# Petition — Leib v. Twentieth Century Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1129%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1976 - **Citation:** 429 U.S. 1020 ## Text / Supreme Court, U. $, FILED NOV *4 1976 (Revised) 2. RODAK, JR. CLER IN THE Supreme Court of the United States No. 76-948 RUTH C. LEIR, FRANK B. LEIB, ANDREW YENCHKO, MARY K. YENCHKO, CLETUS P. LYMAN, ESQ., and RICHARD A. ASH, ESQ., Petitioners, v. 20TIL CENTURY CORPORATION, JAMES C. ROBERT- SON, ROBERT NELSON, ROBERT DI STEFANO, ALLEN (. SPANGLER, A. C. MURPHY, SHERNO RESEARCH CENTER, INC., GOLDCHIP FUNDING COMPANY, and COSMOPOLITAN INVESTORS FUNDING COMPANY, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT CLETUS P. LYMAN, Petitioner, Pro Se, and Attorney for Other Petitioners. Of Counsel: Lyman & Asm, 1612 Latimer Street, Philadelphia, Pa. 19105, (215) 782-7040. [| ——— BATAVIA TIMES, APPELLATE COURT PRINTERS EASTERN PENNSYLVANIA REPRESENTATIVE i EDWARD W. SHANNON THE PLATA, SUITE 10H, PHILADELPHIA, PA. 18108 PMONEs (218) 668.7708 — —e— —- ——_ — INDEX. Opinions, Orders, and Judgments Below............. ee Chic audn Chk bean skis Whe 0d b6s + OEE Questions Presented ..........cccceess iwetnesieetieen Constitutional Clause Involved...................06. EE RE I eT en ae Jurisdiction of the district court .......... ccc auG ici eadened cha ene eeu GS a CU ee pect teeedeuse we Course of the Proceedings................ . Statement of Facts Material to Consideration of the Questions Presented .............c.00000. wr wn Reasons Why the Petition Should Be Granted........ 1. This case involves federal questions of ex- traordinary importance, and the court of appeals has sanctioned a departure by the district judge from the accepted and usual course of judicial proceedings so as to call for an exercise of this Court’s power of supervision ................55. 2. The court of appeals has departed from the accepted and usual course of judicial proceedings so as to call for an exercise of this court’s power of SID 65 dé de cbdncchecsncsnnctadsseuseesc: 3. The court of appeals decided questions of federal law in conflict with applicable decisions of EE otk Knndcncccccnacesndbacveseieabines 4. The court of appeals decided a question of federal law in conflict with other courts of appeals SEER ERP ay Sa aa OTLEY ALON i a me hee me Ge eR 16 27 27 31 33 Page Appendices: A—Order of the United States Circuit Court of Appeals for the Third Circuit, Dated September 29, SUE SAGhcAD Ribot k ddseeuUeheeaas deed laensds Al B—Sur Petition for Rehearing ................ A3 C—Order of the United States Court of Appeals for the Third Circuit Dated July 29, 1976 ....... AS D—Order of the United States District Court GG SE ee ae A7 E—Order of Impoundment................... A8 Pe GU WP GIN, 6 ov nesccckncctccescs AlO G—Order of the United States Court of Appeals for the Third Circuit, Dated 2 ae A45 H—Order of the United States District Court FN ASR ER EE a nae A47 I—Articles Printed in the daily press.......... AS7 J—List of Charges made by District Judge against Attorney Petitioners in Opinion of March 28, 1975 A63 K—Opinion and Order of the United States District Court, Dated March 28, 1975........... A6é5 L—Order of the United States District Court, Dated December 19, 1974................. .. »--Al45 M—Expenses Petition................... see oe N—Petition of Piaintiffs’ Counsel For Award of Counsel Fees TABLE OF CASES. Alyeska Pipeline Service Co. v. Wilderness Society, I I a cai Fa, eas 2 ae 28,32 Cort v. Ash, 422 U.S. 66 (1975) ...........0cccc eee. 18 F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116 hide ciduaiben tovekt Meets Se 28 — ca <0 SS III. Page Figueroa Ruiz v. Delgado, 359 F.2d 718 (Ist Circuit, Ph ocees ds suseneecestenenanewess ideeeiaewennas 33 Freeman v. Ryan, 408 F.2d 1204 (D.C. Circuit, 1968) 33 Goss v. Lopez, 419 U.S. 565 (1975) ...........05005. 32 Green v. Elbert, 137 U.S. 615 (1891)................ 32 In re Goldchip Funding Company, 61 F.R.D. 592 CEs cc ve dacns deed enesnceceveoeacensenes 19 In re Murchison, 349 U.S. 133 (1955).............-. 27,32 In re Nazareth Fairgrounds and Farmers’ Market, Inc., 374 F.2d 595 (2nd Circuit, 1967)................-. 33 Knapp v. Kinsey, 232 F.2d 458 (6th Circuit, 1956)... 33 Ludwig v. Massachusetts, No. 75-377, decided June 30, ee TEER Se | MTT Teeter 30 Mayberry v. Pennsylvania, 400 U.S. 455 (1971) ...... 32 Mills v. Electric Auto-Lite Co., 396 U.S. 375 Ss ¢ 0 Se edhceoebsuescusecessoueesstasebeses 9,28,32 N.L.R.B. v. Phelps, 136 F.2d 562 (Sth Circuit, 1945). 33 New York Indians v. United States, 170 U.S. 1 (1887) 32 Offutt v. United States, 348 U.S. 11 (1954) .......... 32 Quercia v. United States, 289 U.S. 466 (1933)........ 30 Ramey v. Cincinnati Eaquirer, Inc., 508 F.2d 1188 (6th ene: Th |. A Goveucsvépebdesetuasevcenaseves 33 Reynolds v. Stockton, 140 U.S. 254 (1891)........... 32 Rogers v. Richmond, 365 U.S. 534 (1960) ......... — Rosen v. Sugarman, 357 F.2d 794 (2nd Circuit, 1966) 33 Sprague v. Ticonic Bank, 307 U.S. 161 (1938)........ 6 Supreme Council of Royal Arcanum v. Green, 237 U.S. Se EE oc 60-0 con uke 8604 OK GREEORS bE 6b 06055-0660 32 Trustees v. Greenough, 105 U.S. 527 (1881) ......... 28 Watts, Watts & Co. v. Union Austriaca Navigatione, 248 SRS, De ov os nb ccencecseanescsevenseesecesese 32 Whitaker v. McLean, 118 F.2d 596 (D.C. Circuit, 1941) 33 Williams v. Florida, 399 U.S. 78 (1970) ............. 30 IV. TEXT. Statsky, Introduction to Paralegalism eee eoeveeeeeeseeees IN THE Supreme Court of the United States RUTH C. LEIB, FRANK B. LEIB, ANDREW YENCHKO, MARY K. YENCHKO, CLETUS P. LYMAN, ESQ., and RICHARD A. ASH, ESQ., Petitioners, v. 20h CENTURY CORPORATION, JAMES C. ROBERTSON, ROBERT NELSON, ROBERT DI STEFANO, ALLEN C. SPANGLER, A.C. MURPHY, SHERNO RESEARCH CENTER, INC., GOLDCHIP FUNDING COMPANY, and COSMOPOLITAN INVESTORS FUNDING COMPANY, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT Petitioners Ruth C. Leib, Frank B. Leib, Andrew Yenchko, Mary K. Yenchko, Cletus P. Lyman, Esq., and Richard A. Ash, Esq., pray that a Writ of Certiorari issue to review the judgment of the Court of Appeals for the Third Circuit, ren- dered in these proceedings on July 14, 1976. Opinions, Orders, and Judgments Below On December 5, 1974, Judge Muir of the United States District Court for the Middle District of Pennsylvania orally denied an oral motion that he recuse himself. On December 2 19, 1974, the district judge denied a written motion that he re- cuse himself, with opinion. The opinion is not reported, but is reproduced as Appendix L, hereto. On March 28, 1975, the district court entered judgment, awarding attorney petitioners $3,000 in fees and $6,256.72, as reimbursement of expenses, and awarding plaintiff petitioners a total of $460.00 as re- imbursement of expenses. The 79-page opinion is unreported but is reproduced as Appendix K, hereto. On June 18, 1975, the district judge entered an order denying attorney petitioners’ motion that his opinion of March 28, 1975, not be published at least pending appeal and ordering that it be pubiished by West Publishing Company. The order is reproduced as Appendix H, hereto. On July 11, 1975, the United States Court of Appeals for the Third Circuit entered an order, without opinion, staying publication of the district judge’s opinion, pending final disposition of attorney petitioners’ appeal from the district judge’s order of June 18, 1975. The order is reproduced as Appendix G, hereto. On July 14, 1976, the Court of Appeals entered judgment, modifying the judgment of the district court of March 28, 1975, by increasing the amount of the fee awarded to attorney petitioners to $15,400, and affirming the judgment of March 28, 1974, in other respects. The judgment was accompanied by an opinion, which is not reported but is reproduced as Ap- pendix F, hereto. The opinion of the Court of Appeals direct- ed that the opinion of the district court of March 28, 1975, be restricted to counsel, the district court, and the Disciplinary Board of the Supreme Court of Pennsylvania, pending further order of the court, and that counsel preserve the con- fidentiality of both the district court opinion and the Court of Appeals opinion, pending further order of the Court of Ap- peals. On July 14, 1976, the Court of Appeals entered an or- der impounding its own opinion of that date until further or- 3 der of the Court. The order is reproduced as Appendix E, hereto. On July 14, 1976, the district judge impounded his opinion of March 28, 1975, pending further order of the court. The order is reproduced as Appendix D, hereto. On August 26, 1976, the Court of Appeals denied attorney petitioners’ petition for rehearing. The order is reproduced as Appendix B, hereto. On September 29, 1976, the Court of Ap- peals denied attorney petitioners’ application for modification of its opinion and mandate, without opinion. The order is reproduced as Appendix A, hereto. Jurisdiction The Court of Appeals entered judgment modifying, in part, and affirming, in part, the district court, on July 14, 1976. The Court of Appeals, by order of July 29, 1976 [reproduced as Appendix C, hereto], enlarged the time in which to file a petition for rehearing through August 17, 1976. A timely petition for rehearing was filed on August 17, 1976, and was denied by order of August 26, 1976 [Appendix B, hereto]. The jurisdiction of this court is invoked under Title 28 U.S.C. § 1254(1), granting jurisdiction to this court to review by writ of certiorari cases in the courts of appeal upon petition of any party. Questions Presented 1. Did the Court of Appeals err (1) in holding that at- torneys petitioning for awards of counsel fees and expenses under the “common benefit” principle were not entitled to a disinterested judge and (2) in approving the judge’s as- sumption of the role of “guardian” of shareholders of a cor- porate party adverse to petitioners, even though the cor- 4 poration was represented by counsel, vigorously opposing such awards? 2. Did the Court of Appeals err in deferring to the find- ings of fact and assessments of credibility of the district judge, pursuant to F.R.C.P. 52(a), and to his other subjective determinations where: (a) the judge showed bias and hostility toward attorney petitioners? (b) the judge defamed them by making erroneous “findings” of fraud and unethical conduct, in disregard of their fundamental rights to notice of charges in advance and an opportunity to be heard thereon? (c) the judge made key misfindings of fact and showed carelessness and lack of objectivity throughout his decision? (d) the judge on the third of eight days of hearing without any basis accused attorney petitioners’ bookkeeper of giving false testimony concerning the preparation of certain expense records and accused petitioners of “attempting to perpetrate a fraud upon the court’? (e) the judge based his finding that the testimony of at- torney petitioners was not credible upon his erroneous “find- ings” of fraud and unethical conduct? (f) the judge carried out secretly in parallel with the fee and expenses proceedings his own prosecution of charges of fraudulent and unethical conduct, in which he acted as ac- cuser, prosecutor and judge? 3. Did the Court of Appeals err in overlooking such pro- cedural irregularities in the district court as failure to join issues in advance of hearing on hundreds of accounting items, the permission of the district judge to vindictive defendants 5 to oppose a fee award from a fund belonging to plaintiffs and their corporation, and the conducting of the hearing like a boundless discovery proceeding rather than a trial oi issues of fact? 4. Did the Court of Appeals err in awarding attorney petitioners only $15,400 for their efforts, where they spent at least 1,274 hours in legal services, where they achieved a sub- stantial set of rights for a corporation, in its capacity as a security holder in another corporation, an increase in the number of securities and $40,000 in damages, and where the principle defense counsel were paid at least $70,000 for their efforts and where counsel for individual defendants were paid $25,000? In particular, did the Court of Appeals err: (a) in holding that a monetary benefit was necessary to give rise to a fee award? (b) in holding that the participation of counsel for the beneficiary corporation in settlement negotiations was a fac- tor subtracting from attorney petitioners’ entitlement to be paid, even though corporate counsel did nothing to prosecute the litigation? 5. Did the Court of Appeals err in affirming an arbitrary award of only 60% of attorney petitioners’ expenses? 6. Did the Court of Appeals err in not expunging from the record a district judge’s opinion that was replete with de- famatory statements, made without notice and opportunity to be heard in advance on the truth of such statements, and that contained confidential and irrelevant information about at- torney petitioners? 7. Did the Court of Appeals err in communicating with and seeking an advisory investigation by the Disciplinary 6 Board of the Supreme Court of Pennsylvania as a predicate to its ultimate disposition of the case? 8. Did the Court of Appeals err in excluding evidence of relevant facts supervening since judgment in the district court, where the evidence contradicted the unfounded speculation of the district court about future events? 9. Did the Court of Appeals err in not awarding costs on appeal and in not stating whether interest should be paid from the date of the district court judgment? Constitutional Clause Involved Constitution of the United States, Amendment V: “. . .; nor [shall any person] be deprived of life, liberty, or property, without due process of law; . . .” Statement of the Case 1. Jurisdiction of the district court Jurisdiction of the district court of the petitions for award of counsel fees and expenses was based on the principle of continuing jurisdiction to hear such petitions arising from legal services in litigation, of which the court had jurisdic- tion. This principle was stated by this court in Sprague v. Ticonic Bank, 307 U.S. 161 (1938). 