Full opinion text
MEMORANDUM AND ORDER ON APPLICATIONS FOR ATTORNEYS’ FEES AND EXPENSES NANGLE, District Judge. Individuals implanted with the Bjork-Shi-ley eonvexo/coneave heart valve brought this product liability action against the valve’s manufacturer, Shiley, Inc., and its parent company, Pfizer, Inc., alleging that the valve has design and manufacture defects which renders it hazardous to individuals in whom it has been implanted. On August 19, 1992, the Honorable S. Arthur Spiegel, Senior United States District Judge for the Southern District of Ohio, approved a settlement of the action on a worldwide class basis. Class and Special Counsel, as well as counsel for certain class members, are now before the Court seeking an award of attorneys’ fees and expenses from the funds created by the settlement. Pursuant to Orders entered August 3, 1995, and September 1, 1995, this case was transferred from the docket of Judge Spiegel to the docket of the undersigned, for the purpose of determining the amount and source of attorneys’ fees and expenses to be awarded in this case. The Order of September 1, 1995, also contained a number of findings with respect to the financial benefit of certain attorneys’ activities. Specifically, Judge Spiegel concluded that Class Counsel, Stanley M Chesley, Esq., and Special Counsel, John T. Johnson, Esq., Brian Magana, Esq., Louis Saul, Esq., Charles Wolfson, Esq., and James T. Capretz, Esq., had rendered valuable services to the plaintiff class and that their joint application should, therefore, be considered. Judge Spiegel also concluded that the applications of Brian Wolf-man, Esq., on behalf of Public Citizen, Inc., and Thomas Herren, Esq., should be considered because they, too, had rendered valuable services to the plaintiff class. Judge Spiegel further concluded that the application of Sidkoff, Pincus & Green, P.C., and Wapner, Newman & Wigrizer, counsel for certain Pennsylvania class objectors, should be denied because their activities in this case had not conferred any financial benefit upon the Class. Finally, Judge Spiegel reserved for the undersigned the question of whether the activities of The Consumentenbond, and possibly others, benefited the plaintiff class. Accordingly, a hearing was held in this district to consider the fee applications of those attorneys whose services had benefited the Class, as well as the applications of those for which a finding of benefit had been reserved for the undersigned. Upon order of the Court, all attorneys participating in the hearing prepared and submitted a comprehensive stipulation covering all issues relating to the fee applications before the Court. Additionally, the Court received evidence and heard argument at the hearing on the applications. Based upon the evidence and arguments presented at the hearing, as well as the parties’ stipulations and other submissions, the Court issues the following Memorandum and Order. I. BACKGROUND Between 1979 and 1986, Shiley, Inc., a wholly-owned subsidiary of Pfizer, Inc., manufactured a human-implant heart valve known as the Bjork-Shiley convexo/concave heart valve (“c/c heart valve” or “valve”). Somewhere between 50,000 and 100,000 of the valves were implanted in patients worldwide. By 1992, approximately 450 of these valves had fractured resulting in approximately 300 deaths. The valves continue to fracture today and it is anticipated that they will continue to do so in the future. As early as 1984, consumer groups such as the Washington, D.C.-based Public Citizen, Inc., claimed that the c/c heart valve posed a serious public health threat because it had design and manufacture defects which caused it to have an abnormally high risk of fracture. Defendants have steadfastly denied that the c/c heart valve is any more likely to fracture than any other valve available on the market at that time; however, when Public Citizen petitioned the Food and Drug Administration in 1990 to require defendants to notify implantees of the risks associated with the valves, defendants voluntarily agreed to undertake to find and notify implant patients and their physicians of the alleged risks posed by the valves. The c/c heart valve has engendered a substantial amount of litigation. Individuals implanted with valves that have fractured, as well as individuals with properly functioning valves, have brought suit against defendants in jurisdictions across the United States. In every suit involving a valve that had actually fractured, defendants were able to settle the case with a confidential agreement. In cases where there had been no fracture, however, defendants were able to get at least 27 courts to dismiss the suits on the ground that there is no right of recovery for emotional distress arising from a valve implantee’s fear that a properly functioning valve might fracture in the future. Although defendants had generally been successful at settling all fracture eases and getting non-fracture cases dismissed, the litigation and attendant poor publicity was nevertheless taking its toll. Defendants were having to devote substantial resources to defending the nation-wide litigation, and a California court denied their motion for summary judgment in a case where a plaintiff had a properly functioning c/c heart valve. Furthermore, criticism of the valve and of the defendants in newspaper articles, television programs and even congressional hearings began to mount. See Bowling v. Pfizer, Inc., 143 F.R.D. 141, 147-48 (S.D.Ohio 1992). Thus, as Judge Spiegel observed in his Order finding the proposed settlement to be fair, defendants had ample reason to settle all claims involving their c/c heart valves. Id. II. PROCEDURAL HISTORY All of the named plaintiffs in this action had properly functioning c/c heart valves when their complaint was filed on April 19, 1991. The causes of action asserted in their complaint included negligence, strict liability, negligent misrepresentation, fraudulent misrepresentation, intentional infliction of emotional distress and negligent infliction of emotional distress; and the relief sought included compensatory damages, medical monitoring and punitive damages. The complaint also proposed a class action under Rule 23 of the Federal Rules of Civil Procedure. In response to these allegations, defendants filed a motion to dismiss for lack of jurisdiction and a motion for summary judgment contending, among other things, that there was no right of recovery for the emotional distress arising from plaintiffs’ fear that their properly working heart valves might fracture in the future. Defendants also filed a motion requesting that their motions to dismiss and for summary judgment be heard with plaintiffs’ request for class certification. Before the Court ruled on defendants’ motions, however, Class Counsel and counsel for defendants informed the Court that the parties had initiated settlement negotiations. The Court subsequently denied defendants’ request for a consolidated hearing on their motions and class certification and, at a November 19, 1991, status conference, the parties indicated to the Court that they were in the final stages of negotiating a settlement that would apply to all individuals implanted with the c/c heart valve. Approximately two months later, the parties informed the Court that they had agreed upon a proposed settlement. The Court thereafter granted the parties’ Joint Motion for Conditional