William E. Zimsky

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FCC Declaratory Rulings › William E. Zimsky

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9 FCC Red No. 15

Federal Communications Commission Record

FCC 94-179

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of

WILLIAM E. ZIMSKY

Request for Attorney's

Fees in Connection with

the Interactive Video and

Data Service Proceeding

DECLARATORY RULING

Adopted: June 29, 1994;

Released: July 11, 1994

By the Commission:

I. INTRODUCTION

1. In this declaratory ruling, we deny a request by Wil

liam E. Zimsky, a communications lawyer, for a deter

mination that he is entitled to attorney's fees in connection

with his participation in the interactive video and data

service (IVDS) proceeding (Gen. Docket No. 91-2). Zimsky

claims that, because he filed a petition for reconsideration

challenging the fding fee originally established for IVDS,

he is entitled to between 20 and 30 percent of the money

due to be refunded after we reduced the fee. His claim is

based on the "common fund doctrine," which, when it

applies, allows attorneys whose work product benefits a

class of persons to claim a portion of funds produced by

the attorneys' efforts as compensation for services. See

Boeing Co. v. Van Cemert, 444 U.S. 472 (1980).' We find

that the Commission lacks authority to apply the common

fund doctrine to determine that Zimsky is entitled to attor

ney's fees in this case.

II. BACKGROUND

2. On February 13, 1992, the FCC established a new

radio service, known as the interactive video and data

service (IVDS), to piermit two-way interaction with com

mercial and educational programming, along with informa

tional and data services. Report and Order, 7 FCC Red 1630

ity to apply the common

fund doctrine to determine that Zimsky is entitled to attor

ney's fees in this case.

II. BACKGROUND

2. On February 13, 1992, the FCC established a new

radio service, known as the interactive video and data

service (IVDS), to piermit two-way interaction with com

mercial and educational programming, along with informa

tional and data services. Report and Order, 7 FCC Red 1630

(1992). The Commission established a filing fee of $1,400

per applicant. Id. at 1639-40 f H 69-71. This fee reflected a

decision by the FCC to require applicants to apply for a

blanket license for a system that it assumed would include

40 cell transmitter stations (CTS), each with a separate call

sign and a $35 filing fee. ($35 x 40 = $1,400) See 47

U.S.C. § 158(g); 47 C.F.R. § 1.1102(7) (fee schedule).

3. Subsequently, four parties — not including Zimsky —

filed timely pleadings contending that the $1,400 filing fee

was excessive. Memorandum Opinion and Order, 7 FCC Red

4923, 4924 f 8 (1992). On August 4, 1992, the Commission

denied those petitions and reaffirmed the use of a $1,400

filing fee. Id. at 4925 f 15. At about the same time, the

Commission began accepting applications for IVDS in nine

of the top-ten service areas. Most, though not all, of the

applicants tendered the $1,400 fee with their applications.

4. On September 3, 1992, Zimsky filed a petition for

reconsideration of the Commission's August 4 Memoran

dum Opinion and Order on behalf of the Committee to

Preserve Statutory Fees (CPSF), which consisted of certain

applicants who did not file the $1,400 filing fee. Although

Zimsky and the CPSF challenged the propriety of the fee,

they did not ask the Commission to refund any of the fees

already paid, because the CPSF members were not entitled

to refunds.

5. On April 23, 1993, the Commission granted Zimsky's

petition. While the Commission rejected the arguments

that the filing fee was unconstitutional or lacking in statu

tory authority, it ultimately agreed with a third argument

in the petition

ged the propriety of the fee,

they did not ask the Commission to refund any of the fees

already paid, because the CPSF members were not entitled

to refunds.

5. On April 23, 1993, the Commission granted Zimsky's

petition. While the Commission rejected the arguments

that the filing fee was unconstitutional or lacking in statu

tory authority, it ultimately agreed with a third argument

in the petition. Second Memorandum Opinion and Order, 8

FCC Red 2787, 2788 f 10 (1993). The Commission held

that it agreed with the contention that the requirement to

file based on an assumed minimum number of 40 CTS

stations could be an unnecessary burden on IVDS ap

plicants. Id. Accordingly, the Commission permitted ap

plications for a blanket license under one call sign and

reduced the filing fee to $35 to reflect the single call sign.

Id.

6. The Commission went on to state that any "IVDS

applicants that paid an IVDS application fee based on the

40 CTS requirement shall be refunded the amount greater

than the basic $35 per call sign fee." [Footnote omitted.)

Id. at 2788-89 f II. As a result, 4,126 applicants were each

due a refund of $1,365, for a total of $5,631,990. As already

noted, none of the CPSF applicants represented by Zimsky

are entitled to a refund.^

7. As the Commission was preparing to authorize cer

tification of the refunds for payment, Zimsky sent a letter

to the FCC's Managing Director claiming that he was

entitled to a share of the refunds under the common fund

doctrine. Letter from William E. Zimsky to Andrew S.

Fishel (Jun. II, 1993). Counsel for Zimsky then notified

The common fund doctrine provides that:

. . .

