 (1977) & cases cited therein.
3. City of Detroit v. Grinnell Corp., 495 F.2d 448, 469 (2d Cir. 1974); Dawson, Lawyers and
Involuntary Clients in Public Interest Litigation, 88 Harv. L. Rev. 849, 915 (1975) (hereinafter
cited as Dawson II.
4. Compare 3 H. Newberg, supra note 2, § 6900, at 1115-17 with Dam, Class Actions:
Efficiency, Compensation, Deterrence, and Conflict of Interest, 4 J. Legal Stud. 47 (1975) and
Labowitz, Class Actions in the Federal System and in California: Shattering the Impossible
Dream, 23 Buffalo L. Rev. 601 (1974).
5. Developments in the Law-Class Actions, 89 Harv. L. Rev. 1318, 1604 n.11l (1976)
[hereinafter cited as Developments-Class Actions]; e.g., Landau v. Chase Manhattan Bank,
N.A., 556 F.2d 664 (2d Cir. 1977) (per curiam) (aggregate class recovery of approximately
$25,000, from which each class member was entitled to thirty-five cents, and attorneys were
awarded $12,500); Philadelphia Elec. Co. v. Anaconda Am. Brass Co., 47 F.R.D. 557 (E.D. Pa.
1969) (average recovery of approximately $15,000 per class member and attorney's fees of over
$5 million). Contra, Note, The Rule 23(b)(3) Class Action: An Empirical Study, 62 Geo. L.J.
1123, 1155-56 (1974) (empirical data to the contrary) (hereinafter cited as Empirical Study].
6. Developments-Class Actions, supra note 5, at 1605.
7. Free World Foreign Cars, Inc. v. Alfa Romeo, 55 F.R.D. 26, 30 (S.D.N.Y. 1972); Smith,
Standards for Judicial Approval of Attorneys' Fees in Class Action and Complex Litigation, 20
How. L.J. 20, 26-27 (1977). Although some judges, media people, and the defense bar have
characterized attorney's fees as a source of abuse and a stain on the escutcheon of the
administration of civil justice, in reality there is a virtual absence of empiric data showing any
significant incidence of excessive fees. 7A C. Wright & A. Miller, Federal Practice and
Procedure § 1803, at 190 (1972 & Supp. 1979). See also Senate Comm. on Commerce, 93d Cong.,](ViewImageLocal?handle=hein.journals/flr48&div=25&collection=&method=preview&ext=.png&size=3)
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Attorney's Fees, Unclaimed Funds, and Class Actions: Application of the Common Fund Doctrine
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