2. Background Goldchip Funding Company and Cosmopolitan Investors Funding Company are affiliated corporations. Goldchip owns about one-third of the stock of Cosmopolitan, which in turn owns various defunct subsidiaries. Goldchip and 7 Cosmopolitan were founded in late 1967 by defendants Robert Nelson and Robert Di Stefano, two former dancing instructors, turned insurance salesmen and stock promoters. The corporate purpose was life insurance. Ruth C. Leib, Frank B. Leib, Andrew Yenchko and Mary K. Yenchko (‘plaintiff petitioners’) were shareholders of these companies, along with about 5,000 other residents of Penn- sylvania. The companies’ only successful activity was selling stock, to the extent of about $6 million worth. Under the guidance of their founders, the companies lost all but about $1,500,000 between 1967 and june 30, 1972. At that time, the directors of Cosmopolitan decided to terminate operations and sell out. Led by Nelson, the directors decided to amalgamate with 20th Century Corporation, another small, recently formed insurance company, with an only slightly brighter history and prospects. Nelson arranged for a cash buy-out of his interests (for which he had paid in services), but the investors in Cosmopolitan and Goidchip were to receive only unmarketable 20th Century common stock. Due to legal delays involved in a full-scale merger, the parties set out upon a two-step plan of amalgamation. The first step called for an immediate purchase of Cosmopolitan’s in- surance operation. The directors of Cosmopolitan thought that this step (“Step One’’) did not require shareholder ap- proval. Step One was completed by the end of 1972. In Sep- tember, 1973, the directors presented to the shareholders of Cosmopolitan a plan to transfer all remaining assets of Cosmo- politan to 20th Century in return for 20th Century common stock (“Step Two”). These assets were of investment quality and included marketable corporate bonds, common stock and developed and undeveloped tracts of real estate, having aggregate value of about $1 million. Step One involved a payment to Cosmopolitan of 223,118 common shares, and 8 Step Two involved a payment to Cosmopolitan of 260,890 common shares. Having no market, 20th Century shares were evaluated by 20th Century at $4.21, and this value was ac- cepted by Cosmopolitan without independent appraisal. This was more than double 20th Century’s book value, and its operating history suggested that a discount, rather than a premium, was in order. 20th Century sustained losses before Capital gains in every year from 1969 through 1972 and, as it subsequently developed, it lost $729,704 in 1973 (equal to about one-seventh of its net worth). 20th Century’s principal business is credit accident and health insurance, described by an insurance expert as “highly volatile’’. On September 27, 1973, plaintiff petitioners sued to prevent Step Two from taking place, on grounds that proxy solicitations sent to shareholders were misleading and that the plan was a fraud on shareholders and a waste of corporate assets. Step Two was alleged to be unfair to Cosmopolitan and Goldchip shareholders and contrary to their best in- terests. The cash buy-off of Nelson, but not of the other shareholders, was cited. The district court denied ap- plications for restraining injunctions. Step Two was con- summated with the approval of Cosmopolitan directors, and the case proceeded to trial for either recision or damages. Plaintiff petitioners also sued Nelson, Di Stefano, a former officer and another director of Cosmopolitan, on the grounds of negligence and conversion, for the approximately $4,500,000 lost between 1967 and 1972. The case was factually complex, due to the maze of irregular transactions in which Cosmopolitan engaged. Nelson estimated that Cosmopolitan had at least 34 defunct subsidiaries, and part ownership in a Caribbean island and several off-shore mutual funds. With the exception of the in- 9 surance subsidiary, each of the investments was a total loss to Cosmopolitan. Prosecution of the action was made difficult by the initiation of an SEC investigation as a result of this suit. Defendants sent most of their corporate records to the Commission, delaying plaintiffs’ trial preparation. This was significant because of the policy of the district judge, to whom the case had been assigned, that all civil cases should be tried within six months of filing, and preferably sooner. The case was vigorously litigated, with about 30 motions and applications. At one point, defendants filed in- terrogatories addressed to all 5,000 class members and served them on counsel with a request that they be answered under oath within 30 days. (Objections to these interrogatories were sustained.) By the beginning of trial, only 11 months after the action commenced, there had been 235 docket entries. The parties had to simultaneously prepare the case for trial, ex- plore settlement possibilities, and, in the case of plaintiffs, in- vestigate several defendants’ ability to pay judgments if won. ~ The case came to trial on August 29, 1974, and was settled, subject to court approval, in the courtroom on September 5, 1974, after several trial days. The Court approved the settle- ment on November 18, 1974. 3. The Petitions On November 18, 1974, attorney petitioners filed a petition for award of counsel fees in the amount of $75,000. Citing Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970), attorney petitioners asked that their fee be paid by Cosmopolitan. Richard A. Ash, Esq., stated that he spent 599.8 identifiable hours in prosecuting the action, and Cletus P. Lyman, Esq., stated that he spent 674.4 identifiable hours in prosecuting the action. Each attorney attached a schedule showing the date of 10 each service rendered, the nature of the service, and the hours spent on each date. Lyman stated that the fair hourly billing rate for non-contingent services of lawyers in the area com- parable to himself was no less than $50.00 per hour, and Ash stated that the fair hourly billing rate for non-contingent serv- ices for comparable attorneys in the area was no less than $60.00 per hour. The fee petition is reproduced as Appendix N, hereto. On December 3, 1974, petitioners filed a petition for award of identifiable expenses of litigation incurred by plaintiffs and their attorneys. Petitioners requested that Cosmopolitan reimburse attorney petitioners in the amount of $10,427.86 and reimburse plaintiffs in the amount of $460.00. The petition alleged that attorneys had spent $2,939.51 for notes of testimony, $2,378.16 for witness fees, $1,231.96 for travel, $847.99 for long distance telephone calls, $781.05 for paralegal services, $734.42 for printing, $602.52 for mailing, $494.48 for copying (out of office), $178.93 for service of process, $178.47 for dinners for staff (overtime), $138.00 for clerks’ fees, $150.00 for copying (in office), $105.70 for mailing services, $25.72 for messengers, $25.00 for clerical services, $85.00 for addressed labels, and $33.00 for lunches and dinners with clients. The petition alleged that Cosmopolitan had already reimbursed $218.15 pursuant to an agreement to share certain costs during litigation and that $280.90 was repaid by witnesses who did not appear at trial. The petition alleged that plaintiffs incurred traveling ex- penses in traveling to hearings, shareholder meetings, and conferences in the amount of $460.00. The expenses petition contained a schedule which showed the date on which each expenditure by attorney petitioners was made, the payee, the nature of the expense and, in most cases, an explanation why the expenses were made. The expenses petition is reproduced as Appendix M, hereto. 4. Course of the Proceedings On the fourth day of trial of the primary case, September 4, 1974, the parties informed the court that during the trial recesses they had been able to arrive at a concept for settle- ment and that it was the desire of all parties that a one-day recess be granted to see if a settlement could be achieved. On September 5, 1974, all parties announced a settlement, subject to approval of the court after notice to Cosmopolitan shareholders. On October 18, 1974, notice was sent to shareholders advising them of the proposed settlement, of their opportunity to object at a hearing on November 18, 1974, and of the intention of attorney petitioners to seek a fee of $75,000 and expenses of about $10,000 in the event that the settlement was approved. The settlement was approved without objection on November 18, 1974. The Court reserved jurisdiction to consider the matter of counsel fees and ex- penses. Shareholders who attended the hearing were told that they had a right to be heard on the question of counsel fees and expenses, if they wished, and that they should notify the clerk if they desired to be notified of the date of hearing. In connection with the hearing on November 18, 1974, at- torney petitioners filed and provided a copy of their fee petition to the court and opposing counsel together with a copy of an expense petition substantially identical to that which was subsequently filed. No answers or objections were ever filed in response to the fee and expense petitions nor was any pre-hearing discovery ever sought from petitioning coun- sel. 4 The hearing on the petitions for fees and expenses com- menced on December 3, 1974. The hearing was attended not only by petitioners and by counsel for defendant Cosmopolitan, but also by counsel for defendants 20th Cen- 12 tury and Robert Nelson. The hearing continued throughout December 3, 4, 5, 6, 7, 16, 17 and until midday on December 18. Despite attorney petitioners’ repeated requests that coun- sel for defendants other than Cosmopolitan be excluded from the proceedings, the district judge permitted them to par- ticipate as if their clients had standing. The district judge also ignored attorney petitioners’ repeated request that defense counsel state objections, if any, to the petitions in advance of testimony. The hearing was conducted like a discovery proceeding, and defense counsel were permitted wide latitude to cross-examine attorney petitioners on their petitions and numerous irrelevant details of their legal practice and per- sonal lives. The judge acted as if petitioning counsel should have available in court all documents that could conceivably bear upon the inquiry. The judge vigorously participated, asking many questions, both during the examination by defendants and the periods reserved for court questions. The court sua sponte ordered production of information from at- torney petitioners’ tax returns, disclosing their past incomes and overhead. The judge stated that he was acting as a “guar- dian” for shareholders and he said that his role was “primarily for [shareholders’|] protection”. He assumed this role even though Cosmopolitan, the party from whom fees and expenses were sought, was represented by counsel, who was familiar with the case and had demonstrated complete adversity to petitioners throughout the litigation and, in par- ticular, with respect to the fee and expenses petitions. Petitioners were thus opposed by an array of: counsel representing the party from whom they sought awards, two attorneys for defendants whose motive was reprisal against attorney petitioners, and the district judge. During the hearing on the petitions on December 5, 1974, the district judge, without any factual basis, expressed the 13 suspicion that (a) attorney petitioners’ bookkeeper had given false testimony concerning the preparation of certain expense records and (b) that petitioning counsel had attempted ‘‘to perpetrate a fraud on this court”. On the same day, attorney petitioners proved that these charges were baseless and then moved that the district judge recuse himself because of bias and prejudice against them. The judge denied this oral motion as well as a subsequent written motion to the same effect. On March 28, 1975, the district judge filed an 81-page opinion based on his bench notes of trial rather than the trial transcript. That opinion comprised 298 separate “findings of fact”, 17 pages of discussion, and 20 “conclusions of law”. The opinion also included a statement that a copy was being furnished by the judge to the Disciplinary Board of the Supreme Court of Pennsylvania. The opinion found that the value of attorney petitioners’ services was $6,000. The judge then reduced attorney petitioners’ fee to $3,000 because of charges of “fraud” and “unethical conduct”, which he erroneously leveled at at- torney petitioners in his “findings” and opinion. The judge’s charges are set forth as Appendix J, hereto. The charges were different from the charge made during the hearing, which had been completely disproved. The charges had not been made prior to the opinion by the court or any party. The judge also disallowed 40% of attorney petitioners’ claimed expenses. The judge did, however, award plaintiffs reimbursement of the full $460.00 claimed by them. The release of the district judge’s opinion was foreseeably followed by wide publicity in the daily press, reporting the “findings” of the district judge and his referral of the matter to the Disciplinary Board. Several such articles are reproduced as Appendix I, hereto. Attorney petitioners appealed to the Court of Appeals on 14 April 7, 1975. Plaintiff petitioners also filed timely appeals. Attorney petitioners requested that the district judge withhold his decision from publication by West Publishing Company at least until the Court of Appeals had heard and decided their appeal. The trial judge not only refused this request but issued an order [ Appendix H, hereto] stating that the opinion should be published and noting that he requested its publication to alert other courts to his views concerning the alleged misconduct of attorney petitioners. Attorney petitioners appealed that order and moved the Court of Appeals to stay publication of the opinion, pending the Court of Appeals’ decision on their first appeal. On July 11, 1975, the Court of Appeals granted the motion to stay publication. Attorney petitioners’ second appeal was con- solidated with the earlier appeals. The consolidated appeals were argued before a panel of the United States Court of Appeals on November 21, 1975 (Van Dusen, Rosenn and Adams, J.). On July 14, 1976, the Court of Appeals filed its judgment, accompanied by a 29-page opinion { Appendix F, hereto]. The judgment increased the fee awarded to attorney petitioners from $3,000 to $15,400 and affirmed the awards of March 28, 1975, in other respects. The Court of Appeals opinion direct- ed that the opinion of the district court of March 28, 1975, be restricted to the district court, counsel and the Disciplinary Board. By separate order, the Court of Appeals impounded its own opinion until further order [Appendix E, hereto]. Also on July 14, 1976, the district judge, apparently in response to an unrecorded communication from the Court of Appeals, issued an order impounding its opinion of March 28, 1975 until further order [Appendix D, hereto]. The Court of Appeals found that the evidence did not support the ee 15 charges of fraud and unethical conduct made by the district judge; the Court of Appeals also found that the charges were made without notice in advance or an opportunity to be heard thereon. The opinion noted that the Disciplinary Board should be given an opportunity to act before it entered a fur- ther order on the issue of what to do with the two opinions. On August 