[A] litigant or a lawyer who recovers a common fund

for the benefit of persons other than himself or his client

is entitled to a reasonable attorney's fee from the fund as

a whole . . .. The common-fund doctrine reflects the

traditional practice in courts of equity. . .

m E. Zimsky to Andrew S.

Fishel (Jun. II, 1993). Counsel for Zimsky then notified

The common fund doctrine provides that:

. . .

[A] litigant or a lawyer who recovers a common fund

for the benefit of persons other than himself or his client

is entitled to a reasonable attorney's fee from the fund as

a whole . . .. The common-fund doctrine reflects the

traditional practice in courts of equity. . . . The doctrine

rests on the perception that persons who obtain the bene

fit of a lawsuit without contributing to its cost are un

justly enriched at the successful litigant's expense. . . .

Jurisdiction over the fund involved in the litigation al

lows a court to prevent this inequity by assessing attor

ney's fees against the entire fund, thus spreading fees

proportionately among those benefited by the suit. [Cita

tions omitted.]

444 U.S. at 478.

^ Because the CPSF applicants had not submitted the original

$1,400 filing fee, their applications were dismissed and any

partial fees submitted were returned. They thereupon appealed

the dismissal of their applications. Lavanway v. FCC, No.

93-1337 (D.C. Cir., filed May 24, 1993). Eventually, the Com

mission agreed to reinstate the CPSF applications upon payment

of the new $35 filing fee, and the CPSF applicants dismissed

their appeal.

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FCC 94-179

Federal Communications Commission Record

9 FCC Red No. 15

the Commission's Acting General Counsel to "identify a

lien" and offer to meet with Commission staff. Letter from

Jacob A. Stein to Rene Licht (Jun. 16, 1993). He later

submitted a more extensive letter claiming 25 percent of

the refunds under the common fund doctrine. Letter from

Jacob A. Stein to Rene Licht (Jul. 19, 1993).

8. The Commission's Acting General Counsel responded

that she disagreed that the common fund doctrine applied

to this proceeding and that she would advise the FCC's

Managing Director to issue full refunds to the applicants.

Letter from Rene Licht to Jacob Stein (Sept. 30, 1993).

ng 25 percent of

the refunds under the common fund doctrine. Letter from

Jacob A. Stein to Rene Licht (Jul. 19, 1993).

8. The Commission's Acting General Counsel responded

that she disagreed that the common fund doctrine applied

to this proceeding and that she would advise the FCC's

Managing Director to issue full refunds to the applicants.

Letter from Rene Licht to Jacob Stein (Sept. 30, 1993).

9. Zimsky then filed suit against the Commission in

federal district court seeking an award of 25 percent of the

refunds as attorney's fees. Zimsky v. Hundt. No. 93-2175

(D.D.C., filed Oct. 22, 1993). As part of the lawsuit, the

government stipulated that it would not authorize payment

of the refunds during the pendency of the suit.

10. The District Court, at a status conference on January

6, 1994, stayed proceedings there to permit Zimsky to seek

a final agency ruling on his fees petition, which ruling

would be appealable to the United States Court of Appeals.

Zimsky's motion for declaratory ruling followed on Feb

ruary 24, 1994.

III. MOTION FOR DECLARATORY RULING

11. Zimsky asks the Commission to make a "threshold

determination" that he is entitled to some portion of the

refunds under the common fund doctrine. He further re

quests that the Commission initiate an interpleader action

under 28 U.S.C. § 1335 for a court to determine the

amount of the refunds to which Zimsky is entitled, which

Zimsky asserts is between 20 and 30 percent of the

refunds.^ Zimsky suggests that the court may appoint a

guardian to represent the interests of the applicants entitled

to refunds.

12. Zimsky contends that he is entitled to reimbursement

under the common fund doctrine on the theory that his

petition for reconsideration created a common fund which

will benefit the applicants entitled to refunds. In this re

gard, he points out that the Commission did not grant the

petitions for reconsideration originally challenging the fil

ing fee

erests of the applicants entitled

to refunds.

12. Zimsky contends that he is entitled to reimbursement

under the common fund doctrine on the theory that his

petition for reconsideration created a common fund which

will benefit the applicants entitled to refunds. In this re

gard, he points out that the Commission did not grant the

petitions for reconsideration originally challenging the fil

ing fee. Zimsky argues that an award of attorney's fees to

him under these circumstances comports with the equi

table justification for the common fund doctrine because,

otherwise, the applicants entitled to refunds would be un

justly enriched by his efforts challenging the filing fee.

13. Zimsky claims that the common fund doctrine ap

plies because: (1) the beneficiaries can be identified; (2) the

benefits (

i.e., the refunds) can be accurately traced; and (3)

the fee can be shifted with exactitude by deducting a per

centage of each refund check and paying it to Zimsky.

14. Although Zimsky acknowledges the Acting General

Counsel's opinion that the Commission lacks the authority

to make a common fund award, he nevertheless maintains

that the Commission can make a "threshold determina

tion" that he is entitled to attorney's fees. He also main

tains, despite the Acting General Counsel's view, that the

Commission may initiate an interpleader action for the

purpose of obtaining an award for him.