Class Certification for Settlement Purposes (Doc. 43) and set a fairness hearing to consider the proposed settlement for June, 1992. Numerous objections to the proposed settlement were filed, most asserting that the settlement did not provide sufficient benefits to class members. At the fairness hearing to consider the proposed settlement, held June 5, 8 and 9,1992, and July, 22,1992, the Court likewise expressed several concerns about the benefits available to class members under the settlement. In response, Class Counsel, with assistance from a number of attorneys representing objecting class members, including John Johnson, Brian Magaña, Lewis Saul, Charles Wolfson, James Capretz and Brian Wolfman, negotiated a number of substantive improvements to the settlement. Thus, by the time the final, enhanced version of the proposed settlement was submitted to the Court, there were essentially only two objecting factions remaining. One was comprised of two Pennsylvania law firms, Sidkoff, Pincus & Green, P.C., and Wapner, Newman & Associates (“Pennsylvania attorneys”). The Pennsylvania attorneys represented certain members of the proposed class who were representative plaintiffs in a putative class action in the Court of Common Pleas, Philadelphia County, Pennsylvania. The second objector was Public Citizen. Although its attorney, Brian Wolfman, had participated in the negotiations leading to the enhancements to the settlement, Public Citizen was nevertheless unsatisfied with the finished product and lodged a number of objections. The Court, after considering each of the objections in a lengthy and detailed Order entered August 19, 1992, concluded that the settlement, when viewed “holistically”, is fair, adequate and reasonable. Bawling, 143 F.R.D. at 170. The Court was particularly swayed by the fact that, while the settlement offered class members a host of benefits, the only right relinquished by participating class members is the right to pursue the speculative claim of emotional distress arising out of the fear that a properly functioning heart valve may fracture in the future. Accordingly, the Court entered judgment on September 10, 1992, certifying the settlement class, approving the proposed settlement and retaining jurisdiction to determine attorneys’ fees and expenses and to take any action required for the implementation of the settlement (Doc. 255). As previously noted, Class Counsel was assisted by several of the objecting attorneys during the rounds of negotiations that took place after the settlement had been initially submitted to the Court. At some point during or after these negotiations, Class Counsel determined that the Class would benefit from the specialized knowledge that many of the objecting attorneys possessed. Accordingly, Class Counsel moved the Court for the appointment of James T. Capretz, John T. Johnson, Brian R. Magana, Lewis J. Saul and Charles M. Wolfson as Special Counsel to assist him in the effectuation of the proposed settlement. By Order entered September 14,1995, the Court appointed each as Special Counsel to Class Counsel. III. THE SETTLEMENT The settlement applies to all living persons currently implanted with e/e heart valves (approximately 50,000 people) and their current spouses, except those who file valid and timely requests for exclusion. The settlement has three primary components: The Patient Benefit Fund, The Medical and Psychological Consultation Fund and The Fracture Compensation Mechanism. A. The Patient Benefít Fund The Patient Benefit Fund is a guaranteed fund of $37.5 million, which may increase to as much as $75 million, that is to be used to fund research and development and valve replacement surgery (“explanation”) for qualifying class members. The settlement requires defendants to deposit $12.5 million following “Final Approval of the Settlement”, and then $6.25 million annually starting on the second anniversary of the Final Approval of the Settlement. Once the defendants have contributed $37.5 million to the Fund, they are entitled to go before the Court and argue that further research would be fruitless and that they should not, therefore, be required to make further contributions to the Fund. If they are unsuccessful in their argument, then they are required to continue the annual contribution of $6.25 million until they have deposited a total of $75 million. In order to administer the benefits available under the Patient Benefit Fund, the settlement creates a seven-member Supervisory Panel to manage the research and to determine whether a class member qualifies for a particular benefit. The Panel is to be comprised of six experts and one layman and all of the fees and expenses of the Panel are to be paid from this Fund. Supplemented Agreement of Compromise and Settlement, at 13-14. The specific benefits available under the Fund are: Research and Development. The fund will pay for research and development of diagnostic techniques to identify implan-tees who have a significant risk of valve fracture, and research to reduce and properly characterize the risks associated with valve replacement surgery. Supplemented Agreement of Compromise and Settlement, at 8. Payment of Expenses Associated With Explant Surgery. Payment of the usual and customary expenses for valve replacement surgery that are not covered by a third-party payor (i.e. insurance company, government, etc.), where surgery is necessitated by risk of valve fracture. Id. at 11. $38,000.00 for Miscellaneous Expenses. Payment of $38,000.00 to each member who undergoes an explant surgery approved by the Panel and who does not suffer death or permanent bodily injury. This payment is to cover miscellaneous costs of post-hospitalization care, meals, travel, etc. Id. at 19. Temporary Loss of Income. Member’s actual lost income, up to $1,500.00 per week for a maximum of 16 total weeks, resulting from a member’s inability to work because of hospitalization and recuperation from a qualifying valve replacement surgery. The amount payable is reduced by any payments available from a third-party payor, such as worker’s compensation, sick pay, disability insurance, etc. Id. The lost income is only payable from the sixteenth through fifty-second week after surgery. Id. Permanent Loss of Income. If, after one year, a member is partially disabled from explant surgery and, as a result, suffers a diminished earning capacity and/or extraordinary medical expenses, then he will receive compensation for future income loss that is not covered by workmen’s compensation, a disability policy or other third-party source. Id. Alternative Payment for Death or Permanent Total Disability. If valve replacement surgery results in death or permanent total disability, then a member is entitled to: (1) The same payment available to a member whose valve actually fractures under the Valve Compensation Mechanism; or (2) Compensation as set by an arbitration procedure. Id. at 21. Payment for FDA Approved Diagnostic Procedure. If the Food and Drug Administration approves a technique for diagnosing valves with a high risk of fracture, then the Supervisory Panel may use the money from the Fund to pay for the use of the technique on class members where it is reasonably medically necessary. Id. at 8, 16-17. Additionally, this portion of the settlement permits a class member, who qualifies for valve replacement surgery but chooses not to undergo surgery, to bring