17, 1976, attorney petitioners filed a petition for rehearing by the Court of Appeals, which was denied on August 26, 1976. On September 16, 1976, attorney petitioners moved that the court modify its opinion of July 14, 1976, to correct an erroneous statement of fact, contradicted by the record, and that it modify its mandate to comply with Rule 37, Federal Rules of Appellate Procedure, requiring that in- structions be given with respect to the award of interest on the judgment, as modified. On September 29, 1976, the Court of Appeals denied that motion without opinion. On November 9, 1976, the Disciplinary Board of the Supreme Court of Pennsylvania notified attorney petitioners that, upon the receipt of Judge Muir’s opinion (treated as a complaint against attorney petitioners), the chief counsel of the board reviewed voluminous material submitted by the judge and by attorney petitioners and also submitted the materials to a reviewer designated by the board. As a result of these reviews, a decision was made to close the file opened on Judge Muir’s complaint without taking any action against at- torney petitioners. Chief counsel advised that the matter was ended with no discipline record for either attorney petitioner and that the district judge and Judge Van Dusen, senior judge of the panel who heard the case in the Court of Appeals, were notified that the Disciplinary Board considered the matter to be at an end. 16 On November 11, 1976, attorney petitioners moved the Court of Appeals for a further order to permanently im- pound, prohibit the publication, and mandate the con- fidentiality of the district court’s opinion; to impound the Court of Appeals opinion; to issue a memorandum opinion stating: that the district judge’s charges were unsupported by the record, that the district judge should not have published' the fact of his referral of his unfounded charges to the Disciplinary Board, that the chief counsel of the Disciplinary Board and a second reviewer found those charges not sup- ported by the evidence, that counsel closed his file without any disciplinary record against attorney petitioners, and that the Court of Appeals increased their fee from $3,000 to $15,400. The Court of Appeals has not yet acted on this motion. 5. Statement of Facts Material to Consideration of the Questions Presented All pretrial proceedings in the primary case and the trial it- self were conducted by attorney petitioners, on a wholly con- tingent basis, without assistance from other counsel or from any governmental agency. Attorney petitioners took all dis- covery, including 14 depositions, spent 111.5 hours reviewing documents, made motions for injunctions, participated in 36 written motions, filed a 236-page pretrial memorandum, and presented a case at trial for five days. Prior to trial, there had been six days of hearings in open court in Williamsport and Lewisburg, Pennsylvania, on injunctions and class action status and, an additional day on which the pretrial conference was held. Counsel for Cosmopolitan took no discovery, filed + ' The Court of Appeals noted Rule 17-23, Rules of the Pennsylvania Supreme Court, which requires that all proceedings before the Disciplinary Board be confidential. 17 no pleading, filed no pretrial memorandum, listed no witness to be called or exhibit to be introduced, filed no tzial brief, and failed to make timely production of its own records as re- quested by attorney petitioners. The settlement of the case, as achieved among the parties on September 5, 1974, and as confirmed by the court pursuant to Rules 23 and 23.1, Federal Rules of Civil Procedure, on November 18, 1974, provided that defendant Nelson would pay Cosmopolitan $25,000 and that defendant 20th Century Corporation would (1) pay Cosmopolitan $15,000, (2) deliver to Cosmopolitan 40,509 additional securities, called “special preference units” and (3) deliver to Cosmopolitan 260,980 “special preference units” in exchange for return of the same number of shares of common stock previously delivered as payment for Cosmopolitan’s investment assets. “Special preference units” are securities especially created for the settlement, and have the following characteristics: (1) at the option of the holder, they are convertible at any time into common stock at 20tn Century, and (2) they may be redeemed in cash at $4.21 each if any of certain specified developments occur. The parties stipulated that “all of the consideration being paid to Cosmopolitan” is a benefit “resulting from a litigation instituted by plaintiffs”. 20th Century paid its counsel at least $46,000 exclusive of the last month’s trial preparation, the trial itself, and settle- ment proceedings. Counsel for 20th Century spent at least 1,095.55 hours from the beginning of the case through settle- ment, and a reasonable estimate of the amount paid them through settlement is $70,000. Counsel for defendant Nelson and other individuals accepted $25,000 for 700 hours’ work, giving consideration to their clients’ financial straits. Defense 18 counsel worked on a non-contingent basis. Counsel for 20th Century carried the laboring oar for defendants as a whole. Attorney petitioner Lyman was graduated from Yale University in 1967, studied business and applied economics at the graduate school of the University of Pennsylvania, and was graduated from the University of Pennsylvania law school in May of 1971. He is a member of the bar of this court (1975), the bar of the Supreme Court of Pennsylvania (1971), the Courts of Appeals for the Second (1973) and Third (1972) Circuits and the Eastern (1972) and Middle (1973) Districts of Pennsylvania. He has worked on cases with attorney petitioner Ash since 1971, specializing in shareholder and class action suits, and has been an equal partner in the firm of Lyman & Ash since its formation in November 1972, specializing in these types of cases. Attorney petitioner Ash received a Bachelor of Science degree as well as a Bachelor of Arts degree from Lehigh University in 1951 after completing a five-year course: in 1954, he received a Masters’ degree in mathe- matics from the University of Michigan, where he also held a teaching fellowship; and in 1964 he was graduated from the University of Pennsylvania law school. He has been a member of thé bar since 1965 and has specialized, with Mr. Lyman, in class action and share- holder suits since 1971. He was a party in a shareholder case in this court, Cort v. Ash, 422 U.S. 66 (1975). As of the time their petitions were before the district court, attorney petitioners had been involved in some 19 class or share- holders actions, and they had been successful in achieving re- lief for their clients in most of those cases that had been com- pleted, as of the time their petitions were before the court. Other district courts had awarded them substantial fees in similar cases: $7,500 for 70 hours; $7,400 for 72 hours; ee ea 19 $22,000 for 208 hours; and $78,000 for 600 hours. Attorney petitioners’ services throughout the litigation were of ex- cellent quality, which led the district judge to state, in a published decision on the class action certification, dated January 15, 1974, that they were “competent and experienced in this type of litigation.” Jn re Goldchip Funding Company, 61 F.R.D. 592, 594 (M.D.Pa. 1974). The district judge wrote this opinion after having opportunity to observe attorney petitioners at a TRO hearing, a preliminary injunction hear- ing, and a class action hearing and to scrutinize the sub- stantial number of pleadings and briefs filed in connection with those proceedings. The judge characterized such pretrial hearings as “miniature trials.” The district judge assumed the role of representative of the interests of Cosmopolitan shareholders in the fee and expense proceeding. He described himself as “guardian” of the share- holders and stated that he was conducting the proceedings “primarily for their benefit.” Prior to the beginning of the hearing on fees and expenses, the district judge stated that the amounts in question were “substantially higher than I originally anticipated.” The eight-day hearing consisted almost entirely of cross- examination of Lyman & Ash by the several defense counsel and the disirict judge. The first three days were devoted to expenses and the balance to the fee. The reasonableness of the 1,274 identifiable hours was in- controvertible. Many hours identified were spent in the courtroom, many were spent at depositions and conferences attended by other counsel, and most were spent in the preparation of documents filed in the case. As the judge noted at the hearing, the court file was too large for his fe- male clerk to bring into the courtroom. The hours claimed 20 were modest compared to the approximately 1,800 hours spent by counsel for 20th Century and counsel for defendant Nelson and other individuals. The hours spent were con- firmed by time records maintained by attorney petitioners during the latter five months of the fourteen month case. 842 of the 1,274 hours were so recorded. The hours spent were also confirmed by the time records of counsel for 20th Cen- tury. The fact of the expenses was incontrovertible since they had been paid by check. The propriety of about 95% of the ex- penses was incontrovertible since the payments were to court reporters, witnesses, printers, copy services, marshals, and the clerk of court. Only about 5% of the expenses reasonably required elaboration. At some time during the course of the hearing, the district judge began to secretly propound his charges of fraud and un- ethical conduct against attorney petitioners. The only ac- cusation made during the hearing was about the testimony of attorney petitioners bookkeeper, which was completely dis- proven the day it was made. The jrdge carried out his own investigation into disputed facts. He privately sought evidence from the local telephone company in an unsuccessful attempt to discredit attorney petitioners’ testimony as to the rates of taxes and surcharges on telephone bills. He utilized his erroneous and selective in- terpretation of information he derived from a book by Stat- sky entitled /ntroduction to Paralegalism to discredit attorney petitioners’ testimony [| A137-8]. This volume was never men- tioned during the proceedings and surfaced for the first . me in the judge’s opinion as a basis for his finding that they acted improperly and were not worthy of belief [A128]. 21 On March 28, 1975, the judge issued his 81-page opinion, which was filed publicly in Williamsport on the same day that ‘it was mailed to attorney petitioners in Philadelphia [ Ap- pendix K]. The opinion contained accusations of fraud and unethical conduct in the form of “findings”. These “findings” were the first time attorney petitioners received notice of the accusations against them. The charges are listed as Appendix J, hereto. Among the charges were that certain entries on time records were “fraudulent”, that expenses listed under “din- ners for staff (overtime)” were intentionally camouflaged personal living expenses and that the services of an employee were deliberately mischaracterized as “paralegal”. Another charge was that attorney petitioners had an arrangement with their clients that the attorneys, not the clients, would be liable for expenses of litigation, in violation of the Code of Profes- sional Responsibility, Disciplinary Rule 5-103(B). The opinion contained 112 erroneous findings of fact. The erroneous findings included that counsel for Cosmopolitan was responsible for settlement both with 20th Century and Nelson. This was contradicted not only by testimony of at- torney petitioners but also by testimony of Nelson’s counsel and the record of the case. The error was compounded by another misfinding wherein the district judge found that the lawyers, who actually represented Nelson, were counsel for Cosmopolitan [A119]. Another key error was that the set- tlement with 20th Century invelved only 40,509 “special preference units” rather than 301,489 units. The opinion reproduced income and overhead figures from counsels’ tax returns [A70-1], obtained by a sua sponte order of the court, over attorney petitioners’ objection. The district judge also found that attorney petitioners were not rated in Martindale-Hubbell and that attorney petitioners never tried 22 a case to a jury. This finding was made even though this case did not involve a jury trial. The cardinal sentence in the opinion is: “Considering all the facts and circumstances in evidence, including but not limited to the false entries in Lyman’s time records, improper characterization of the college student bookkeeper and filing clerk as a paralegal and deceitful camouflaging of personal living expenses under ‘dinners for staff (overtime)’, I am obliged to conclude that the testimony of Lyman & Ash is not worthy of belief and I reject it.” Appendix K, hereto at A 128. Proceeding from this rejection of testimony, the district judge stated that he could not make “any finding of the amount of time actually expended” by attorney petitioners in the case [A128-9]. He nevertheless found, on the basis that they never tried a jury case, that the fair rate of compensation for their time was $20 per hour for office work and $30 per hour for court work [A127]. He then determined that a proper fee would be $6,000 but for the alleged fraud and un- ethical conduct, but that the fee should be reduced in half to $3,000 on account of these factors [A134]. On the question of value of the “special preference units”, the district judge decided that their protective value was of little significance because of what he found to be the adequate financial preformance of 20th Century. He ignored the un- broken string of annual losses of 20th Century, including a loss of $729,704 in 1973, the last year for which results were available. He went so far as to speculate, without any evidence on the point, that the net worth of 20th Century had probably increased during the last six months of 1974. The opinion stated that the clerk of court was directed to forward a copy of the opinion to the disciplinary board of the Supreme Court of Pennsylvania for whatever action that body deemed appropriate [A144]. 