IV. COMMENTS

15. The General Counsel afforded interested persons an

opportunity to comment on Zimsky's motion. Public No

tice, Mimeo No. 42103 (Mar. 11, 1994). The Commission

received 19 comments and 281 reply comments, some on

behalf of multiple applicants.' One of the commenting

applicants indicated that he was willing to reimburse

Zimsky. Kunkle Comments.'' The rest of the commenters,

representing over 400 applicants, opposed any payment to

Zimsky.

16. Those commenters opposing Zimsky raised numer

ous objections to Zimsky's common fund theory

, 1994). The Commission

received 19 comments and 281 reply comments, some on

behalf of multiple applicants.' One of the commenting

applicants indicated that he was willing to reimburse

Zimsky. Kunkle Comments.'' The rest of the commenters,

representing over 400 applicants, opposed any payment to

Zimsky.

16. Those commenters opposing Zimsky raised numer

ous objections to Zimsky's common fund theory. The three

most significant arguments are the following; (1) the Com

mission lacks authority to make a common fund award or

to take cognizance of Zimsky's claim; (2) the common

fund doctrine does not apply to Commission rulemakings;

and (3) the facts of this case are inconsistent with the

equitable basis of the common fund doctrine.

V. ANALYSIS

17. Based on our review of Zimsky's motion and the

comments, we find, as did the Acting General Counsel, no

basis to make a determination that Zimsky is entitled to a

common fund award or to initiate an interpleader action.

In this regard, we agree with the principal objections raised

by the commenters opposing Zimsky's motion. We now

turn to a detailed examination of these objections and of

Zimsky's responses.

A. COMMISSION AUTHORITY

18. Opposing Comments. Several commenters argue that

there is no authority to award Zimsky attorney's fees in

this proceeding. FRAC Comments at 7-10; ICC Comments

at 6; North Pointe Comments at 4; Shadowfax Comments

at 4-5; Coughlin Reply Comments at 3; North Pointe Reply

Comments at 2. They point out that there is no statutory

provision for awarding attorney's fees in this proceeding

and that the Commission lacks equitable authority to

award attorney's fees. They contend that the Commission

must make full refunds to the applicants unless ordered to

do otherwise by a court. They maintain that an

interpleader action is unwarranted.

19. Zimsky's Reply. Zimsky refers to a memorandum of

points and authority that addresses similar arguments that

he made before the District Court

ing

and that the Commission lacks equitable authority to

award attorney's fees. They contend that the Commission

must make full refunds to the applicants unless ordered to

do otherwise by a court. They maintain that an

interpleader action is unwarranted.

19. Zimsky's Reply. Zimsky refers to a memorandum of

points and authority that addresses similar arguments that

he made before the District Court. Plaintiff's Memorandum

of Points and Authorities in Support of Plaintiff's Opposition

to Defendant's Motion to Dismiss or, in the Alternative, for

•' The suit was originally fded as Zimsky v. Quello.

^ The interpleader statute provides relief to stakeholders hav

ing custody of money or property to which there are two or

more adverse claimants. By Tding an interpleader, the stake

holder asks the court to determine its liability with respect to

each of the adverse claimants. The stakeholder deposits the

disputed amount in court for the court's judgment. See also

Fed. R. Civ. P. 22. See generally General Accident Group v.

Gagliardi, 593 P. Supp. 1080 (D. Conn. 1984), aff'd, 767 F.2d 907

(2d Cir. 1985).

These pleadings are listed in the Appendix to this ruling.

^ A second applicant originally indicated that he was willing to

pay but subsequently retracted his support. Compare Mercury

Datanet Comments with Karl W. Hinkle (Mercury Datanet)

Reply Comments.

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9 FCC Red No. 15

Federal Communications Commission Record

FCC 94-179

Summary Judgment, filed in Case No. 93-2175 (D.D.C.)

(Plaintiff's Memorandum). In this pleading he asserts that

the common fund doctrine applies to administrative pro

ceedings. Id. at 8. Although he concedes that the Commis

sion lacks equitable power to award attorney's fees, he

maintains that he nevertheless has a property interest in

the fund that the Commission may recognize and bring

before a court for enforcement. Id. at 4-5, 9-10, 12-14.

20. Discussion. We decline to make a "threshold deter

mination" that Zimsky is entitled to attorney's fees

strative pro

ceedings. Id. at 8. Although he concedes that the Commis

sion lacks equitable power to award attorney's fees, he

maintains that he nevertheless has a property interest in

the fund that the Commission may recognize and bring

before a court for enforcement. Id. at 4-5, 9-10, 12-14.

20. Discussion. We decline to make a "threshold deter

mination" that Zimsky is entitled to attorney's fees. We

disagree with Zimsky's assertions that he has an existing

property interest in the refunds which we can recognize or

that such an interest can arise in a purely administrative

context. Our review of the precedents indicates that a

common fund award can arise only in the context of

litigation before an appropriate court exercising its equi

table powers. The FCC, as an administrative agency, has no

authority to make such an award. Indeed, the D.C. Circuit

has explicitly held that the FCC lacks authority to award

attorney's fees without statutory authorization. Turner v.