an action for damages for alleged emotional distress from fear of fracture of a working valve if the class member has not received any fracture compensation under the settlement. Id. at 10. Finally, in the event that class members continue to qualify for explant surgery after the Fund is fully expanded to $75 million, the settlement obligates defendants to continue to pay all of the members’ qualifying expenses and benefits listed above even though defendants’ total contribution to the Fund would exceed $75 million. Id. at 12-13, & 23. B. The Medical and Psychological Consultation Fund The Medical and Psychological Consultation Fund (“Consultation Fund”) is a fund of at least $80 million, which could increase to as much as $130 million, that is intended to provide class members with funds to obtain medical and psychological consultation. The fund will provide an equal cash payment of between $2,500.00 and $4,000.00 to each member, depending upon how many class members make a claim. Defendants are also required, under this part of the settlement, to pay an additional $10 million into the Fund, which is to be paid to spouses of valve implantees (“Spousal Compensation Fund”). The settlement requires defendants to deposit $80 million as soon as practicable after the settlement is signed. Id. at 23. After payment of fees and expenses, the total amount of the Consultation Fund will be equally divided and distributed to all “Claimants”. If the total number of members participating in this Fund exceeds 20,000, however, then defendants shall make additional payments into the Fund in accordance with the following schedule: For each Claimant over 20,000 up to 30,-000, $2,500.00 per additional Claimant; For each Claimant over 30,000 up to 35,-000, $1,500.00 per additional Claimant; For each Claimant over 35,000 up to 40,-000, $1,200.00 per additional Claimant; and For each additional Claimant over 40,000, $750.00 per Claimant. Id. at 24. In similar fashion, the $10 million Spousal Compensation Fund will, after payment of any expenses and fees, be divided equally among all claimants who are spouses of class members that have been implanted with c/c valves. Id. at 25. Defendants are not, however, required to pay into this Fund until “Final Approval of the Settlement.” Id. at 24. C. The Valve Fracture Mechanism The third component of the settlement, the Valve Fracture Mechanism, provides an im-plantee whose valve has fractured with one of three options for seeking compensation. The first option is a sort of insurance program whereby compensation is determined by a set of formulas that take into account a claimant’s family status, age, income and country of residence. The compensation available to a United States resident, for example, ranges from a minimum of $500,-000.00 to a maximum of $2,000,000.00, while the payment to members from other countries may be something less but is in no event less than $50,000.00. Id. at 25, App. C; First Report of the Special Masters/Trustees, App. 1 (Court’s Exh. 11). The settlement creates a Foreign Fracture Panel, which will determine fair compensation for fracture claimants who are residents of countries other than the United States. Id. at 25-26. The second alternative available to a fracture claimant under the mechanism is binding arbitration. The claimant can bring his or her claim before a three-member panel, whose decision is final and binding. Id. at 27. The third option is to bring suit against defendants in an appropriate forum, with all claims and defenses preserved. Id. at 28. IV. IMPLEMENTATION OF THE SETTLEMENT A number of appeals were taken from the Court’s judgment of September 10, 1992, approving the settlement. As a result, this Court was without jurisdiction over this case until the Sixth Circuit Court of Appeals dismissed the final appeal on March 15, 1994. The United States Supreme Court subsequently denied a petition for writ of certiora-ri on October 3, 1994, and “Final Approval of the Settlement”, as that term is defined in the settlement, occurred at that time. Accordingly, the defendants thereafter made the required initial payment of $12.5 million into the Patient Benefit Fund. Thus, defendants’ contributions to the Patient Benefit Fund should be as follows: Year Amount of Pmt. Running Total 1994 $12.50 million $12.5 million 1996 $ 6.25 million $18.75 million 1997 $ 6.25 million $25.00 million 1998 $ 6.25 million $31.25 million 1999 $ 6.25 million $37.50 million 2000 $ 6.25 million $43.75 million 2001 $ 6.25 million $50.00 million 2002 $ 6.25 million $56.25 million 2003 $ 6.25 million $62.50 million 2004 $ 6.25 million $68.75 million 2005 $ 6.25 million $75.00 million On April 13,1994, the Court appointed the Honorable Robert L. Black, Jr., and Peter J. Strauss, Esq'., as Special Masters/Trustees to implement the settlement. The Trustees have since hired a Claims Administrator and set up and staffed an office in Cincinnati, Ohio. On May 13, 1994, the Court appointed the two expert panels provided for in the settlement: the Supervisory Panel and Foreign Fracture Panel. On January 4, 1995, the Foreign Fracture Panel issued its final report establishing compensation schedules for foreign valve implantees who suffer a fracture. See First Report of the Special Masters/Trustees, App. 1 (Court’s Exh. 11). The Supervisory Panel, with the approval of the Court, selected a Guidelines Committee to consider and recommend new guidelines for determining whether a class member qualifies for the diagnostic procedures and/or explant surgery available under the Patient Benefit Fund. Although the Committee held its first meeting in July of 1995, it has yet to propose any guidelines. Thus, class members are currently required to qualify under the guidelines established by the defendants, which are considered by most to be far too restrictive. The Supervisory Panel has also approved a number of research projects, many of which were already being carried out under the direction and funding of the defendants prior to the settlement. An important issue of settlement interpretation that has arisen is whether a class member implanted with a valve that suffers a so-called “single-leg fracture” or “single-strut separation” qualifies for explanation benefits and/or compensation under the Fracture Mechanism. Class and Special Counsel took the position that a member suffering a single-leg separation should receive the same treatment under the settlement that a member suffering a full, dual-leg fracture receives. Defendants disagreed, taking the position that a single-leg separation is qualitatively different from a full, dual-leg fracture and, as a result, a elass member suffering such a separation should not be entitled to the same benefits as a member suffering a complete fracture. The parties resolved the issue through an agreement that Class Counsel would negotiate with the defendants each single-leg fracture ease on an individual basis. As of October 20, 1995, the Claims Administrator had referred 16 single-leg fracture claims to Class Counsel. Third Report of the Special Masters/Trustees, at 10 (Court’s Exh. 13). Participation in the Consultation Fund has been substantially lower than the 20,000 to 40,000 claims that the parties had anticipated. As of the date of the Trustees’ most recent report, October 26, 1995, the Claims Administrator had received 12,002 claims and had determined that 1,680 of these claims