23 Immediately after the release of the opinion, news articles appeared in the daily press summarizing the “findings” made by the district judge and giving emphasis to his referral of the matter to the disciplinary board. One such article pointed out that the disciplinary board had the power to suspend or dis- bar attorneys. Several such articles are Appendix | hereto. On June 12, 1975, attorney petitioners wrote to the district judge and asked that the opinion not be published at least un- til the court of appeals decided the case [ A49-56]. The request pointed out that the charges were false and that, in any event, they were made as “findings” without notice in advance to at- torney petitioners or opportunity to be heard on the truth thereof. The district judge entered an order on June 18, 1975, denying the request, ordering that the opinion be published, and making it clear that his purpose in publishing was to de- stroy attorney petitioners’ standing with other courts. Ap- pendix H [A47-8}. Attorney petitioners appealed that order to the court of ap- peals and moved for a stay of publication of the district court’s opinion. The court of appeals granted a stay of publication on July 11, 1975 [Appendix G.]}. On Suly 14, 1976, the court of appeals issued its 29-page opinion and judgment in the consolidated appeals. The court of appeals set aside the findings of fraudulent and unethical conduct [A34-5] and held that the opinion should not have been publicly filed with such charges in it [A38]. It also held that public referral of the opinion to the disciplinary board was improper and inconsistent with the Rules of the Penn- sylvania Supreme Court, mandating confidentiality of com- plaints to that board [A38]. The court of appeals not only found that the evidence did not justify the “findings” but that they were made in violation of the basic requirements uf due SSS 24 process of law [ A34-5, A38-9]. The court of appeals held that it was improper for the district judge to sua sponte require production of attorney petitioners tax returns [A23]. The court of appeals found that the district judge’s finding that Appellants’ did not produce the $25,000 settlement with in- dividual defendants was clearly erroneous [A31]. The court of appeals fixed the fee due to attorney petitioners at $15,400 [A34], or over five times the fee awarded by the district judge. The court of appeals concluded that $40 an hour was a reasonable rate for attorney petitioners’ time [A29]. Nevertheless, the court of appeals determined that, under Rule 52(a), Federal Rules of Civil Procedure, it was bound to accept as true any finding of fact by the district judge unless it (1) is completely devoid of minimum evidentiary support displaying some hue of credibility or (2) bears no rational relationship to the supporting evidentiary data” [A19J. The court of appeals therefore refused to set aside the finding that attorney petitioners’ testimony was to be rejected and that the quality of their work was “substandard”. The court of appeals selected the lesser of the number of hours spent by the defense law firms, namely the 700 hours spent by Nelson’s counsel, as the basis for computing a fee [A28]. Thecourtof appeals multiplied 700 hours by $40 per hour and arrived at a starting point of $28,000. The court of appeals then multiplied by 10% to take into account the “con- tingency factor’’, and arrived at $30,800. The court of appeals then reduced that figure by 50% because of the alleged sub- standard quality of the work and inability to translate the special preference units into monetary terms. The resulting fee awarded was $15,400. The court of appeals declined to review the arbitrary 40% reduction in claimed expenses, but made the observation * es Sane a 25 that the district court was entitled to reduce the total of awardable expenses to take account of (1) unreimbursable items and (2) poor records [A35]. The court of appeals then cited the copying of legal research and dinners as two cate- gories which might include unreimbursable items and in office copying, travel and telephone charges as categories of ex- penses affected by poor record keeping [A36]. The total amount claimed under these categories was about $1,300 or 13% of expenses claimed. The court of appeals ignored that among the reasons for the 40% reduction in awarded expenses were the district judge’s charges of fraudulent and unethical conduct, which the court of appeals rejected elsewhere in its opinion. The court of appeals saw nothing wrong with the distric’ judge acting also as “representative” of the class of Cos- mopolitan shareholders, and expressly endorsed a “more ac- tive role” for a judge in the context of a fee hearing [A23]. The court of appeals reasoned that the potential for abuse by attorneys is great as they often have unbridled discretion in such proceedings. The court of appeals ignored that, in the case, the fee award was not sought from a fund or a class but from a corporation managed by directors and represented by counsel, opposed to the award. The court of appeals refused to consider evidence sub- mitted to it for the first time of the financial performance of 2%h Century for the year 1974. This evidence was not pre- sented to the district court because it did not become available until one month after the district court’s opinion. It contradicted the speculative finding of the district court that 20th Century increased its net worth during the latter part of 1974. The evidence, an annual report of 20th Century, dis- closed that its net worth was reduced by $876,521 during the period cited by the district judge. eS OOOO 26 The Court of Appeals ordered that the March 28, 1975, opinion of the district court be restricted to counsel, the dis- trict court and the disciplinary board [A12], that the con- fidentiality of the district court opinion and the court of ap- peals opinion be preserved by counsel, and that the opinion of the court of appeals be impounded until further order of court [A39]. The court of appeals concluded that further ac- tion with respect to the two opinions should await action of the disciplinary board if it acted within a reasonable period of time [A38-9]. After rehearing was denied on August 26, 1976, attorney petitioners moved that the court of appeals correct a factual error in its opinion, which reflected unfavorably on attorney petitioners. The court of appeals erroneously said that at- torney petitioners spent 20 hours and produced 7 pages of motion papers [A22], whereas the record clearly showed that they produced 37 pages of motion papers. Attorney petitioners also asked that the Court of Appeals comply with Rule 37, Federal Rules of Appellate Procedure, and state whether interest should be paid on the judgment of the dis- trict court, as modified, from the date of the district court’s judgment. On September 29, 1976, the court of appeals denied this motion [ Appendix A). On November 9, 1976, counsel for the disciplinary board notified petitioners that: ee . . ., Judge Muir’s complaint, your statement and the voluminous material which both the judge and your counsel submitted to this office were forwarded to Chief Disciplinary Counsel for his review and recom- mendation. Following Chief Counsel’s review the entire file was submitted to a reviewer designated by The Disci- plinary Board. As a result of these reviews the decision was made to close the files opened on Judge Muir’s com- le tn all lll mn ote nt et ne 27 plaint without taking any action against you. Thus the matter is ended with no discipline record for either of you. . . . Judge Van Dusen and Judge Muir have been advised by Chief Counsel of this decision and this office considers the matter to be at an end.” On November 11, 1976, attorney petitioners moved the court of appeals to permanently impound the district court opinion and mandate its confidentiality, to permanently im- pound its own opinion, and to issue a memorandum stating that the charges made by the district judge were unsupported by the evidence, had been found unsupported both by the court of appeals and the Disciplinary Board, were made without due process of law and should not have been publish- ed; and further stating that the referral to the Disciplinary Board should not have been made public and that the court of appeals modified the fee award from $3,000 to $15,409. This motion has not yet been acted upon. REASONS WHY THE PETITION SHOULD BE GRANTED 1. This case involves federal questions of extra- ordinary importance, and the court of appeals has sanc- tioned a departure by the district judge from the accepted and usual course of judicial proceedings so as to call for an exercise of this Court’s power of supervision. The approval by the court of appeals of the assumption by the district judge of the role of “representative” of the Cosmopolitan shareholders is in conflict with the principle that judges must be impartial. This court has always upheld this principle. Jn re Murchison, 349 U.S. 133, 136 (1955). An exception to the rule, for attorneys who are compensated by SL 28 court awards, is particularly inappropriate. Congress is ex- panding the circumstances in which court-awarded fees are available in order to further important policies. It is unlikely that attorneys will respond to Congressional incentives and carry out litigation, to be financed by court awards, if their fee petitions are to be reviewed by a party-judge, acting as an investigator, both on and off the bench. The accepted and usual procedure where a court finds a party unrepresented is to appoint a guardian. Cf. Rule 17(c), Federal Rules of Procedure. Although this Court has often addressed itself to the availability of fee awards [Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975); Mills v. Electric Auto- Lite Co., 396 U.S. 395 (1970); Trustees v. Greenough, 105 U.S. 527 (1581)], it has not addressed itself in modern times to either the standards or procecures for determining the amount of such awards. In light of the comparatively recent development of class action litigation since the 1966 amend- ment to Rule 23, Federal Rules of Civil Procedure, and the recent congressional enactments and pending legislation authorizing fee awards, guidance from this Court is now due. These questions are likely to be a frequent concern to the lower courts. This Court has identified the delicacy of the problem of Court awarded fees. As stated in F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 129 (1974) (Marshall, J. ): “| .., there is the possibility of a threat being posed to in- dependent advocacy by having the earnings of the at- torney flow from the pen of a judge before whom he argues.” The district judge not only controlled the flow of earnings of attorney petitioners, but also wielded power to greatly injure 29 their reputations and future earning power. If the court of ap- peals’ deference to the district judge is not reversed by this Court, attorneys seeking fee awards will have to strive as much to curry favor and, more importantly, to avoid disfavor of the district judge as to advocate their clients’ interest. Having a divided constituency will put attorneys, who an- ticipate fee awards, at a disadvantage compared to attorneys who are paid by their clients. The award of the court of appeals is so low as to discourage attorneys from undertaking litigation financed by court awards. The ten percent “contingency factor” does not com- pensate for deferral of payment awarded more than three years after the case began and 20 months after the last services were rendered. It is unrealistic to expect an attorney to un- dertake litigation on a 10% contingent fee basis, no matter how well founded the case may seem. Any experienced prac- titioner knows that evidence often fails to develop as ex- pected, the law may change, clients may withdraw, defen- dants may become judgment-proof, and courts may decide the case wrongly. Clients, witnesses, or the lawyers them- selves may become disabled or die during the pendancy of the case, with destructive effects on the case. The 50% reduction from the value of attorney petitioners’ time because the benefit was partly non-monetary means that they worked for little more than overhead, even though they won a valuable settlement, approved by the court as adequate. This does not take into account the time and ex- penses necessary to petition for the fee and expenses, which in this case involved an eight-day hearing, an appeal and now this petition. Granting discretionary authority to district judges to discount a schedule of litigation expenses by 40 percent, 30 without ruling on the items individually, confers second class standing on attorneys. All other litigants are entitled to itemized determinations of their special damages, and it is unlikely that attorneys will wish to bring litigation if reim- bursement of their out-of-pocket expenses is subject to ar- bitrary percentage discounts, depending on the judge’s reaction to their record maintenance practices or his belief that some items may be unreimbursable. A mechanical application of Rule 52(a), under the cir- cumstances of this case, by the court of appeals, tips the balance of power too far toward district courts, at the risk of tyrannical behavior by judges and the terrorizing of litigants and their attorneys. This Court has recognized the possibility of a “complaint, biased or eccentric’’ judge in the context of discussing the right to a jury trial. Ludwig v. Massachusetts, No. 75-377, decided June 30th, 1976, 44 U.S.L.W. 5173; Williams v. Florida, 399 U.S. 78, 100 (1970). In an equity case such as this, where a jury trial is unavailable, it is essential that the right of appeal be meaningful. The court of appeals has conferred inviolability on findings of credibility and quality since any record will yield at least a scrap of support for a finding either way. This case raises the question of abuse of judicial immunity in opinion writing. This Court should take the opportunity to outline the responsibilities that accompany the immunity. The case also raises the limits of judicial activism in conduct of a bench trial, a question not previously decided by this Court. Compare, Quercia v. United States, 289 U.S. 466 (1933), establishing limits on judicial activism for jury trials. Both the district judge and the court of appeals erroneously assumed that greater activism was appropriate for a bench trial, disregarding the even greater need for objectivity when iii tet ee 31 a judge has responsibility for deciding the facts as well as the law. 2. The court of appeals has departed from the ac- cepted and usual course of judicial proceedings so as to call for an exercise of this court’s power of supervision. The communication between the court of appeals and the Disciplinary Board of the Supreme Court of Pennsylvania as a predicate to deciding petitioners’ request that the court of ap- peals expunge the district court opinion and prevent its publication is contrary to the rule that appellate courts decide cases on the record made by the parties in the lower court. The court of appeals had ample basis to conclude, and did conclude, that the charges made by the district judge were un- supported by the record, made without due process of law, and harmed attorney petitioners’ livelihood. The court of ap- peals should have expunged the opinion and prevented its publication without waiting for an advisory investigation by another body. , The court of appeals disregarded the clear language of Rule 37, Rules of Appellate Procedure, which required it to decide whether interest should be allowed on the judgment, as modified. It did so after attorney petitioners expressly requested that it carry out this part of its appellate function. 