FCC, 514 F.2d 1354, 1355 (D.C. Cir. 1975). Because no

court has awarded Zimsky attorney's fees, we have no basis

to take any action contrary to the applicants' right to

receive full refunds.

21. It is clear from the case law that equitable jurisdic

tion in a court is essential to a common fund award. As

the Supreme Court has said; "The common-fund doctrine

reflects the traditional practice in courts of equity . . ." Van

Gemert, 444 U.S. at 478. In this, the Court was referring to:

. . . the power of federal courts in equity suits to

allow counsel fees and other expenses entailed by the

litigation not included in the ordinary taxable costs

recognized by statute.

Allowance of such costs in appropriate situations is

part of the historic equity jurisdiction of the federal

courts.

Sprague v. Ticonic National Bank, 307 U.S. 161, 164 (1939).

22. The requirement for equitable jurisdiction in a court

led the Federal Circuit, in Knight v. United States, 982 F.2d

1573 (Fed. Cir

iled by the

litigation not included in the ordinary taxable costs

recognized by statute.

Allowance of such costs in appropriate situations is

part of the historic equity jurisdiction of the federal

courts.

Sprague v. Ticonic National Bank, 307 U.S. 161, 164 (1939).

22. The requirement for equitable jurisdiction in a court

led the Federal Circuit, in Knight v. United States, 982 F.2d

1573 (Fed. Cir. 1993), to reject a common fund claim

based purely on administrative action, under circumstances

strikingly similar to Zimsky's claim. In Knight, a law firm

representing four employees of the Department of the Inte

rior successfully petitioned the Department of the Interior

and the Office of Personnel Management to revise the

computation of cost of living allowances for federal em

ployees who were removed from their positions. The firm

claimed as attorney's fees 25 percent of back pay to be

reimbursed as a result of the revised policy.

23. The court rejected the law firm's claim, stating:

. . . a "common fund" is the creature of a court's

inherent equitable power over funds under its con

trol. A common fund does not crystallize at the

moment a single plaintiff prevails on his claim. It is

not created by the parties or their lawyers. A "com

mon fund" is established by a court.

[The government's obligation to honor a common

fund] can only arise from litigation before a court,

adequate representation of all parties in interest,

identification of a common fund as to which the

government is merely a stakeholder, jurisdiction over

the fund by a court directly or through a party

representing those being assessed, and exercise of the

judicial equity power to impose liability on the fund

- none of which are present here.

982 F.2d at 1581-82. (Emphasis in the original.)

24. Knight indicates that, contrary to his claim, Zimsky,

in the absence of any prior judicial action, has no existing

"entitlement", "lien" or "property right" which the Com

mission can or should recognize

representing those being assessed, and exercise of the

judicial equity power to impose liability on the fund

- none of which are present here.

982 F.2d at 1581-82. (Emphasis in the original.)

24. Knight indicates that, contrary to his claim, Zimsky,

in the absence of any prior judicial action, has no existing

"entitlement", "lien" or "property right" which the Com

mission can or should recognize. The Commission has the

same obligation here, with respect to the applicants entitled

to refunds, as the government in Knight had with respect to

its employees: "Absent a court order recognizing the valid

ity of [the attorney's claim| . . . the government was

obligated to pay . . . the entirety of the amount it owed to

each one. 982 F.2d at 1580.

25. Moreover, there is no basis for the Commission to

initiate an interpleader. Interpleader is permitted where a

stakeholder faces substantial claims exposing it to a real

risk of multiple liability. See General Accident Group v.

Gagliardi, 593 F. Supp. at 1086-87. Here, because we have

no authority to make an award to Zimsky, an interpleader

action would not be appropriate. As discussed above, there

is no impediment to making full refunds to the applicants.

B. FURTHER ISSUES RELEVANT TO ZIMSKY'S

MOTION

26. The preceding discussion disposes of Zimsky's re

quest. However, the parties also discuss several additional

issues that bear on Zimsky's request, and, for the sake of

completeness, we wish to address those issues. First, we do

not believe that a court would be justified in asserting

jurisdiction over the funds in our custody. Second, we do

not believe that application of the common fund doctrine

applies to our rulemakings. Third, we believe that an

award to Zimsky would be inequitable.

I. Court Jurisdiction

27. Ordinarily, jurisdiction over the question of attor

ney's fees is ancillary to jurisdiction over the subject matter

of a suit. See Sederquist v. Court, 861 F.2d 554, 557 (9th

Cir. 1988)

the funds in our custody. Second, we do

not believe that application of the common fund doctrine

applies to our rulemakings. Third, we believe that an

award to Zimsky would be inequitable.

I. Court Jurisdiction

27. Ordinarily, jurisdiction over the question of attor

ney's fees is ancillary to jurisdiction over the subject matter

of a suit. See Sederquist v. Court, 861 F.2d 554, 557 (9th

Cir. 1988). Thus, attorney's fees may be awarded where

litigation "has conferred a substantial benefit on members

of an ascertainable class, and where the court's jurisdiction

over the subject matter of the suit makes possible an award

that will operate to spread the costs proportionately among

them." Mills v. Electric Auto-Lite Co., 396 U.S. 375, 394

(1970), cited in, Boeing Co. v. Van Gemert, 444 U.S. at 478.