were non-qualifying. Id. at 2-3. The lower than expected participation in the Fund does not affect the minimum size of the Fund; defendants paid in the required $80 million at the inception of the settlement and it has since earned approximately $7.5 million in interest. Thus, class members participating in the Fund are expected to receive a substantially larger individual payment than had originally been estimated by the parties. In order to obtain maximum participation in this Fund, the Trustees extended the deadline for filing claims to December 31, 1995. In the meantime, the Trustees made a partial distribution from the Consultation Fund to qualified claimants of $3,000.00, as well as a partial payment of $500.00 to qualified spousal claimants from the $10 million Spousal Compensation Fund. The Trustees will distribute the remainder of the Fund, less any attorneys’ fees awarded from the Fund, upon a final determination of the number of qualified claimants. V. PETITIONS FOR ATTORNEYS’ FEES AND OBJECTIONS THERETO On September 11, 1995, Class Counsel, Special Counsel and Counsel for Public Citizen filed, in accordance with this Court’s Order of September 5, 1995, their stipulations of fact relevant to the issues raised by the fee applications before the Court. The facts to which they stipulated to include the following: 1. Under the terms of the settlement, Class Counsel is required to provide services to the Class throughout the entire life of the settlement. 2. Special Counsel have agreed to provide the following future services to the Class in order to assist in the implementation of the settlement: (a) John Johnson’s work will focus on identification of class members who are carrying valves that have a high risk of fracture; (b) James Capretz’s work will focus on adoption of valve replacement guidelines and protocols. 3. The separate time and expense records submitted by Class Counsel and Special Counsel fairly and accurately represent the services performed and the quantity of time expended in rendering those services and expenses incurred. 4. The time and expense records submitted by Amicus Public Citizen and its counsel, Brian Wolfman, fairly and accurately represent the services performed and the quantity of time expended in rendering those services and expenses incurred. 5. Interest that accumulates on the monies awarded by the Court as compensation for services rendered or expenses incurred by the attorneys in this action subsequent to the date of the order awarding such fees and expenses, through date of distribution, shall also be awarded and distributed. 6. Any attorneys’ fees and costs awarded in this case shall be drawn pro rata from the Consultation Fund (including the Spousal Compensation portion thereof) and the Patient Benefit Fund. A. Joint Application of Class and Special Counsel Class and Special Counsel have made joint application to the Court seeking a single, lump-sum award for their past and future attorneys’ fees and expenses incurred in this case. Class Counsel has reached an agreement with each of the Special Counsel as to how the award will be divided. In support of their application, Class and Special Counsel contend that the settlement has created a fund with a total fixed, predetermined cash value of $165 million, broken down as $75 million for the Patient Benefit Fund, $80 million for the Consultation Fund and $10 million for the Spousal Compensation Fund. Counsel further assert that the unfixed monetary value of benefits available to class members (via the Fracture Compensation Mechanism and other benefits) may exceed $335 million and, therefore, that the total value of the settlement, without taking account of any present value considerations, may exceed $500 million. Although Counsel value the settlement at over $500 million, they seek payment of their fees and expenses from only the $165 million common fund which they claim is created by the Patient Benefit, Consultation and Spousal Funds. Thus, in their initial application, filed October 9, 1992, Counsel sought an award of 13% of the $165 million common fund, or $20 million, as compensation for their past work in negotiating and winning approval of the settlement and for their current and future work in implementing and administering the open-ended provisions of the settlement. However, in their first supplement to the application, filed May 19, 1995, Counsel increased their fee request to 20% of the $165 million fund, or $33 million. Counsel’s justification for the increased request is that their initial estimate of the time and labor required to implement and administer the settlement was far too conservative based upon the work that they had already done under the settlement. Thus, according to Counsel, the 7% increase in their request is required to adequately compensate them for the future work to which they have committed under the settlement. On August 29, 1995, Counsel filed a second supplement to their application in which they provide a final update of the services performed and hours worked by Class Counsel, as well as Special Counsel Johnson and Saul. Thus, the application, as supplemented through August 29, 1995, details the services rendered and hours expended by each attorney. Following is a summary of the individual contributions and activities of Counsel in this case as set forth in the application. 1. Class Counsel Stanley M. Chesley Class Counsel and his firm, Waite, Schneider, Bayless & Chesley Co., LPA, have expended a total of 16,364.25 hours on this ease through August 15, 1995, broken down as follows: Attorneys’ Time — 6,739.00 hours Paralegals’ Time — 613.00 hours Law Clerks’ Time — 602.00 hours Staff Time — 8,410.25 hours The hourly rates for attorney’s in Counsel’s firm range from $140.00 for associates to Mr. Chesley’s current rate of $300 per hour. Paralegal and law clerk time is generally valued at $60.00 per hour, while staff time is valued at $25 per hour. Additionally, Class Counsel has incurred expenses totaling $349,-551.30. As Class Counsel, Mr. Chesley initiated this action, negotiated the initial settlement agreement and was the lead negotiator in the subsequent rounds of negotiations that led to the enhancements to the settlement. More specifically, he provided services in the following areas during the period leading up to the Court’s approval of the settlement: 1) Investigation Prior to Filing the Complaint; 2) Filing of Pleadings and Motions; 3) Settlement Negotiations; 4) Discovery; 5) Class Notification Program; 6) Preparation For and Participation in the Fairness Hearings; 7) Initial Activities in the Effectuation of the Terms and Provisions of the Settlement. Following approval of the settlement, Class Counsel’s efforts have been focused in the following areas: 1) Establishment of the Foreign Fracture Panel and the Supervisory Panel; 2) Development of the “Foreign Fracture Formulae”; 3) Assistance to the Supervisory Panel; 4) Assistance to the Special Masters/Co-Trustees; 5) Establishment of preliminary protocols and claims procedures for use by the Claims Administrator; 6) Design of the second “class notice,” as well as the claim form for the Consultation Fund; 7) Provision of various services to class members; 8) Assistance in resolving fracture and ex-plantation claims when contacted by individual class members or their attorneys; 9) Continued negotiations with defendants over the “single leg fracture” issue; 10) Opposition to the appeals of the Court’s approval of the settlement. 