3. The court of appeals decided questions of federal law in conflict with applicable decisions of this Court. The deference accorded the district judge under Rule 52(a), Federal Rules of Civil Procedure, and other principles of deference, in the circumstances of this case, was in conflict 32 with decisions of this Court. It is impermissible to combine the roles of accuser, prosecutor and judge. Jn re Murchison, supra. A man may not act as judge of a case in which he has assumed an interest. /bid. Credence should not be given to facts found where the fincer is looking for the wrong thing. Rogers v. Richmond, 365 U.S. 534, 547 (1960). A judgment which goes beyond the scope of the pleadings is void. Reynolds v. Stockton, 140 U.S. 254 (1891). A judge may not be a combatant in a proceeding [Mayberry v. Pennsylvania, 400 U.S. 455, 465 (1971)] or become personally embroiled. Offutt v. United States, 348 U.S. 11, 17 (1954). The action of the court of appeals in impounding rather than expunging the district judge’s opinion is in conflict with Goss v. Lopez, 419 U.S. 565 (1975); Supreme Council of Royal Arcanum v. Green, 237 U.S. 531, 546 (1915); and Green v. Elbert, 137 U.S. 615 (1891). The court of appeals’ holding that a benefit must be able to be reduced to a monetary equivalence in order to justify a fee award is in conflict with this Court’s decision in Mills v. Elec- tric Auto-Lite, 396 U.S. 375, 395 (1970). See also Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 259 (1975). The court of appeals’ exclusion of evidence facts super- vening after judgment, which contradicted the unfounded speculation of the district judge, was inconsistent with this Court’s holdings in Watts, Watts & Co. v. Union Austriaca Navigatione, 248 U.S. 9, 21 (1929) and New York Indians v. United States, 170 U.S. 1, 32 (1887). 33 4. The court of appeals decided a question of federal law in conflict with other courts of appeals. Other courts of appeals have held that preservation of a fund, whether or not accompanied by a measurable monetary gain, is a benefit justifying a fee award. Ramey v. Cincinnati Enquirer, Inc., 508 F.2d 1188, 1194-5 (6th Circuit 1974), Freeman v. Ryan, 408 F. 2d 1204, 1206 at N.4 (D.C. Circuit, 1968). The sanctioning of the role of inquisitor on the part of the district judge is in conflict with the decision of the First Cir- cuit in Figueroa Ruiz v. Delgado, 359 F.2d 718, 720 (ist Cir- cuit, 1966). The tolerance of partiality and acceptance of the district judge’s findings under these circumstances conflicts with the decisions of the courts of appeals in Rosen v. Sugarman, 357 F.2d 794, 799 (2nd Circuit, on petition for mandamus, 1966), continued sub nom in re Nazareth Fairgrounds and Farmers’ Market, Inc., 374 F.2d 595 (2nd Circuit, on appeal, 1967), Knapp v. Kinsey, 232 F.2d 458, 465 (6th Circuit, 1956) (“‘par- tiality renders resulting judgment “invalid”’), and N.L.R.B. v. Phelps, 136 F.2d 562, 567 (Sth Circuit, 1945) (partiality “taints and vitiates all of the proceedings’). The tolerance of the court of appeals of the hostility of the district judge toward attorney petitioners conflicts with the holding of Whitaker v. McLean, 118 F.2d 596 (D.C. Circuit, 1941) (“hostility” evidenced by remark on record renders judgment void.) For the reasons set forth above, this Petition for Certiorari should be granted to review the judgment of the court of ap- peals. 34 Conclusions Respectfully submitted, CLETUS P. LYMAN, 1612 Latimer Street, Philadelphia, Pa. 19103, Petitioner Pro Se and Attorney for Other Petitioners. APPENDIX A Order of the United States Circuit Court of Appeals for the Third Circuit, Dated September 29, 1976 UNITED STATES COURT OF APPEALS For the Third Circuit Nos. 75-1596, 75-1597, 75-1598 & 75-1674 In the matter of GOLDCHIP FUNDING COMPANY and COSMOPOLITAN INVESTORS FUNDING COMPANY, RUTH C LEIB, et al. v. 20TH CENTURY CORPORATION, et al., Defendants, and GOLDCHIP FUNDING COMPANY, COSMOPOLITAN INVESTORS FUNDING COMPANY, Nominal Defendants, Cletus P. Lyman, Esq. and Richard A. Ash, Esq., counsel for plaintiffs, Appellants in No. 75-1596, Ruth C. Leib, Appellant in No. 75-1597, Frank B. Leib, Andrew Yenchko and Mary K. Yenchko, Appellants in No. 75-1598, Cletus P. Lyman, Esq. and Richard A. Ash, Esq., Appellants in No. 75-1674. (D. C. Civil No. 73-551) A2 Appendix A—Order of the United States Circuit Court of Appeals for the Third Circuit, Dated September 29, 1976. Present: VAN DUSEN, ADAMS and ROSENN, Circuit Judges. ORDER After consideration of the APPLICATION FOR MODIFICATION OF OPINION AND MANDATE, the RESPONSE to such application, the MOTION FOR IM- POUNDMENT, and the record, it is ORDERED that the APPLICATION FOR MODIFICATION OF OPINION AND MANDATE! and the appellants’ MOTION FOR IMPOUNDMENT OF APPLI- CATION FOR MODIFICATION OF OPINION AND MAN- DATE are denied. BY THE COURT:- FRANCES L. VAN DUSEN, Circuit Judge. Dated: September 29, 1976 ' In addition to the reasons given in the Response and the record references at page A21 of this court’s opinion, it is noted that (A) the affidavit of July 29, 1974, with exhibits, reproduced at A244-A267 was not solely in support of a continuance motion but also specifically stated to be “to advise the Court of recent out-of-court proceedings so that the Court will know the status of the case as of the date of the final Pre-Trial Conference, today, July 29, 1974, . . . [and] to excuse the failure of plaintiffs to provide all of the papers required by the terms of the Court’s Practice Order of Oc- tober 4, 1973, particularly Para. 5.5 thereof” (A244), and (B) the subject of this application was raised in the Petition for Rehearing at page 5, note 2, and has been denied by the in banc court’s order of August 26, 1976. a A3 APPENDIX B Sur Petition for Rehearing UNITED STATES COURT OF APPEALS For the Third Circuit Nos. 75-1596/7/8 & 75-1674 In the matter of GOLDCHIP FUNDING COMPANY and COSMOPOLITAN INVESTORS FUNDING COMPANY, RUTH C. LEIB, et al., v. 20TH CENTURY CORPORATION, et al., Cletus P. Lyman, Esq. and Richard A. Ash, Esq., counsel for plaintiffs, Appellants in No. 75-1596, Ruth C. Leib, Appellant in No. 75-1597, Frank B. Leib, Andrew Yenchko and Mary K. Yenchko, Appellants in Nos. 75-1598, Cletus P. Lyman, Esq. and Richard A. Ash, Esq., Appellants in No. 75-1674. Present: SEITZ, Chief Judge, and VAN DUSEN, ALDISERT, ADAMS, GIBBONS, ROSENN, HUNTER, WEIS and GARTH, Circuit Judges. The petition for rehearing filed by Cletus P. Lyman, Esq. and Richard A. Ash, Esq., Appellants in Nos. 75-1596 and 75- GQ ee A4 Appendix B—Sur Petition for Rehearing. 1674, in the above entitled case having been submitted to the judges who participated in the decision of this court and to all the other available circuit judges of the circuit in regular active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the circuit judges of the circuit in regular active service not having voted for rehearing by the court in banc, the petition for rehearing is denied. By the Court, FRANCES L. VAN DUSEN, Judge. Dated: August 26, 1976 AS APPENDIX C Order of the United States Court of Appeals for the Third Circuit, Dated July 29, 1976 UNITED STATES COURT OF APPEALS For the Third Circuit July 26, 1976 Nos. 75-1596/7/8 & 75-1674 In the matter of GOLDCHIP FUNDING COMPANY, et al., RUTH C. LEIB, et al. vs. 20TH CENTURY CORPORATION, et “l., Cletus P. Lyman,.Esq., and Richard A. Ash, Esq., etc., Appellants in No. 75-1596 & 76-1674, Ruth C. Leib, Appellant in No. 75-1597, Frank B. Leib, Andrew Yenchko and Mary K. Yenchko, Appellants in No. 75-1598. Present: VAN DUSEN, ADAMS and ROSENN, Circuit Judges. A6é Appendix C—Order of the United States Court of Appeals for the Third Circuit, Dated July 29, 1976. 1. Motion by appellants, Cletus P. Lyman, Esq. and Richard A. Ash, Esq., for enlargement of time within which to file a petition for rehearing from its present due date of July 28, 1976, to and including August 17, 1976. 2. Motion by appellants, Cletus P. Lyman, Esq. and Richard A. Ash, Esq., for impoundment of forthcoming petition for rehearing, in the above-entitled cases. The opinion was filed and the judgment entered on July 14, 1976. Respectfully, T. F. QUINN/ags, Clerk. enc. ags The foregoing Motions are granted. By the Court, ARLENE M. ADAMS, Judge. Dated: July 29, 1976 A7 APPENDIX D Order of the United States District Court Dated July 14, 1976 UNITED STATES DISTRICT COURT For the Middle District of Pennsylvania In the matter of GOLDCHIP FUNDING COMPANY AND COSMOPOLITAN FUNDING COMPANY, RUTH C. LEIB, et al., Plaintiffs, VS. 20TH CENTURY CORPORATION, et al., Defendants. Civil No. 73-551 Complaint Filed 9/27/73 (Judge Muir) July 14, 1976 The Clerk shall impound the Opinion of this Court dated March 28, 1975, from this day forth until further order of this Court. MUIR, Muir, U.S. District Judge. A8 APPENDIX E Order of Impoundment UNITED STATES COURT OF APPEALS For the Third Circuit Nos. 75-1596, 75-1597, 75-1598 & 75-1674 In the Matter of GOLDCHIP FUNDING COMPANY and COSMOPOLITAN INVESTORS FUNDING COMPANY, RUTH C. LEIB and FRANK B. LEIB, on their own behalf and on behalf of the classes of independent sharehold- ers of GOLDCHIP FUNDING COMPANY and COSMOPOLITAN INVESTORS FUNDING COMPANY and derivatively on behalf of GOLDCHIP FUNDING COMPANY and COSMOPOLITAN INVESTORS FUND- ING COMPANY, and its subsidiaries, Vv. 20TH CENTURY CORPORATION, JAMES C. ROBERT- SON, ROBERT NELSON, ROBERT DI STEFANO, ALLEN C. SPANGLER, A. C. MURPHY, SHERNO RESEARCH CENTER, INC., Defendants, and GOLDCHIP FUNDING COMPANY, COSMOPOLITAN INVESTORS FUNDING COMPANY, Nominal Defendants. Cletus P. Lyman, Esq. and Richard A. Ash, Esq., counsel for plaintiffs, Appellants in No. 75-1596, Ruth C. Leib, Appellant in No. 75-1597, AY Appendix E—Order of Impoundment. Frank B. Leib, Andrew Yenchko and Mary K. Yenchko, Appellants in No. 75-1598, Cletus P. Lyman, Esq. and Richard A. Ash, Esq., Appellants in No. 75-1674. (D. C. Civil No. 73-551) Present: Van Dusen, Adams and Rosenn, Circuit Judges. As explained in the opinion being filed today in the above appeals, it is ORDERED that the opinion and judgment being filed today in the above-captioned appeals shall only be made available to the district court, counsel of record, and the Pennsylvania Disciplinary Board until further order of this court. It is FURTHER ORDERED that such distributees and the parties shal! preserve the confidentiality of the opinion and judgment being entered today until further order of this court. BY THE COURT:- VAN DUSEN, Circuit Judge. Dated: July 14, 1976 AlO APPENDIX F Opinion of the Court UNITED STATES COURT OF APPEALS For The Third Circuit Nos. 75-1596, 75-1597, 75-1598 & 75-1674 In the matter of GOLDCHIP FUNDING COMPANY and COSMOPOLITAN INVESTORS FUNDING COMPANY, RUTH C. LEIB and FRANK B. LEIB, on their own behalf and on behalf of the classes of independent shareholders of GOLDCHIP FUNDING COMPANY and COS- MOPOLITAN INVESTORS FUNDING COMPANY and derivatively on behalf of GOLDCHIP FUNDING COM- PANY, and its subsidiaries, Vv. 20TH CENTURY CORPORATION, JAMES C. ROBERT- SON, ROBERT NELSON, ROBERT DI STEFANO, ALLEN C. SPANGLER, A. C. MURPHY, SHERNO RESEARCH CENTER, INC., Defendants, and GOLDCHIP FUNDING COMPANY, COSMOPOLITAN IN- VESTORS FUNDING COMPANY, Nominal Defendants. Cletus P. Lyman, Esq. and Richard A. Ash, Esq., counsel for plaintiffs, Appellants in No. 75-1596 Ruth C. Leib, Appellant in No. 75-1597 ———<— © ee ee a oe ae te eee All Appendix F—Opinion of the Court. Frank B. Leib, Andrew Yenchko and ivsary K. Yenchko, Appellants in No. 75-1598 Cletus P. Lyman, Esq. and Richard A. Ash, Esq., Appellants in No. 75-1674 (D. C. Civil No. 73-551) Appeals From The United States District Gourt For The Middle District of Pennsylvania Argued November 20, 1975, and Supplemental Documents Submitted by Counsel in January & April 1976 Before VAN DUSEN, ADAMS and ROSENN, Circuit Judges Cletus P. Lyman, Esq., Lyman & Ash, Philadelphia, Pa., Attorneys for Appellants in Nos. 75-1596/7/8 & 75-1674 James M. Marsh, Esq. & Edward C. German, Esq., Philadelphia, Pa., Attorneys for Appellants in Nos. 75-1596 and 75-1674 Howard D. Scher, Esq. & Ragan A. Henry, Esq., Goodis, Greenfield, Henry, Shaiman & Levin, Philadelphia, Pa., At- torneys for Appellee Cosmopolitan Investors Funding Com- pany H. Lee Roussel, Esq., W. Jeffry Jamouneau, Esq. & Rod J. Pera, Esq., NcNees, Wallace & Nurick, Harrisburg, Pa., At- Al2 Appendix F—Opinion of the Court. torneys for Appellees 20th Century Corporation and James C. Robertson Barry F. Greenberg, Esq., Cohen, Shapiro, Polisher, Shiek- man & Cohen, Philadelphia, Pa., Attorneys for Appellee Robert Nelson (Filed Jul 14, 1976) VAN DUSEN, Circuit Judge. This appeal seeks reversal of a district court order entered March 28, 1975, awarding two attorneys $3,000. in counsel fees and $6,256.72 in expenses for their efforts in a class and derivative securities litigation that ended in settlement of all claims. Appellants, Cletus P. Lyman, Esq. and Riciard A. Ash, Esq.,' who originally sought in excess of $85,000. in fees and expenses, challenge the principal findings of fact on which the award is based and for various reasons seek ex- pungement of all or part of the district court’s 81-page opinion and order.” For the reasons set forth below, we af- firm the order of the district court with certain modifications. ' The named plaintiffs in the consolidated class actions are appellants in Nos. 75-1597 and 75-1598. Messrs. Lyman and Ash are appellants in Nos. 75-1596 and 75-1674. Messrs. Lyman and Ash are referred to hereinafter as appellants. ? By a previous order, we had stayed publication of the opinion pending determination of this appeal. We vacate the stay in view of our comments in this opinion, but direct that the opinion be restricted to the district court, counsel, and the Disciplinary Board, as explained below at page A38. Al3 Appendix F—Opinion of the Court. I. The Facts On September 27, 1973, Frank B. Leib, a shareholder in Cosmopolitan Investors Funding Company (Cosmopolitan) commenced a “class and derivative” action seeking to enjoin shareholder approval of Cosmopolitan’s exchange of the stock of its life insurance subsidiary for 260,980 shares of 20th Century Corporation stock. After denial of Leib’s motion for preliminary relief and consummation of the trans- action, the suit was consolidated with an earlier “class and derivative” action instituted by Ruth C. Leib, a shareholder of Goldchip Funding Company (Goldchip). Goldchip is an inactive corporation whose sole asset is approximately one- third of Cosmopolitan’s outstanding stock. Lyman and Ash, equal partners in the law firm of that name, were counsel in both cases. Following completion of the ‘challenged exchange,” plain- tiffs filed amended complaints seeking recision of the trans- action and damages. They asserted various direct and derivative claims against 20th Century, its chief operating of- ficer, and certain former officers and directors of both Cosmopolitan and Goldchip.