(Emphasis added.) See also Weinberger v. Great Northern

Nekoosa Corp., 925 F.2d 518, 523 (1st Cir. 1991); National

Treasury Employees Union v. Nixon, 521 F.2d 317, 320

(D.C. Cir. 1975) ("The award of attorney's fees is not a

separate claim for relief requiring an independent jurisdic-

tional base, but rather is an additional equitable remedy

which under appropriate conditions can be awarded to the

prevailing party"). Accord, Washington Gas Light Co. v.

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Federal Communications Commission Record

9 FCC Red No. IS

Baker, 195 F.2d 29, 33 (D.C. Cir. 1951) (court has equi

table power to award attorney's fees from funds under its

control during a suit).

28. In his pleadings before the District Court, Zimsky

argued that an action for attorney's fees could be brought

independently of a suit on the merits, a contention rejected

by the court in Sederquist. Plaintiff's Memorandum at 4-5,

8-9. The cases he cites, however, such as Laffeny v. Hum

phrey, 248 F.2d 82 (D.C. Cir. 1957), cert, denied, 355 U.S.

869 (1957), were not in fact independent, but arose from

related suits on the merits. See Clackamas County, Oregon

V. McKay, 219 F.2d 479 (D C. Cir. 1954). See also National

Council of Community Mental Health Centers v

ected

by the court in Sederquist. Plaintiff's Memorandum at 4-5,

8-9. The cases he cites, however, such as Laffeny v. Hum

phrey, 248 F.2d 82 (D.C. Cir. 1957), cert, denied, 355 U.S.

869 (1957), were not in fact independent, but arose from

related suits on the merits. See Clackamas County, Oregon

V. McKay, 219 F.2d 479 (D C. Cir. 1954). See also National

Council of Community Mental Health Centers v. Mathews,

546 F.2d 1003, 1008 (D.C. Cir. 1976), cert, denied, 431

"U.S. 954 (1977) (explaining Lafferty). Moreover, the Su

preme "Court has cautioned that requests for attorney's

fees should not result in a second major litigation. Hensley

V. Eckerhardt, 461 U.S. 424, 437 (1983). This would nec

essarily be the result where, as here, a litigant brought an

independent suit for attorney's fees after participating be

fore a forum that had no power to award such fees.

2. Applicability of the Common Fund Doctrine to

Rulcmaklngs

29. Opposing Comments. The commenters assert that the

common fund doctrine does not apply to rulemakings,

such as this one. Coalition Comments at 2-3; North Pointe

Comments at 3-5; Coughlin Reply Comments at 3; FRAC

Reply Comments at 2. They assert that the common fund

doctrine was intended to recognize instances in which a

party prosecuted litigation to vindicate the private rights of

a class of beneficiaries. According to these commenters,

Zimsky's participation in this rulemaking does not fall

within that rationale because the rulemaking was directed

to making a policy decision in the publie interest and not

to vindicating private rights. In their view, the creation of

the refunds was purely incidental to the public interest

function of the rulemaking.

30. Zimsky's Reply. Zimsky denies that the relevant ac

tion here should be considered a rulemaking. He contends

that the order which created the refunds should be char

acterized as an adjudication. Plaintiff's Memorandum at 10.

31. Discussion. In our view, the common fund doctrine

does not apply to our rulemakings

the refunds was purely incidental to the public interest

function of the rulemaking.

30. Zimsky's Reply. Zimsky denies that the relevant ac

tion here should be considered a rulemaking. He contends

that the order which created the refunds should be char

acterized as an adjudication. Plaintiff's Memorandum at 10.

31. Discussion. In our view, the common fund doctrine

does not apply to our rulemakings. Adjudications and

rulemakings have fundamentally different characters. Adju

dications are concerned with the determination of past and

present rights and liabilities. New Orleans Public Service,

Inc. V. Council of the City of New Orleans, 491 U.S. 350,

370-71 (1989). See also Attorney General's Manual on the

Administrative Procedure Act at 14. Rulemaking, on the

other hand, is essentially legislative in nature, not only

because it operates in the future but also because it is

primarily concerned with policy considerations. Id. In

making such policy decisions, such as the appropriate

IVDS filing fee, the Commission expects to receive and

assimilate public comment representing diverse stakes in

making its public interest determinations. Under these cir

cumstances, there is no justification for considering a par

ticular participant as entitled to special reimbursement.

We are concerned that application of the common fund

doctrine to Commission rulemakings would simply burden

those proceedings with questions of whether a party's posi

tion in the rulemaking established a compensable claim.

Indeed, as some commenters suggest, it might encourage

participation in rulemakings by speculators hoping to

claim attorney's fees.

32. We reject Zimsky's assertion that the order mandat

ing refunds should be considered adjudicatory and thus

distinct from the rulemaking. Zimsky's petition sought re

consideration of an action revising the Commission's rules

to establish a filing fee for IVDS. The refund of fees

already collected was purely incidental to the eventual

modification of the rule

tors hoping to

claim attorney's fees.