2. Special Counsel John Johnson Mr. Johnson, his former and current law firms, and his English co-counsel, Alexander Harris & Co., have spent a total of 9,706.14 hours on this case at hourly rates ranging from $70.00 to $205.00 for attorneys, and $50.00 to $60.00 for law clerks and paralegals. Mr. Johnson’s hours break down as follows: Attorneys’ Time — 8,299.99 hours Paralegals’ Time — 1,349.95 hours Law Clerks — 56.20 hours Mr. Johnson’s expenses total $273,799.95. Prior to the filing of this action, Mr. Johnson did what is generally regarded as some of the most valuable discovery work done in the c/c heart valve litigation. Through his extensive review of Shiley’s manufacturing records, Mr. Johnson uncovered Shiley’s allegedly shoddy manufacturing practices, which included the polishing, rewelding and reconditioning of cracked and otherwise defective valves and the falsification of manufacturing records. Mr. Johnson is now capable of reading and interpreting Shiley’s voluminous and complex records and claims that he can predict fracture rates based upon the records associated with a particular valve. Accordingly, much of Mr. Johnson’s future work as Special Counsel will be devoted to researching Shiley’s records. As an objector to the settlement, Johnson demanded and helped negotiate the following enhancements to the settlement: 1) The defendants’ unconditional agreement to assist and pay for the identification of those implantees with “reconditioned” valves; 2) Compensation for members who undergo explantation of all related medical bills, travel expenses and pain and suffering; and 3) Compensation for the mental anguish of those members who should undergo ex-plantation but who, for reasons of health, age, etc., decide not to undergo the procedure, as well as an unconditional agreement that defendants will pay for the explantation of these members if the procedure is required on an emergency basis in the future. In addition to his work in reviewing hundreds of thousands of pages of Shiley manufacturing records in order to identify members that were implanted with valves having the highest risk of fracture, Johnson’s work as Special Counsel has included preparing and making an extensive presentation to the Supervisory Panel to assist it in the establishment of guidelines for explantation, working with the Foreign Fracture Panel, updating foreign counsel on the status of the settlement, assisting Class Counsel in opposing appeals to the Sixth Circuit and assisting Class Counsel in his efforts to have the settlement interpreted as entitling class members with valves that have a single-leg fracture to full fracture benefits. Johnson expects that his work in this case will continue to consume at least 50% or more of his time for another five to ten years if implementation of the settlement continues as it has. 3.Special Counsel Lewis J. Saul Mr. Saul, and his New Zealand co-counsel, Michael Okkerse, have expended a total of 1,448.15 hours on this case and have incurred expenses- totaling $13,773.17. All of these hours were billed either by Mr. Saul at an hourly rate of $250.00 or by Mr. Okkerse at an hourly rate of $225.00 Mr. Saul represented a number of New Zealand plaintiffs who initially objected to the settlement and was one of the moving forces behind the following improvements to the settlement: 1) The initial settlement proposal assigned New Zealand a Class III classification under the Fracture Compensation Mechanism on the mistaken belief that New Zealand did not have a common law tort system. Based upon the expertise of Saul and others, New Zealand was reclassified to the much more favorable Class I category; 2) Obtained a substantial increase in the minimum compensation for fracture victims of all foreign countries; and 3) Helped obtain the $10 million spousal compensation fund. In addition, he and Mr. Okkerse performed painstaking research and investigation concerning the distribution of the valves to New Zealanders and undertook to provide notification of the settlement to many New Zea-land health organizations that had not received the original notice of the settlement. As Special Counsel, Mr. Saul’s work has focused on identifying qualified and willing candidates for inclusion on the Supervisory Panel, as well as the Foreign Fracture Panel. He will also provide ongoing service to the Panels and will monitor and represent the interests of foreign class members to assure that they are adequately compensated and treated equitably under the settlement. 4. Special Counsel Charles Wolfson Mr. Wolfson has expended 286.6 hours on this case and has incurred estimated expenses of $10,350.00. The application does not indicate an hourly rate for Mr. Wolfson. Mr. Wolfson acted for Australia in much the same way that Mr. Saul acted for New Zealand. He argued along with Mr. Saul for the inclusion of the Spousal Compensation Fund and took the lead in developing and securing the concept of guaranteed minimum compensation for foreign class members in cases of valve fractures and unsuccessful ex-plantations. As Special Counsel, Mr. Wolf-son’s work will focus on assuring that Australian class members are treated equitably under the settlement. 5. Special Counsel Brian Magaña Counsel’s application does not indicate the number of hours that Mr. Magaña and his Dutch co-counsel, Jan Beer, have expended on this case. Mr. Magaña became involved in this case in 1992 representing the interests of Dutch and other foreign members. As part of his representation of a Dutch consumers’ organization known as The Consumen-tenbond, Mr. Magaña helped negotiate the following improvements to the settlement: 1) The $38,000.00 expense reimbursement provision for explant patients; 2) A $200,000.00 minimum payment for persons from “Group II Countries” (including Holland); and 3) Changes in the way Foreign Fracture Panel operates and clarification of the scope of the Panel’s powers. As Special Counsel, Mr. Magaña will continue to address the particular interests of foreign class members. 6.Special Counsel James T. Capretz Mr. Capretz and his current and former law firms have spent a total of 2,179.90 hours on this case through July 27, 1995, at hourly rates ranging from $70.00 to $225.00. His expenses total $63,005.06. Mr. Capretz’s application does not break down Ms claimed hours into attorney and non-attorney time. Mr. Capretz and Ms former and current law firms have been at the forefront of the Shiley heart-valve litigation, representing plaintiffs in a number of suits filed in Califor-rna. As an objector to the settlement, Mr. Capretz helped bring about a number of improvements to the settlement, including: 1) Limiting members’ release of claims to that of emotional distress for fear of fracture; 2) Providing benefits beyond direct medical expenses for explantation; 3) Requiring defendants to accelerate annual payments into the funds if needed by class members; 4) Obtaining from defendants the understanding that compensation for explants will not reduce the research budget; 5) Class members’ right to appeal if ex-plant surgery is demed; 6) The right of members with a Mgh risk of fracture but the inability to undergo surgery to sue for emotional distress; 7) Re-evaluation of members demed ex-plantation if the guidelines are subsequently modified; 8) Guaranteed payment of