* Although the record reflects some procedural confusion as to the direct or derivative nature of the various claims, it is clear that in January of 1974, following a demand for action upon the board of direc- tors by Lyman and Ash, F. R. Civ. P. 23.1, Cosmopolitan hired its own counsel and began to assert its own rights against 20th Century and its chief operating officer. Later, on March 29, 1974, two classes composed, respectively, of the shareholders of Cosmopolitan and Goldchip were certified * Jurisdiction was based, inter alia, on section 27 of the Securities Exchange Act of 1934, as amended, 15 U. S. C. § 78aa. Al4 Appendix F—Opinion of the Court. under Rule 23 of the Federal Rules of Civil Procedure (162- 64a). In one of the first documents filed by Cosmopolitan’s at- torneys, the corporation explicitly reserved “its right to ob- ject to . . . the amount and source of attorneys’ fees, if any, which may be awarded to plaintiffs’ counsel. . . .”* And on February 17, 1974, the district court strongly cautioned Lyman and Ash that any application for fees or reim- bursement would have to be supported by full and detailed documentation. The court stated: “All right. Now, . . . I don’t know whether I have said this before—if I have, | am going to say it again—-if this Court is ever going to be asked to award any counsel fees, I will only do it if there be submitted a full documentation, and by that I mean the dates on which the services are rendered, what services were rendered on each date, how much time was spent on each date, what attorney rendered the service, and what his regular hourly rate is. ‘And I recognize that there are other factors such as the amounts involved and the degree of success. But | decided when I came on this bench, I would never award counsel fees unless I had such backup material. And I feel very strongly about it. And the best way to get coun- sel to understand it is that it is going to have to be done. I just want to throw that out as a cautionary admonition.’ * Memorandum of Law of Cosmopolitan Funding Co., Document 121, filed February 25, 1974 (M. D. Pa. Civil No. 73-551). * See transcript of hearing on February 17, 1974, Document No. 347 (M. D. Pa. Civil No. 73-551), at page 7. This warning was reiterated on one other occasion whan appellants’ documentation was found inadequate. See letter of August 7, 1974, from Judge Muir to Mr. Lyman, reproduced at 1702a. Al5 Appendix F—Opinion of the Court. The litigation proceeded generally along two fronts with varying degrees of participation by appellants. With respect to certain of the individual defendants, Lyman and Ash worked primarily alone. And by June 1974, they were able to arrange a tentative settlement of $25,000. (87la, 1542-43a, 1602-05a). Appellants’ role with respect to 20th Century, on the other hand, was less significant. Negotiations during the early spring of 1974 were conducted in large part by counse! for Cosmopolitan (870a, 2906-09a). These negotiations led to an offer by 20th Century to settle the various claims asserted against it and its chief operating officer by giving Cosmopolitan $15,000. cash and an additional 40,509 shares of 20th Century common stock. Cosmopolitan accepted the offer and on August 28, 1974, one day before trial, Cosmopolitan and 20th Century filed a settlement document reflecting the agreed upon terms.® During this period, Lyman and Ash showed no inclination to accept anything ap- proximating the proposed settlement. On the fifth day of trial, however, a settlement acceptable to Lyman and Ash was finally reached. The terms of the set- tlement closely resembled those Lyman and Ash had con- tinuously rejected, except that the final agreement introduced the concept of “special preference units.”’ As before, Cosmopolitan was to receive $15,000. cash plus an additional 40,509 shares of 20th Century stock. Rather than common * The settlement agreement was accompanied by a memorandum of law claiming that the class lacked standing to challenge the settlement because the settled claims were derivative, rather than direct, in nature (547-52a). We express no opinion or: this question. ’ See note 24 below for a complete description of special preference units. Al6 Appendix F—Opinion of the Court. voting stock, however, the shares, denominated “special preference units,” were non-voting securities with certain conditional conversion privileges. In addition, Cosmopolitan was to exchange the 260,980 shares, or a 15% block, of 20th Century common stock it had received in the “challenged transaction” for an identical number of “special preference units.” A further provision in the settlement required Cosmopolitan, in effect, to relinquish its voting rights in the 10% block of 20th Century common stock it had owned prior to this litigation. On November 18, 1974, after the court had approved the settlement, Lyman and Ash presented petitions for award of counsel fees and reimbursement of expenses. The court examined the petitions (1551-63a), and set the matter for trial on December 3, 1974. Prior to trial, Lyman and Ash filed amended petitions seeking $75,000. in counsel fees and $10,427.86 in expenses. In their petition for fees and accompanying affidavit, Lyman and Ash claimed to have spent, respectively, 674.4 and 599.8, or a total of 1274.2, “identifiable” hours prosecuting the con- solidated actions. After increasing the number of “iden- tifiable” hours by 25% to reflect what they considered the ac- tual amount of time they had devoted to the case, appellants, using hourly billing rates of $50.00 and $60.00, selected the $75,000. sum “in their discretion” based on a number of fac- tors (2642-542). Following nearly four days of hearings on the petition for fees and three days of hearings on the petition for expenses, the district court entered an order awarding $3,000. in at- torneys’ fees and $6,256.72 in expenses, or 60% of the Al7 Appendix F—Opinion of the Court. $10,427.86 of expenses claimed. In support of this award, the trial judge on March 28, 1975, filed an 81-page opinion and order, comprised of 298 findings of fact, 20 conclusions of law, and a 17-page discussion. In that opinion, the court stated that it had found appellants’ time records and books of account unreliable and their live testimony in support of their petitions unacceptable. Although it was unable to determine the precise number of hours actually expended on the suit, the district court considered the other factors set out in our opinion in Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F. 2d 161 (3d Cir. 1973) (Lindy 1), and concluded that appellants’ efforts were worth $6,000. Finally, based on his view that appellants’ conduct was of questionable propriety (see pages A34-A36 below), the district judge reduced the $6,000. to $3,000. In addition, he instructed the Clerk to forward a copy of his opinion and order to the Disciplinary Board of the Supreme Court of Pennsylvania (863a). Lyman and Ash and the named plaintiffs in the con- solidated actions immediately appealed the district court’s or- der. After requesting the trial judge to withhold publication of his opinion pending determination of the initial appeals, Lyman and Ash filed an “appeal” from the district court’s June 18, 1975, order which formally denied such request and which reaffirmed that court’s intention to publish its opinion (909a). This “appeal” was accompanied by a motion for a preliminary stay of publication (2973-9la). We granted that motion pending decision on the merits of the consolidated ap- peals (2992a). See note 2 above. Als Appendix F—Opinion of the Court. Il. The Contentions Appellants raise three broad challenges to the district court’s award of fees and expenses and its decisions to publish its opinion. First, they challenge the court’s finding that their petitions and testimony were insufficient to meet their burden of proof under Lindy I. They also argue in this context that the district court was biased and predisposed to find against them. Second, they contend that the ultimate award of fees and expenses was unreasonably low and an abuse of discretion. Finally, they assert that publication of the district court’s opinion under the circumstances of this case would constitute a denial of due process of law. Ill. The District Court Findings In Lindy | we established guidelines for use in computing reasonable attorneys’ fees which require the district court initially to determine “how many hours were spent in what manner by which attorneys.” Lindy, supra, 487 F. 2d at 167. The burden of producing records and/or testimony on which a court may base such a determination rests squarely on the attorneys seeking compensation for their services. See Jn re Meade Land and Development Co., 527 F. 2d 280 (3d Cir. 1975). Our initial task then is to decide whether the district court’s finding that appellants’ petitions and testimony were insufficient to carry that burden is clearly erroneous. A. The Petitions and Supporting Testimony Appellate review of findings of fact is governed by F. R. Civ. P. 52(a), which provides in part: Al9 Appendix F—Opinion of the Court. “Findings of fact shall not be set aside unless clearly erroneous and due regard shall be ¢.vcn to the op- portunity of the trial court to judge the credibility of the witnesses.” As the language of the rule itself suggests, the clearly erroneous standard applies with particular force where, as here, iue district court’s pertinent findings rest almost en- tirely on its observation of witnesses.* In such cases a finding must be affirmed unless it “(1) is completely devoid of minimum evidentiary support displaying some hue of credibility or (2) bears no rational relationship to the sup- porting evidentiary data.” Krasnov v. Dinan, 465 F. 2d 1298, 1302 (3d Cir. 1972); see Bluebird Food Products Co. v. Baltimore & Ohio R. Co., 474 F. 2d 102, 107 (3d Cir. 1973), 9 Wright & Miller, Fed. Prac. & Proc., Civil §2585 at 733-34 (1971). After a thorough review of the entire record, we can- not say the district court’s critical findings as to the petitions and Lyman and Ash’s supporting testimony are clearly erroneous. We must, therefore, agree that the petitions them- selves cannot serve as the basis for an award in this case. Appellants seek counsel fees for a time period beginning September 15, 1973, and ending November 14, 1974. As we have already noted, they were advised by the district court early in this litigation that they would be required to sub- stantiate each requested item in any petition for counsel fees *In the words of the district judge, the court “. . . applied the time- honored tests for determining (appellants’] credibility as witnesses, in- cluding their attitudes, demeanor, and behavior while on the stand, their interests in the outcome of the proceedings, their inclination to speak truth- fully or not, the probability or improbability of their statements and all other facts and circumstances in evidence.” (845Sa) A20 Appendix F—Opinion of the Court. or expenses by indicating the service rendered, the date ren- dered, the time spent and the hourly rate for the attorney in- volved. Despite this clear warning, and despite our October 31, 1973, decision in Lindy I, neither Lyman nor Ash made any effort to keep a record of the time he spent on this litigation prior to June 23, 1974 (2244a, 2778a). All of the hours alleged to have been spent and al! of the expenses incurred between September 15, 1973, and June 1974 are estimates reconstructed from memory as refreshed by a review of documents, the court docket, correspondence and other materials in the office of Lyman and Ash (2255-57a, 2778a). These hours account for more than one-third of the total “identifiable” hours billed in this case. Wh‘'e we do not hold that, under all circumstances, con- temporaneous time records are required, reconstructions of the type involved here inspire little confidence as to their ac- curacy and invite the closest scrutiny. Where an attorneys’ records do not prove to be reasonably accurate, they may properly be discounted as failing to satisfy the “strict stand- ard” enunciated in our cases. See Jn re Meade Land Develop- ment Co., 527 F. 2d 280, 284 (3d Cir. 1975).* We stress, as we did in that case, “that it is the attorney’s obligation to keep and submit to the court time records supporting an application for com- pensation. And, absent unusual circumstances, it is the court’s independent obligation to give credit only where there are * We recognize that this “strict standard” has only been announced in the bank ruptcy context where the district court has special independent obligations. However, we believe the district court's role in the Lindy con- text is sufficiently analogous that similar standards should apply. See page A24 infra. A2l Appendix F—Opinion of the Court. such supporting documents, even in cases where no interested parties raise objections to the claim.” The close scrutiny mandated by the lack of pre-June 23 time records was also warranted with respect to the “con- temporaneous” time records maintained after June 23, 1974. Mr. Lyman and Mr. Ash both testified that their post-June entries were sometimes made at the end of several days or a week for the preceding period (2810-1la, 2244a). All of Mr. Lyman’s records were “approximate’’ because he usually rounded off to the nearest hour or half-hour (2245Sa).'