32. We reject Zimsky's assertion that the order mandat

ing refunds should be considered adjudicatory and thus

distinct from the rulemaking. Zimsky's petition sought re

consideration of an action revising the Commission's rules

to establish a filing fee for IVDS. The refund of fees

already collected was purely incidental to the eventual

modification of the rule. Zimsky's petition did not seek

refunds, as his clients, who did not submit the $1,400 filing

fee, were not entitled to any. Indeed, if Zimsky had sought

reconsideration of the original action which instituted the

$1,400 fee (instead of the order reaffirming the fee) there

would have been no refunds, because the Commission

would not yet have collected any fees.

3. The Equities of this Case

33. Opposing Comments. Numerous commenters contend

that a common fund award to Zimsky would be inequi

table. Advanee MobilComm Comments at 1; Been Com

ments at 1-2; Chinese American Comments at 1; FRAC

Comments at 5-7, 10-13; Holt Comments at 1; ICC Com

ments at 3-7; InterVision Comments at 1; Coalition Com

ments at 6-10; Kumari Comments at 1-2; Magnolia

Comments at 1; Shadowfax Comments at 5-9; Sharma

Comments at 1-2; Ashu Vashisht Comments at 1-2; Naresh

^ The only case that Zimsky cites in which a court — not itself

having decided the merits of a case — found an administrative

agency liable to pay attorney's fees under the common fund

doctrine is an intermediate state court case. Taylor v. State

Universities Retirement System, 560 N.E.2d 893 (111. App. 1990).

There, the court overturned the denial of attorney's fees by the

Illinois State University Retirement System (SURS) to an attor

ney who had obtained disability benefits for his client from

which SURS was able to recoup payments it made to the client.

The court's holding rests on legal principles inapplicable here.

The ruling that SURS could be required to pay attorney's fees

is directly contrary to federal law discussed at paragraph 21,

supra

rney's fees by the

Illinois State University Retirement System (SURS) to an attor

ney who had obtained disability benefits for his client from

which SURS was able to recoup payments it made to the client.

The court's holding rests on legal principles inapplicable here.

The ruling that SURS could be required to pay attorney's fees

is directly contrary to federal law discussed at paragraph 21,

supra. Moreover, SURS's obligation to make a common fund

award arose because it was a beneficiary of the attorney's efforts

in the same position as a private insuror, not — as is the FCC --

a stakeholder.

® The D.C. Circuit has held that:

One who is influential in litigation leading to the

announcement of a rule of law does not thereby gain a

right of compensation from all those who benefit from

the application of the rule.

The assertion of a noncontractual claim for compensation

for services rendered in sponsoring favorable legislation

does not deserve prolonged discussion.

Whittier v. Emmet, 281 F.2d 24, 32 (D.C. Cir. 1960), cert, denied,

364 U.S. 935 (1961). Zimsky cites no case in which the common

fund doctrine has been applied to a rulemaking proceeding.

Indeed, one of his cases, Best v. California Apprenticeship Coun

cil, 193 Ca. App.3d 1448, 1456 (1987), indicates that the doctrine

does not apply to quasi-legislative proceedings.

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Federal Communications Commission Record

FCC 94-179

Vashisht Comments at 1-2; Vintage Comments at 1; Alli

ance Reply Comments at 2-4; Coughlin Reply comments at

1-4; FRAC Reply Comments at 2-3; ICC Reply Comments

at 2-4; ITV Reply Comments at 2-4; North Pointe Reply

Comments at 2-3; Osborn Reply Comments at 1, attach

ment.' They urge that Zimsky did not represent them and

that his actions did not benefit them.'" They observe that,

unlike Zimsky's clients, they did not dispute the validity of

the original $1,400 filing fee, which they suggest had the

beneficial effect of discouraging the filing of speculative

applications

ly Comments at 2-4; North Pointe Reply

Comments at 2-3; Osborn Reply Comments at 1, attach

ment.' They urge that Zimsky did not represent them and

that his actions did not benefit them.'" They observe that,

unlike Zimsky's clients, they did not dispute the validity of

the original $1,400 filing fee, which they suggest had the

beneficial effect of discouraging the filing of speculative

applications. E.g., Coalition Comments at 6-8; Shadowfax

Comments at 6-8. They argue that the applicants entitled to

refunds and Zimsky's clients constitute two distinct and

adverse classes. Id. According to these commenters,

Zimsky's clients benefited by being reinstated, while the

applicants entitled to refunds were harmed by increased

competition and delay caused by Zimsky's efforts. Addi

tionally, they argue that in view of the limited nature of

Zimsky's participation — the filing of a single petition for

reconsideration - the award claimed by Zimsky represents

an unjustifiable windfall rather than reasonable reimburse

ment.

34. Zimsky's Reply. Zimsky responds that the applicants

have no cause to oppose his request for attorney's fees.

Zimsky Reply Comments at 2-4. In his view, what is

relevant is that he prosecuted a meritorious action result

ing in the creation of a fund and therefore has a claim for

attorney's fees against the fund. Zimsky attributes the ap

plicants' opposition to his claim to their interest in receiv

ing the full amount of the refunds. Because of the

applicants' "intransigence." Zimsky submits that a neutral

third party should resolve his claim.