medical expenses in advance if required to obtain explant surgery; 9) The appointment of a layman, rather than a scientist, as the seventh member of the Supervisory Panel; 10) The addition of several provisions in the settlement to ensure that no profit inures to defendants out of settlement activities; 11) Creation of a public information repository; 12) Requirement that explant surgery guidelines be predicated only upon “objective” matters, such as valve characteristics; and 13)Creation of the Spousal Compensation Fund. As Special Counsel, Mr. Capretz has appeared at Supervisory Panel meetings, has assisted in a program to provide class members with access to their valves’ manufacturing records and has generally worked with the Court, the Trustees and the Claims Ad-mimstrator in implementing the settlement. B. The Objection of Public Citizen, Gary Crane and Other Class Members to Counsel’s Joint Application Public Citizen, Gary Crane and certain other class members (hereinafter “Public Citizen”) together filed an extensive objection to Class and Special Counsel’s joint fee application. First, and perhaps foremost, Public Citizen does not agree with Class and Special Counsel’s valuation of the settlement. Public Citizen contends that, when present value and contingency considerations are taken into account, the total value of the settlement is somewhere between $125 and $190 million. Public Citizen also depicts the settlement as a “mixed bag”, characterizing the fracture compensation provisions of the settlement as very beneficial, the research to be funded under the plan as thus far oMy moderately beneficial, and the provisions for explantation minimally beneficial because the Supervisory Panel has yet to issue new guidelines for determining who qualifies for such a procedure. In addition, Public Citizen asserts that three Urnted States law firms representing a substantial number of implantees with properly functioning valves opted their clients out of the settlement en masse,. and that these individuals are now settling their emotional distress claims for far more than what a class member participating in the Consultation Fund is scheduled to receive under the settlement. Thus, according to Public Citizen, there were two basic reactions to the settlement: (1) those with representation opted out, and (2) those without representation acquiesced to the settlement. Public Citizen thus concludes that the Class’ working-valve claims were worth well in excess of the $80 million paid into the Consultation Fund, as it and other parties had always maintained. As to Class and Special Counsel’s fee request, Public Citizen contends that Counsel’s application must be evaluated under the lodestar method for two reasons. This first is that the size of the fund is relatively large, and making an award on a percentage basis without cross-checking it with a lodestar analysis will result in a windfall to Counsel. Second, because Special Counsel started out as objectors to the settlement, failure to make their awards on a lodestar basis creates the appearance that Class Counsel was able to “buy off’ their objections by agreeing to appoint them as Special Counsel and pay them a fee that does not bear a relationship to their work or contribution to the settlement. Based upon its lodestar analysis, Public Citizen asserts that Counsel’s fee request of $33 million is dramatically out of line with the value of their services on an hourly basis. Following is a summary of Public Citizen’s analysis of each attorney’s lodestar. 1. Class Counsel Public Citizen assumes that the current hourly rates of all attorneys, law clerks and paralegals in Class Counsel’s firm are reasonable, particularly in view of the delay in payment. It argues, however, that the following reductions in Counsel’s claimed hours are required: (1) all 8,410.25 hours for “staff’ work because this time is part of the overhead included in the attorneys’ billing rates and therefore is not compensable; (2) an across-the-board reduction of 20% in attorney hours because of duplication of effort, overstaffing, inadequate descriptions of tasks performed and attorney time expended on work not requiring an attorney; and (3) a 50% reduction in law elerk/paralegal time because that percentage of their time was devoted to clerical duties such as copying and filing, which are not properly compensable. Based upon these reductions, Public Citizen calculates a basic lodestar for Class Counsel and his firm of $1,234,547.00. Public Citizen then applies a multiplier of 2.0 for fees incurred before approval of the settlement, which it believes sufficiently reflects the fact that there was some risk of non-recovery, but not a great amount of risk because the case was brought for the purpose of settlement. For all of Counsel’s fees incurred after the Court’s approval of the settlement, Public Citizen argues that a reduced multiplier of 1.05 is appropriate because there was very little risk of non-recovery. Applying these multipliers, Public Citizen calculates an enhanced fee of $1,936,497.90 plus all of claimed expenses of $349,551.30, thus yielding a total award for Class Counsel of $2,286,049.20. Based upon this lodestar analysis and the relatively large size of the common fund, Public Citizen asserts that an award based upon a percentage of the fund should be, at most, 5% of the $165 million fund, which yields a fee of $8.25 million. This figure is four times Class Counsel’s enhanced lodestar, as calculated by Public Citizen, but it would not, according to Public Citizen, be unreasonable in light of the results achieved and the future work facing Class Counsel under the settlement. 2. Special Counsel John Johnson Public Citizen agrees that Mr. Johnson has done extremely important work in his litigation against defendants because he has learned to read Shiley’s voluminous and complex manufacturing records, which are allegedly critical to identifying valves with a high risk of fracture. However, Public Citizen rejects this as a basis for the recovery of his hours in 1987, 1988, 1989, 1990 and 1991 hours, which he expended in a Texas case that was brought prior to the commencement of this action. Public Citizen asserts that Johnson is seeking compensation for these hours based upon the theory that his work in the Texas case forced defendants into the global settlement of this ease. Public Citizen does not believe that this theory supports his recovery for those hours in this case, particularly in light of the fact that Mr. Johnson may have settled the Texas case and would, therefore, have already been compensated for his work there. Thus, Public Citizen asserts that none of Mr. Johnson’s time in 1987, 1988, 1989, 1990 and 1991 is compensa-ble from the common fund in this case. After deducting these hours, Public Citizen calculates Johnson’s individual lodestar, enhanced by a blended multiplier of 1.3, as $1,369,516.80, plus expenses of $40,248.53. As to his English co-counsel, Alexander Harris & Co., Public Citizen asserts that only 230 hours, or 33.4% of its claimed 748.89 hours, are properly compensable, which yields an enhanced lodestar of $57,568.51. Thus, Mr. Johnson’s total enhanced lodestar, including expenses, is, according to Public Citizen, $1,479,372.90. 