° Some of Mr. Ash’s records for this period were missing (2778-79a). And, for one day, Mr. Ash produced two “contemporaneous” records; one showed two hours devoted to this case while the other showed eight hours, or four times that » mount (805a). The dissatisfaction understandably engendered by the quality of the time records and the high number of billable hours on particular days was confirmed when the court examined the particulars of the petitions in detail.'' By way of illustration only, we note the following examples. Mr. Lyman’s petition showed two hours for “correspondence” on August 5, 1974. The product of these two hours is two one- © Aside from travel time and time spent in conference, all but one of the 224 line items in Mr. Lyman’s petition show time spent in even hours or half-hours. Substantially the same observation can be made of Mr. Ash's petition. '' Of course, “[i]t is not necessary to know the exact number of minutes spent nor the precise activity to which each hour was devoted.” Lindy, supra, 487 F. 2d at 167. However, where time records are compiled in the manner shown in this record, inability to justify specific entries is highly relevant on whether the records as a whole are a sufficiently reliable source for the computation of reasonable fees under Lindy. A22 Appendix F—Opinion of the Court. sentence letters, one two-sentence and one six-sentence letter (979-8la, 1069a). None of these letters required extensive preparation. Similarly, the petition indicates that well over 20 hours was spent preparing a simple two-page motion for a continuance and a brief five-page supporting memorandum (2549-5la, 238-43a). The district court understandably expressed sur- prise at the amount of time allegedly invested in this short, uncomplicated motion (2549a). That appellants sought fees in excess of $1,000. for this motion provides support for the district court’s findings. Finally, we think there is a rational basis in the record for discounting much of appellants’ live testimony. While it is difficult to evaluate the cold record in this regard, we have concluded the transcvipts contain a number of answers the district court could fairly characterize as “evasive” or in- consistent. '? B. Alleged Bias as Affecting Rulings on Petitions Claiming Fees and Expenses Closely related to appellants’ contention that the district court erroneously disregarded their petitions is the argument that the district court was “predisposed” against appellants. This contention was first raised on the morning of the third day of hearings. During the testimony of appellants’ part-time bookkeeper, the court stated, “I think it is only fair to tell '? See, e.g., 1695-96, 1844-45, 2240, 2314, 2348, 2356-57, 2382-84, 2392-94, 2395-96, 2397, 2414-20, 2601, 2602-05, 2697, 2707, 2744-45, 2790, 2793-95, 2817-22, 2831-32a. Compare 1648a with 1884-86a. A23 Appendix F—Opinion of the Court. you, Mr. Lyman and you Mr. Ash, that I am very troubled as to whether or not there has been an attempt to perpetrate a fraud on this court by you gentlemen” (2022a). This statement and the court’s initial reaction to appellants’ books prompted Lyman and Ash to move that the court recuse itself because of “bias against plaintiff's counsel.” Appellants also sought “permission to voir dire Your Honor with respect to Your Honor’s comments about the attempted perpetrated fraud . .” (2048a). Both motions were denied, and a subsequent written motion under 28 U. S. C. § 144 was denied by a written order and opinion dated December 19, 1974 (672-77a). We have carefully reviewed the entire record bearing this contention of bias in mind and, on the basis of that review, we reject such contention. In Lindy hearings the role of the district judge is unusual for the court is frequently the sole representative of a class whose interests are at that stage divergent from those of their former attorneys. Especially in class actions, attorneys as a practical matter often have nearly unbridled discretion as to the fees and expenses incurred during the course of the litigation. The need for some form of safeguard against possible abuse of the equitable fund doctrine is therefore great. Although the class may have its own representative at the hearing, the district court has the prerogative to play a more active role than it might in a jury or other context. Cf. In re Meade Land and Development Co., 527 F. 2d 280 (3d Cir. 1975). In carrying out its obligation, the district court has a broad discretion, which includes the power to examine wit- nesses and to require production of supporting documents. '* '? The only instance where we think the district court’s participation ap- proached the bounds of impropriety was when it sua sponte required production of appellants’ partnership tax returns (2470- 72a). A24 Appendix F—Opinion of the Court. In our view, the record reflects the efforts of the district court t8 carry out, seriously and conscientiously, the in- dependent duty imposed upon it by our decision in LindyI. As the district court stated in its order denying the motion for recusal (674a): “It is to be noted, of course, that no jury is involved in this case and that the proceeding is equitable in nature. Attorneys coming into court for an award of attorneys feesfromafund. . . are ina fiduciary capacity and the judge has the obligation to examine the application in the same manner as a judge approving an expense of any other fiduciary. “The instances of bias cited by the attorneys in this case, taken as true and as made in good faith, show no more than the [district] judge fulfilling his responsibility.” We have already noted that the district court’s concern with its duty to determine fees and expenses started early in this case and well before it became aware of the manner in which Lyman and Ash maintained their records or compiled their petitions seeking attorneys’ fees. Appellants rehearse a litany of charges on some of the district court’s 298 findings. Most of their challenges are without merit.'* Although we must agree that there are in- stances not discussed elsewhere in this opinion where minor errors were made, we cannot in this case infer bias from the mere fact that the district court, working without the benefit '‘* E g., the fact that Mr. Ash had conducted hundreds of non-jury trials is not inconsistent with the finding “that neither Lyman nor Ash had ever tried a case to a jury and neither had ever tried [an injunction] case beyond the preliminary injunction stage” (849a). See also 2575-76a, 2397-98a, 2623a. A25 Appendix F—Opinion of the Court. of a transcript,'> made mistakes in its opinion. Similarly, we think the district court’s initial expression of surprise at the amount of the requested awards (1563a) and the court’s previously quoted remark that it was “troubled” about a possible attempt to defraud the court (2022a) were largely motivated by a desire to be fair (675a, 2022a) and, in any event, established no bias. '® As the Supreme Court stated in United States v. Grinnell Corp., 384 U. S. 563, 583 (1966): | “The alleged bias and prejudice to be disqualifying must stem~from an extra-judicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case. Berger v. United States, 255 U. §. 22, 31.” None of the instances of alleged bias indicate any extra- judicial influence or animus. 'S We reject as frivolous the argument that the trial judge committed rever- sible error in making his findings on the basis of notes taken during the hearing. Appellants’ brief at 31, 32, 36. We also note that appellants an- swered in the negative when asked if they desired to submit proposed find- ings (2944a). '* Appellants cite two instances to us as evidence that the district court had made up its mind before hearing the evidence. One involves the trial judge’s questions about the integrity of accounts kept in penci! (2020-22a). The other involved his initial concept that appellants had erroneously com- puted the amount of tax-on their telephone charges (1811-12a, 1905-06a, 2085a, 2094a, 2500-Ola, 2925Sa). In both instances the court dropped the matter entirely when its initial doubts proved wrong. We note in this con- text that the cases cited at page 62 of appellants’ brief relating to the propriety of predicating decisions on facts outside of the record or “private evidence” are inapposite since no part of the decision in this case was based on such evidence. A26 Appendix F—Opinion of the Court. IV. The Amount of the Awards A. Attorneys’ Fees In Lindy we established an analytical framework for the computation and award of attorneys’ fees. As we explained in Merola y. Atlantic Richfield Co., 515 F. 2d 165, 168 (3d Cir. 1975) (Merola II): “Lindy approached the award of attorneys’ fees by requiring that initially an objective basis for evaluating attorneys’ services be established by multiplying the hours spent on a case by a reasonable hourly rate of com- pensation for each attorney involved. With this objective figure as a backdrop, Lindy injected flexibility into the fee-setting process by requiring that the value of the serv- ices be finally determined by consideration of at least two additional factors: (1) the contingent nature of the case, reflecting the likelihood that hours were invested and expenses incurred without assurance of com- pensation and (2) the quality of the work performed as evidenced by the work observed, the complexity of the issues and the recovery obtained.” Since the trial judge in this case failed to make any findings on the number of hours expended by Lyman and Ash in this litigation, we would normally remand for such a deter- mination. However, it is apparent that the trial judge has already made a diligent effort and has compiled as complete a record as is possible under the unique circumstances of this case. As noted below at page A28, the record contains evidence, which is not disputed by any party, that 700 hours were spent by counsel for the individual defendants for com- ee A27 Appendix F—Opinion of the Court. parable work. Only because this is a most unusual case, ' with a virtually complete lack of reliable direct supporting documentation and involving relatively inexperienced at- torneys, with no full-time secretaries or other record-keeping personnel, who testified at length before a conscientious district judge, we will not follow our normal policy of re- quiring the district court to make the determination of hours expended in the first instance. While judicial economy in the attorneys’ fee context normally requires a remand, we believe that in this extraordinary case it would be wasteful of the resources of both the parties and the courts to follow that course. A remand here would only cause a further drain on Cosmopolitan’s depleted treasury when this litigation has al- ready generated claims for attorneys’ fees that may exceed it. Under these circumstances, we have decided to adopt appel- lants’ suggestion that we determine a reasonable fee at this juncture. Appellants’ brief at 66-67. See Powell v. Penn- sylvania Railroad Co., 267 F. 2d 241 (3d Cir. 1959); cf. Merola v. Atlantic Richfield Co., supra, 515 F. 2d at 173. 6a In addition to the fact that the absence of (a) records, (b) reliable testimony from appellants, and (c) other direct evidence of hours spent by appellants on this case, makes it wasteful for all concerned to remand this case to the district court for a finding of such hours, our view that the Penn- sylvania Disciplinary Board is the appropriate agency to determine, in the first instance, the application of the Code of Professional Responsibility to this record (see pages A36-A40) has contributed to our conclusion that we should take the highly unusual course of not remanding the case to the district court. See Lindy Bros. Builders, Inc., et al. v. American Radiator & Standard Sanitary Corp., et al. (Lindy Il), ...... Pe MP seccss (July 2, 1976, 3d Cir. Nos. 74-2189 & 74-2255) (en banc). We note that parts IV A - C of Lindy I1 do not apply to this fee application adjudicated in the district court on March 28, 1975, more than a year prior to Lindy //. The Pennsylvania Disciplinary Board has indicated that it .ill not act on the reference of the district court case and opinion to it until the above appeals have been de- termined. A28 Appendix F-—Opinion of the Court. The threshold determination we must make is the amount of time Lyman and Ash spent prosecuting these suits. The record indicates that counsel for the individual defendants in this litigation spent approximately 700 hours (1605-10a). Counsel for 20th Century spent somewhat more (835-37a). Because of their failure of proof'’ and the fact, discussed below, that appellants’ refusal to settle the claims against 20th Century at an earlier time accounts for a large portion of the time spent by counsel for 20th Century, we think the 700-hour figure represents an acceptable starting point for the Lindy computation. Next we must set the value of Lyman and Ash’s time on an hourly basis. In Lindy, supra, 487 F. 2d at 167, we said: “The value of an attorney’s time generally is reflected in his normal billing rate. A logical beginning in valuing an attorney’s services is to fix a reasonable hourly rate for his time—taking account of the attorney's legal reputation and status (partner, associate).” The difficulty in this case stems from the fact that Lyman and Ash’s practice was confined almost exclusively to cases han- dled gn a contingent fee basis. Only in a few scattered in- stances did Lyman and Ash bill on an hourly basis at the $50.00 and $60.00 rates they claimed (2624-25a, 282la, see 2420-21a, 2423). Thus we must fix a “reasonable hourly rate” taking account of appellants’ legal reputation and experience. Prior to these suits, Lyman and Ash had had little previous experience as lead counsel in the type of litigation involved in '? Cf. Merola v. Atlantic Richfield Co., 493 F. 2d 292, 296 & n. 14 (3d Cir. 1974) (Merola 1). A29 Appendix F—Opinion of the Court. this case (820-30a, 2397-98a, 2575-76a, 2623a). Although Mr. Ash’s experience was more extensive, Mr. Lyman had been a practicing member of the bar for less than two years prior to this litigation. The pretrial papers he prepared in this case were the first he had ever done (2575-76a). Taking into ac- count the prevailing rate of compensation in the legal com- munity'* and the facts at the time of this litigation,'* we have determined, after careful consideration, that the figure of $40.00 per hour represents an appropriate, weighted, average rate of compensation for these attorneys in this type of litigation at the time. Multiplying the 700-hour estimate discussed above by $40.00 per hour, we arrive at a threshold attorneys’ fee of $28,000. Our next inquiry concerns the question of whether this $28,000. figure should be adjusted to reflect the contingent nature of this case. Although the litigation was conducted on a wholly contingent basis, the prospects for success on the proxy claim became substantial soon after the litigation com- menced and before any significant amount of legal time had been spent (847-48a). Moreover, an experienced and respect- ed member of the Philadelphia bar, who acted as counsel for the individual defendants, testified that his client had settled principally because the cost of defending against the suit would have been greater than the $25,000. paid in the settle- ment (1542-43a, 1601-05a). Under these circumstances, the '* The district court set the rates at $20.00 per hour for non-trial time and $30.00 per hour for trial time. '* At the time of the litigation, the firm of Lyman and Ash was new, had limited library facilities and limited secretarial or clerical assistance. The overhead component of their fee was, therefore, smaller during the period than that of lawyers in existing firms. A30 Appendix F—Opinion of the Court. policies militating in favor of a substantial increase to reflect the contingent nature of the suit apply with diminshed force. And given the small amount of the actual monetary recovery, we think the objective figure of $28,000. should be increased by no more than 10% for a total of $30,800.” We now turn to the question which the district court found to be of paramount importance: whether the fee should be re- duced to reflect “the quality of the work performed as evidenced by the work observed, the complexity of the issues and the recovery obtained.” Merola v. Atlantic Richfield, supra, 515 F. 2d at 168. We cannot say the district court abused its discretion in determining that a reduction in fee is warranted in this case. First, there is sufficient evidence in the record to support the district court’s finding that the quality of appellants’ ac- tual work was substandard. Prior to trial, the district judge so characterized their work, and the record reflects the court’s concern at other stages in the litigation.