35. Discussion. We disagree with Zimsky's contention

that awarding him attorney's fees is necessary to prevent

the unjust enrichment of the applicants entitled to refunds.

On the contrary, we agree with the commenters that an

award of attorney's fees would unjustly enrich Zimsky.

First, Zimsky has not shown that it would be equitable to

treat him as having represented the applicants entitled to

refunds

iscussion. We disagree with Zimsky's contention

that awarding him attorney's fees is necessary to prevent

the unjust enrichment of the applicants entitled to refunds.

On the contrary, we agree with the commenters that an

award of attorney's fees would unjustly enrich Zimsky.

First, Zimsky has not shown that it would be equitable to

treat him as having represented the applicants entitled to

refunds. Second, an award of the magnitude sought by

Zimsky would be an unreasonable windfall.

36. In our view, it would be inequitable to award Zimsky

attorney's fees from the refunds unless, as a matter of

equity, he filed his petition for reconsideration on behalf of

the applicants entitled to refunds. This follows from the

relation of the common fund doctrine to the theory of

quantum meruit." See Silberman v. Bogle, 683 F.2d 62, 64

(3rd Cir. 1982). Recovery under a theory of quantum

meruit requires that services were accepted and enjoyed by

the person sought to be charged under circumstances that

provided reasonable notice that the person furnishing the

services expected, in so doing, to be paid. See In re San

Juan DuPoni Plaza Hotel Fire Litigation, 768 F. Supp. 912,

924 n.43.

37. Courts have applied the common fund doctrine con

sistent with this principle. Thus, the Supreme Court noted

in a case where claims were filed which benefited creditors

that: "they had notice by the bill, that suit was brought not

exclusively for the benefit of the complainants therein, but

equally for those of the same class who should come in

and contribute to the expenses of the litigation." Central

Railroad & Banking Co. of Georgia v. Petttis, 113 U.S. 116,

126-27 (1885). Here, Zimsky makes no claim that he for

mally sought to represent the applicants entitled to refunds.

notice by the bill, that suit was brought not

exclusively for the benefit of the complainants therein, but

equally for those of the same class who should come in

and contribute to the expenses of the litigation." Central

Railroad & Banking Co. of Georgia v. Petttis, 113 U.S. 116,

126-27 (1885). Here, Zimsky makes no claim that he for

mally sought to represent the applicants entitled to refunds.

38. In a case in which the party seeking a common fund

award did not sue in a formal, representative capacity,'^ the

court explained the equitable considerations that apply in

such a case:

Whether one professes to sue representatively or for

mally makes a fund available for others may, of

course, be a relevant circumstance in making the

fund liable for his costs in producing it. But when

such a fund is for all practical purposes created for

the benefit of others, the formalities of the litigation

- the absence of an avowed class suit . . . hardly

touch the power of equity in doing justice as between

a party and the beneficiaries of the litigation. . . .

And so, [the relation of the party and the benefi

ciaries of the litigation) must enter into the ultimate

judgment of the District Court as to the fairness of

making an award, or the extent of such award . . . .

In any event such allowances are appropriate only in

exceptional cases and only for dominating reasons of

justice.

Sprague v. Ticonic National Bank, 307 U.S. at 167. We do

not read the court to say, as Zimsky would have it, that

any time a party's litigation incidently benefits others, a

common fund award is appropriate. Rather, we understand

the court to mean that ~ in the absence of formal repre

sentation - a common fund award would be appropriate

only when the relationship between the litigant and the

beneficiaries raises strong equities for treating the litigant as

acting for the benefit of the others

ld have it, that

any time a party's litigation incidently benefits others, a

common fund award is appropriate. Rather, we understand

the court to mean that ~ in the absence of formal repre

sentation - a common fund award would be appropriate

only when the relationship between the litigant and the

beneficiaries raises strong equities for treating the litigant as

acting for the benefit of the others. We consider this en

tirely consistent with our understanding of the principles

of quantum meruit, as described above ~ which require

fair notice to the beneficiaries that services are being

rendered on their behalf.

39. We see nothing in the circumstances in which

Zimsky filed his petition for reconsideration that would

have put the applicants on notice that he was acting on

their behalf. Nothing in his petition indicates that he was

' Numerous other reply comments also took this position.

They assert that they were satisfied with the ,$1,400 fee, that

Zimsky did not represent them, and that Zimsky's efforts have

been to the detriment of the applicants entitled refunds and to

the IVDS industry.

One commenter accuses Zimsky of engaging in "greenmail."

FRAC Comments at 3-5.

" The expression quantum meruit means "as much as he

deserves." Under this doctrine, a person who benefits from the

labor and materials of another should not be unjustly enriched.

Rather, the law implies a promise to pay a reasonable amount

for the labor and materials furnished, even in the absence of a

specific contract. See In re San Juan Dupont Plaza Hotel Fire

Litigation, 768 F. Supp. 912, 924 n.43 (D. Puerto Rico 1991).