3.Special Counsel Lewis Saul Public Citizen recommends a small reduction of 25 hours because of some minor duplication in Mr. Saul’s claimed hours. Based upon this reduction, Public Citizen calculates Mr. Saul’s lodestar, including Mr. Okkerse’s hours, as $347,776.25. Multiplying this figure by a blended multiplier of 1.3, Public Citizen calculates Mr. Saul’s enhanced lodestar as $452,109.12. As for his claimed expenses of $10,773.17, Public Citizen asserts that only $8,000.00 of these expenses can be justified. Thus, Public Citizen recommends a total award to Mr. Saul of $460,109.12. 4. Special Counsel Charles Wolfson Public Citizen finds all of Mr. Wolfson’s claimed 286.6 hours reasonable. Because Mr. Wolfson does not state his hourly rate in the application, Public Citizen assigns him an hourly rate of $250.00 and calculates his lodestar as $68,067.50. Public Citizen employs a blended lodestar of 1.25, which it asserts takes account of the fact that approximately half of Mr. Wolfson’s hours were spent prior to approval of the settlement and half after. Thus, Public Citizen recommends a total award of $95,434.38, based upon an enhanced lodestar of $85,084.38 plus expenses of $10,-350.00. 5. Special Counsel Brian Magaña Because Mr. Magana and his Dutch co-counsel, Jan Beer, have not itemized their hours, Public Citizen does not calculate a lodestar for Mr. Magaña. Public Citizen characterizes Mr. Magana’s role in this case as “relatively modest” and asserts that it would be inappropriate to increase Counsel’s overall fee award by anything more than $50,000.00 to account for Mr. Magaña’s and Mr. Beer’s work. 6.Special Counsel James T. Capretz Public Citizen, finding all of Mr. Capretz’s claimed hours reasonable and well documented, calculates his lodestar as $430,586.00. Suggesting a multiplier of 1.75 for all of the hours expended by Mr. Capretz and his firm prior to approval of the settlement, and a very minimal multiplier of just over one for those hours expend after approval of the settlement, Public Citizen calculates an enhanced lodestar of $683,408.00. Adding to this figure Mr. Capretz’s claimed expenses of $63,005.06, Public Citizen arrives at a total award for Mr. Capretz of $746,413.06. Thus, the total maximum fee that could be properly awarded to Class and Special Conn-sel on their joint application, according to Public Citizen, is $11,081,329.46, broken down as follows: Class Counsel - $ 8,250,000.00 (5% of common fund) John Johnson - 1,479,372.90 (enhanced lodestar) Lewis Saul - 460,109.12 (enhanced lodestar) Charles Wolfson - 95,434.38 (enhanced lodestar) Brian Magaña - 50,000.00 (estimate) James Capretz - 746,413.06 (enhanced lodestar) TOTAL - $11,081,329.46 C. Public Citizen, Inc.’s Fee Application Public Citizen seeks a total award of $105,-037.46 based upon an enhanced lodestar of $99,070.30 and total expenses of $5,967.16. In support of its request, Public Citizen shows that its attorneys have expended a total of 355.10 hours on this ease at hourly rates ranging from $180.00 to $300.00. Public Citizen applies a multiplier of 1.5 to the hours that its attorneys expended prior to the Court’s approval of the settlement, a multiplier of 1.1 for those hours expended while the appeals were pending and no multiplier for hours expended after the settlement became final and unappealable. According to its application, Public Citizen has been at the forefront of bringing the problems associated with the c/c heart valve to light. It brought suit against defendants in California, petitioned the FDA to require defendants to notify implantees and their physicians of the risk of fracture and negotiated the terms of the notification program with the defendants. Furthermore, through its clearinghouse, Public Citizen assisted dozens of lawyers in bringing suit against defendants by creating a paper trail of liability that lawyers around the nation utilized. Public Citizen’s participation in this ease has included numerous objections to the settlement, participation in the negotiations that led to the enhanced settlement, work with the Supervisory Panel and objections to the applications for attorneys’ fees currently before the Court. No objections to Public Citizen’s application have been filed. D. Application for an Award of Costs by The Consumentenbond The Consumentenbond, a Dutch non-profit consumer advocate organization, has filed an application seeking an award of $197,675.00. According to its application, this figure represents its estimated in-house costs to date in dealing with all of the problems related to the c/c heart valve and the settlement based upon an analysis by its in-house controller. According to its application, The Consu-mentenbond has been working on the c/c heart valve problem since 1985, spending thousands of hours handling questions and matters relating to the approximately 2,617 valves that have been implanted in 2,303 Dutch patients. After it became aware of the full scope of the problems with the valve, The Consumentenbond petitioned the Dutch Government to commission a study to determine which valves were most likely to fracture and what the best course of action would be. The Dutch Government ultimately commissioned a study, which was published in the English medical journal, The Lancet, and the FDA subsequently required the defendants to send a copy of the study to all doctors who were treating patients implanted with the valves. After approval of the settlement in 1992, The Consumentenbond acted as an information conduit between the United States parties and Dutch implantees. It continued in this capacity after approval of the settlement, providing its members with updated information about the research being done and the recent developments over the issue of single-leg fractures. Finally, it assisted its members in filling out the various claim forms required for participation in the settlement. Public Citizen objects to The Consumen-tenbond’s application asserting that, although its work is admirable, its expenses are not documented, are based solely upon estimates and, in large part, relate to work done as far back as 1985. Public Citizen also points out that The Consumentenbond does not reveal whether it received compensation for its expenses from other sources. Thus, although The Consumentenbond might be entitled to a modest award if it could properly document its expenses relating directly to this case, Public Citizen objects to any award without proper documentation. On September 12,1995, The Consumenten-bond filed, in response to Public Citizen’s objection, an affidavit by its Legal Counsel setting forth that $106,500.00 of its estimated $197,675.00 in in-house costs were incurred after it received notice of this case in January, 1992. These costs break down as follows: Personnel, Legal and Administrative $ 80,000.00 Office Supplies Related to This Case 20,000.00 Communication Costs (faxes, mailing and shipping, documents to members) 6,500.00 Total Estimated In-House Costs Incurred After January, 1992 $106,500.00 In response to this filing, Public Citizen notes that, although the affidavit does provide some useful additional information, The Consumentenbond’s use of rough estimates in lieu of detailed documentation of its expenses makes it extremely difficult to determine how much of its costs are compensable in this case. Accordingly, Public Citizen requests that the Court exercise its discretion and reduce any award made to The Consu-mentenbond to reflect the lack of detail in its application. E. Application of Thomas K. Herren, Esq. Mr. Herren