*' Second, we must agree with the district court’s conclusion that “nothing should be added in this case for the novelty or complexity of the issue”’ (849a). Although the case was procedurally complex, we do not believe those complexities increased the difficulty of obtaining the settlements achieved in this litigation. More significantly, we think a reduction in the objectively determined fee is appropriate in light of the result achieved through appellants’ efforts. %© The district court used an increase factor of 20% but was considering a fee that was lower than the fee we are considering here (85la). *! Order of November 26, 1973, Document No. 48 (M. D. Pa., Civil No. 73- 551), letter of August 7, 1974, from Judge Muir to Mr. Lyman (882a). A3l Appendix F—Opinion of the Court. The principal monetary benefit produced by appellants was the $25,000. settlement against the individual defendants. *!* As we have previously noted, that settlement was achieved in principle by June. By appellants’ own records, they had ex- pended approximately 425 hours on this litigation by that time. Thus, using the hourly rate of $40.00, plus a con- tingency factor of 10%, the maximum possibie fee for producing this $25,000. settlement would be $18,700., assuming all the hours were spent on this aspect of the litigation. The only other benefit produced by this litigation came from the settlement with 20th Century. That settlement con- sisted of $15,000., 40,509 special preference units and the conversion of 260,980 shares of Cosmopolitan’s 20th Century common stock into an identical number of special preference units.?? The fact is, however, that Lyman and Ash cannot be credited with the full value of their time for producing this benefit. First, it is undisputed that the entire settlement without the special preference feature was (1) attainable at least by the end of 1973 (833a), and (2) would have been achieved but for 21a We have concluded that the district court finding that Lyman and Ash did not produce this $25,900. sum is clearly erroneous. See 871a, 1542-43a, 1602-05a, and page Al5 above. The difference between the fee we have set and the $6,000. fee set by the district court reflects this conclusion. 22 Appellants correctly point out that in its description of the settlement the district court failed to mention the conversion of the 260,980 shares of common stock into special preference units (831a). We add the observation that the district court also failed to mention the loss of voting rights. We doubt the district court was unaware of either of these facts. In any event, the court found special preference units to have limited value. A32 Appendix F—Opinion of the Court. the opposition of Lyman and Ash (834a).%* By that time Lyman and Ash claim to have expended only 212.4 hours, 23: or one-sixth of the time for which they now seek attorneys’ fees. Using the $40.00 per hour rate, plus a 10% contingency fac- tor, they would thus be entitled to a maximum fee of $9,355.60. Furthermore, counsel for Cosmopolitan played the significant, if not exclusive, role in arriving at the initial terms of the settlement ($15,000. cash plus 40,509 additional shares) (833a, 870a, 2906-09a). Second, the bulk of appellants’ time was expended in changing the 40,509 shares into 40,509 preference units and arranging the conversion of Cosmopolitan’s 260,980 shares of *3 Opposing counsel testified: “[ While the other parties to this transaction were willing as far back as November and December of 1973, and certainly in early 1974, to sit down and negotiate a settlement, and a settlement that was within the range that we ended up with, there was no inclination on the part of Mr. Lyman or Mr. Ash to accept figures anywhere near what we ended up with until the case was weli into I think about the fourth or fifth day of trial.” (2909a) Immediately following this testimony, Mr. Lyman refused an opportunity explicitly extended by the court to cross-examine. See also reply brief at 9. Mr. Lyman testified that a settlement identical, except for the preference units, to the settlement finally approved “could have been had at any time after the suit was filed” (231 1a). While this testimony does not reveal a precise date after which the ultimate settlement, except for the preference units, could have been at- tained, it does indicate that the settlement, without the preference units, was attainable by the end of 1973. 23a It should be noted that these 212.4 hours have already been included in the 425 hours covered by the computation of time spent as of June 1974 on the settlement with the individual defendants described at the top of page A31 above. This $9,355.60 computation assumes that these 212.4 hours were spent solely on the claims against 20th Century. A33 Appendix F—Opinion of the Court. 20th Century stock into special preference units. While it is clear that the preference feature** has “some value” (1593a), we are unable on this record to translate that value into monetary terms and we must, therefore, agree with the district court that appellants have failed to sustain their bur- den of proof. Without belaboring the point, it is enough to state that other than their present worth in terms of peace of mind, the value of the preference units is linked directly to the future of 20th Century and the likelihood that certain ad- verse conditions will occur. But the only expert to testify con- cerning the value of the preference feature offered no predic- tion concerning 20th Century’s prospects. The expert's ** Special preference units of 20th Century are non-voting shares con- vertible under certain conditions to securities and created especially for the settlement. They have the following characteristics: (1) In the event, prior to September 15, 1979, of (a) a decline in 20th Century's net worth below $2 million, (b) a formal adjudication of the bankruptcy of 20th Century or Consumers Life (a subsidiary), or (c) appointment of a statutory receiver for Consumers Life, the units will automatically convert into general debt obligations at $4.21 per unit. (2) In the event the above conditions do not occur before Sep- tember 15, 1979, and a principal subsidiary of 20th Century possesses a certificate of authority to operate as a life insurance company on Sep- tember 15, 1979, the units will convert to common stock. See Set- tlement Agreement, § I1-D(3) (573a). (3) If a principal subsidiary of 20th Century does not possess a cer- tificate of authority to operate as a life insurance subsidiary on Sep- tember 15, 1979, the units will not convert until (a) recertification triggers conversion into common stock, or (b) bankruptcy, receiver- ship, a decline in net worth below $2 million, or the occurrence of January 1, 1985, without recertification triggers conversion into debt. In addition, the units are (a) convertible into common stock at the op- tion of the holder (Cosmopolitan) and (b) convertible into debt at $4.21 per unit at the option of 20th Century. A34 Appendix F—Opinion of the Court. testimony was based on the premise that these conditions would occur.” Moreover, whatever value the preference feature has must be weighed against the fact that preference units, unlike the common stock for which they were substituted, have no dividend rights. More significantly, as a part of the change in the settlement Lyman and Ash accomplished, Cosmopolitan effectively relinquished all voting rights in 20th Century although Cosmopolitan held a 25% equity interest in the com- pany. In sum, the total benefit produced by Lyman and Ash con- “sists of (1) $25,000. from the settlement with the individual defendants, (2) a small portion of the $15,000. cash and 40,509 additional shares received from 20th Century, and (3) the conversion of common stock into special preference units, a benefit to which no precise value was ascribed on this record. Taking the size of these benefits into account, we con- clude that the objectively determined fee of $28,000., after being increased by 10% to $30,800. to reflect the contingent nature of the suit, will be reduced by 50% to $15,400. We decline to reduce the fee as a penalty for any attempt to “defraud” the court. In our view, the evidence falls short of establishing by “clear, precise and indubitable evidence” 23 The expert stated: “[i]n the aggregate if the adverse conditions do occur” (emphasis supplied), the value of the special preference feature will be the difference between “the basic book value” at the time and $4. 21 (1594-95a). As noted above, the present value of the preference feature depends on the likelihood those conditions will occur. The record contains no evidence on either such likelihood or the monetary value of the preference units which might be compared to the market value of the common stock. Sales of the common stock apparently do occasionally take place when buyers and sellers can be matched. eno. _ A35 Appendix F—Opinion of the Court. willfulness or intent to deceive on the part of appellants. See Ratay v. Lincoln National Life Ins. Co., 378 F. 2d 209, 212 (3d Cir. 1967). Nor can we say that the present record” justifies the district court’s conclusion that there has been a “clear violation” by appellants of Disciplinary Rule 5-103(B), since Lyman and Ash were not given an opportunity to present evidence in opposition with knowledge that they were being charged with an infraction of that Rule. It is possible that ap- pellants could have shown that their clients remained “ultimately liable for” the expenses of litigation. B. Expenses After reviewing the entire record, the district court decided to award 60%, or $6,256.72, of the $10,427.86 amount requested by Lyman and Ash. We cannot say that this award was contrary to law or that the findings on which it is based are clearly erroneous.”’ In our view, the district court was en- titled to reduce the total of awardable expenses to take ac- count of (1) unreimbursable items and (2) poor records. While it is impossible on this record to determine the precise amount of such expenses, it is apparent that some of ** See transcript of hearing on February 17, 1974 (M. D. Pa. Civil No. 73- 551), Document No. 347 a: 73-77 (testimony of R. Leib), transcript of hearing on February 28, 1974 (M. D. Pa. Civil No. 73-551), Document No. 345 at 31-34 (testimony of A. Yenchko), 1282-83a, 1292-93a; 1303a. *” We note that during the trial appellants expressed a willingness to accept 75% of the expenses claimed (2162a, see also 2173a). The district court was entitled to conclude that, under the unique circumstances of this case, some portion of the pre-trial and trial expenses, such as witness fees and notes of testimony, cannot be termed reasonable and necessary. Cf. In re Middle West Utilities Co., 17 F. Supp. 359, 375 (S.D.N.Y. 1936). A36 Appendix F—Opinion of the Court. the items in the petition are unreimbursable, since they would normally be subsumed in the hourly billing rate. Among these are: a portion of the legal research copying expenses necessitated by the fact that Lyman and Ash had no library, expenses for “clerical” and other in-office overhead charges. Under the circumstances of this case, the district court did not abuse its discretion in denying reimbursement at least for some portion of the expenses attributable to “Dinners for staff (o.t.).” Similarly, we believe appellants must bear the risk of un- certainty arising from the poor quality of their records, Ap- pellants, for example, claim to have made 3,000 copies of documents on their firm’s copier and seek reimbursement at S¢ per page. But the 3,000 copy figure and 5¢ per page charge represent little more than a guess “hurriedly” arrived at (1719a). Telephone and travel charges present analogous dif- ficulties. Credit cards were used to pay some travel expenses, and while expenses clearly were incurred, allocation to this litigation was often based on appellants’ memory (916-17a, 1632-34a, 1799a). Appellants maintained no records of out- of- pocket expenses (789a). The same problems attend analysis of the firm’s telephone records. Telephone charge allocations for the first 11 months of this case were first made in July and August of 1974 and thereafter on a monthly basis only (1903- 94a, 1910a). V. The District Court's Opinion In its final order on March 28, 1975 (863-64a) and in a sup- plementary order entered June 18, 1975 (868-69a), the district court directed the Clerk to forward a copy of its opinion in A37 Appendix F—Opinion of the Court. this case to the Disciplinary Board of the Supreme Court of Pennsylvania and to the West Publishing Company. As we have previously noted, that opinion contains language which may injure appellants’ professional reputations. Appellants have asked this court to order the withdrawal of the opinion and to direct that the opinion and order, or parts thereof, be expunged from the district court's files.” In the absence of extraordinary circumstances, every court has the authority and the necessarily broad discretion to write and to file its own opinions and orders relating to questions properly presented to it. Moreover, courts have the duty to assist the appropriate state disciplinary bodies in carrying out their responsibility of investigating activities which may be contrary to the canons of ethics and a source of injury to the public. We note, however, that the Supreme Court has “advised caution ‘[w]here a per- son’s good name, reputation, honor or integrity is at stake because of what the government is doingtohim. . .’ ” Doe v. McMillan, 412 U. S. 306, 324 (1973), qucting Wisconsin v. Con [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1129%3A1. Public record. Not legal advice.