In that case, a party, as the beneficiary of a trust fund,

brought an action against banks in receivership to establish a

lien against the banks' assets. As a consequence of stare decisis,

the party's claim necessarily established the claims of other,

similarly situated, beneficiaries of the trust fund

e San Juan Dupont Plaza Hotel Fire

Litigation, 768 F. Supp. 912, 924 n.43 (D. Puerto Rico 1991).

In that case, a party, as the beneficiary of a trust fund,

brought an action against banks in receivership to establish a

lien against the banks' assets. As a consequence of stare decisis,

the party's claim necessarily established the claims of other,

similarly situated, beneficiaries of the trust fund. The court did

not rule on whether a common fund award should be made in

that case, but held that a District Court erred in refusing even

to entertain a petition for an award of attorney's fees.

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9 FCC Red No. 15

acting other than for his clients.'^ As the commenters point

out, there is no reason to believe that those applicants who

did not dispute the validity of the $1,400 filing fee sup

ported Zimsky's attempt to seek reconsideration or consid

ered his efforts beneficial. Indeed, as the commenters also

point out, Zimsky's clients, who refused to pay the $1,400

filing fee represent a class distinct from those who did pay,

and the interests of the two groups may be adverse. In

short, we find it equitable to treat Zimsky's petition for

reconsideration as having been filed only for the benefit of

his own clients.''^

40. As an additional matter, we do not believe that

Zimsky has demonstrated that his claim of 20-30 percent of

the refunds — between $1,126,398 and $1,689,597 — repre

sents a reasonable attorney's fee, as required under the

common fund doctrine. See Boeing Co. v. Van Gemen, 444

U.S. at 478; Swedish Hospiial Corp. v. Shaiala, 1 F.3d 1261.

1265 (D.C. Cir. 1993). See also In re THC Financial Corp.

Litigation, 86 F.R.D. 721, 738 (D. Hawaii 1980) (the reality

and appearance of windfall fees should be avoided)."

41. Zimsky's principle argument for claiming 20-30

percent of the refunds is that such a figure is typical of

common fund awards in class action suits See Swedish

Hospital, 1 F.3d at 1272. Here, however

v. Shaiala, 1 F.3d 1261.

1265 (D.C. Cir. 1993). See also In re THC Financial Corp.

Litigation, 86 F.R.D. 721, 738 (D. Hawaii 1980) (the reality

and appearance of windfall fees should be avoided)."

41. Zimsky's principle argument for claiming 20-30

percent of the refunds is that such a figure is typical of

common fund awards in class action suits See Swedish

Hospital, 1 F.3d at 1272. Here, however. Zimsky's limited

participation in the IVDS proceeding is so obviously dif

ferent from full-blown class action litigation that this

precedent provides no guidance as to the reasonableness of

his claim." Compare Trustees v. Greenotigh, 105 U.S. 527,

532 (1882) (common fund award made to compensate

party pursuing litigation benefiting others "at great expense

and trouble"). Although Zimsky goes to some lengths to

document the labor and expertise he applied in preparing

his petition for reconsideration, we agree with the

commenters that these seem no different from those repre

sented by pleadings typically filed on behalf of specific

clients in proceedings such as the IVDS rulemaking. Com

pare Cosgrove v. Sullivan, 759 F. Supp. 166, 167 (S.D.N.Y.

1991) (attorney's fees reflect "the extremely high quality of

legal services rendered").

42. In view of the foregoing, we conclude that we have

no authority to find that Zimsky is entitled to attorney's

fees for his participation in the IVDS proceeding. We

therefore find no basis to initiate an interpleader action or

to withhold full refunds from the IVDS applicants (except

as may be appropriate in light of the pendency of judicial

proceedings involving this issue).

VI. ORDER

43. ACCORDINGLY, IT IS ORDERED, That the Mo

tion for Declaratory Ruling, filed February 24, 1994, by

William E. Zimsky IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton

Acting Secretary

APPENDIX

The following comments were received:

1. Advanced MobileComm, Inc.

2. Ouentin L. Breen (2 applicants)

3. Chinese American Investment Group Partnership

eedings involving this issue).

VI. ORDER

43. ACCORDINGLY, IT IS ORDERED, That the Mo

tion for Declaratory Ruling, filed February 24, 1994, by

William E. Zimsky IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

William F. Caton

Acting Secretary

APPENDIX

The following comments were received:

1. Advanced MobileComm, Inc.

2. Ouentin L. Breen (2 applicants)

3. Chinese American Investment Group Partnership

4. Fee Refund Action Committee (FRAC)

(74 applicants)

5. Florida MIVS Corp.

6. Phillip C. Holt

7. Independent Cellular Consultants (ICC)

(not an applicant)

8. InterVision United Partnership and

InterVision Two

9. IVDS Applicants Coalition (Coalition)

(43 applicants)

10. Ramesh Kumari

11. Donald J. Kunkle

12. Magnolia Communications

13. Mercury Datanet

14. North Pointe Development Corporation et al.

(5 applicants)

15. Shadowfax Cellular Partnership et al.

(27 applicants)