represented a class member named Michael Zehender and seeks an award of $6,884.00 for that representation. According to his affidavit, Mr. Herren began representing Mr. Zehender on July 11, 1991. The affidavit further reflects that Mr. Her-ren’s work was done for Mr. Zehender individually rather than on behalf of the Class. Because Mr. Herren’s work was done for his client, rather than the Class, Public Citizen objects to his application. Mr. Herren’s services did not confer any benefit upon the plaintiff class; thus, he is not, according to Public Citizen, entitled to an award from the common fund in this case. F. Affidavit of Guy N. Perenich, Esq. for Attorney’s Fees Mr. Perenich seeks an award of $2,116.00 for his representation of a class member and his wife in this case. Perenich’s amended affidavit reflects that all of his work was done on behalf of his clients rather than on behalf of the plaintiff class. Public Citizen objects to Mr. Perenich’s application on the ground that he never entered an appearance in this case or filed an objection to the settlement. Thus, Public Citizen asserts that Mr. Perenich had nothing to do with creating or enhancing the settlement fund and thus is not entitled to an award therefrom. VI. DISCUSSION A. Fee Awards in a Common Fund Case The settlement of this case clearly resulted in a fund (composed of the Patient Benefit, Consultation and Spousal Compensation Funds) for the common benefit of the settlement class. “[A] litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 749, 62 L.Ed.2d 676 (1980). This doctrine, known as the “common-fund doctrine”, derives from a federal court’s “historic equity jurisdiction”, Sprague v. Ticonic Natl Bank, 307 U.S. 161, 164, 59 S.Ct. 777, 779, 83 L.Ed. 1184 (1939), and is premised upon the principle “that persons who obtain the benefit of a lawsuit without contributing to its costs are unjustly enriched at the successful litigant’s expense.” Boeing, 444 U.S. at 478, 100 S.Ct. at 749. Accordingly, those attorneys and organizations who contributed to the creation of the common fund in this case are entitled to a reasonable fee therefrom. “When an attorney makes a claim for fees from a common fund, his interest is “adverse to the interest of the class in obtaining recovery because the fees come out of the common fund set up for the benefit of the class.” Rawlings v. Prudential-Bache Properties, Inc., 9 F.3d 513, 516 (6th Cir.1993). This divergence of interests requires a court to assume a fiduciary role in reviewing fee applications because “there is often no one to argue for the interests of the class (that their recovery should not be unfairly reduced), since it is to be expected that class members with small individual stakes in the outcome will not file objections, and the defendant who contributed to the fund will usually have scant interest in how the fund is divided between the plaintiffs and class counsel.” Rawlings, 9 F.3d at 516. (footnote omitted). The court’s responsibility is only heightened where, as here, the common fund results from a pre-certification settlement: [T]he divergence in financial incentives present here “creates the danger that the lawyers might urge a class settlement at a low figure or on a less-than-optimal basis in exchange for red-carpet treatment for fees” ... This generates an especially acute need for close judicial scrutiny of fee arrangements that implicate this concern, (citations and alterations omitted) In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 821 (3rd Cir.1995) (quoting Weinberger v. Great Northern Nekoosa Corp., 925 F.2d 518, 524 (1st Cir.1991)), cert. denied, — U.S. -, 116 S.Ct. 88, 133 L.Ed.2d 45 (1995). B. Selecting the Method of Award Although the preferred method of award in common fund cases has historically been to award a reasonable percentage of the fund, this approach fell into disfavor during the 1970s because it was thought to frequently yield fee awards that were excessive and unrelated to the work actually performed. Court Awarded Attorney Fees, Report of the Third Circuit Task Force, 108 F.R.D. 237, 242 (1986) (“Third Circuit Report ”). Led by the Third Circuit’s decision in Lindy Bros. Builders, Inc. of Phila. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167-68 (3rd Cir.1973), courts began with increasing frequency to use the lodestar approach to calculate fee awards in common fund cases. See e.g., Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1265-66 (D.C.Cir.1993); Third Circuit Report, 108 F.R.D. at 242. The lodestar method requires a court to calculate the product of an attorney’s reasonable hours expended and reasonable hourly rate. The lodestar calculation can then be adjusted upward or downward, through application of a “multiplier”, to account for additional factors such as the contingent nature of the case and the quality of an attorney’s work. Shalala, 1 F.3d at 1266; Third Circuit Report, 108 F.R.D. at 242. Two developments in the 1980s, however, marked a reversal in the trend toward the lodestar method. The first was a footnote in a 1984 Supreme Court decision suggesting that an award in a common fund case should be based upon a percentage of the fund: Unlike the calculation of attorney’s fees under the “common fund doctrine,” where a reasonable fee is based on a percentage of the fund bestowed on the class, a reasonable fee under § 1988 reflects the amount of attorney time reasonably expended on the litigation. Blum v. Stenson, 465 U.S. 886, 900, n. 16, 104 S.Ct. 1541, 1549 n. 16, 79 L.Ed.2d 891 (1984). The second was a report issued by the Task Force appointed by the Third Circuit to evaluate the practical effectiveness of the lodestar method in making fee awards. Third Circuit Report, supra. The Task Force noted nine different deficiencies that had been leveled against the lodestar approach: 1) It “increases the workload of an already overtaxed judicial system”; 2) Its elements “are insufficiently objective and produce results that are far from homogenous”; 3) It “creates a sense of mathematical precision that is unwarranted in terms of the realities of the practice of law”; 4) It “is subject to the manipulation of the judges who prefer to calibrate fees in terms of percentages of the settlement fund or the amounts recovered by the plaintiffs or of an overall dollar amount”; 5) Although designed to curb certain abuses, it has led to other abuses, such as “encouraging lawyers to expend excessive hours engag[ing] in duplicative and unjustified work, inflat[ing] their ‘normal’ billing rate, and including] fictitious hours”; 6) It “creates a disincentive for the early settlement of cases”; 7) It “does not provide the district court with enough flexibility to reward or deter lawyers so that desirable objectives, such as early settlement, will be fostered”; 8) It “works to the particular disadvantage of the public interest bar” because “the ‘lodestar’ in the so-called ‘money1 cases, such as securities and antitrust actions, are set higher than they are in the Civil Rights Attorneys Fees Awards Act of 1976”; 9) “Despite the apparent simplicity of the [lodestar] formulation, considerable confusion and lack of predictability remain in its administration.” Third Circuit Report, 108 F.R.D. at 246-49. Characterizing the lodestar approach as a “cumbersome, enervating, and often surrealistic process of preparing and evaluating fee petitions that now plagues the bench a