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A federal judge has awarded $2 million in fees to lawyers who won $6 million for 52 former employees of Mobil Corp. who said they were cheated out of severance pay when they were not hired by the newly formed Exxon Mobil Corp. after a 1999 merger. The decision by U.S. District Judge Cynthia M. Rufe of the Eastern District of Pennsylvania in the ERISA lawsuit, Hooven v. Exxon Mobil Corp., is significant in two respects. Rufe found that although the plaintiffs were not entitled to an award of attorney fees under ERISA’s discretionary fee-shifting provision, their contract with Mobil promised an award of fees to any worker who “prevails in any material respect” in an ERISA claim. And while the plaintiffs lawyers had racked up fees of about $1.24 million at their usual hourly rates, Rufe found that since the plaintiffs had agreed to a one-third contingency fee, they were entitled to reimbursement of the full amount they had agreed to pay. Rufe decided that the team of plaintiffs lawyers was entitled to a 61 percent “multiplier” due to the high quality of work and for taking the risk of earning nothing in a case that required more than 6,000 hours of attorney time. The ruling is a victory for plaintiffs attorneys John A. Guernsey, Frank R. Emmerich Jr. and Colleen M. Johns of Conrad O’Brien Gellman & Rohn. The suit focused on a severance plan established by Mobil in 1999 when Exxon and Mobil were preparing for a merger that was expected to result in the loss of up to 12,000 jobs. As an incentive to employees to remain with Mobil pending the merger despite the uncertainty of employment in the merged company, Mobil announced a program of enhanced severance benefits termed the “change in control plan.” In April 2004, after an eight-day non-jury trial, Rufe ruled in favor of the plaintiffs, finding that the workers were entitled to severance pay based on the wording of a “summary plan description.” Lawyers for Exxon Mobil argued that the workers were not entitled to severance because they never truly lost their jobs. Instead, they said, the plaintiffs merely found themselves working for a different company, Tosco Corp., which had purchased some of Mobil’s assets in a deal designed to win FTC approval for the merger. But Rufe found that while the severance plan documents made it clear that such workers would not be eligible for severance, that fact was not included in a “summary plan description” distributed to workers at the time that news of the upcoming merger was first announced. “If an employee was expected to read the entire plan to obtain an understanding of benefits provided, then there would be no need to provide a summary plan description,” Rufe wrote. Rufe cited the 2003 decision from the 3rd U.S. Circuit Court of Appeals in Burstein v. Retirement Account Plan for Employees of AHERF, which held that “where there is a conflict between a plan document and a summary plan description, the summary plan description governs.” In Burstein, Rufe said, the 3rd Circuit “emphasized … Congress’ desire that the summary plan description be transparent, accurate and comprehensive.” Although Rufe rejected three of the plaintiffs’ ERISA claims, her verdict in their favor on the fourth claim effectively entitles them to full severance pay benefits. At the time of the verdict, Guernsey said in an interview that the 52 workers — mid-level managers in the Philadelphia and Washington, D.C., areas — are now entitled to severance packages ranging from $80,000 to $250,000 depending on their years of service to Mobil. Now Rufe has ruled that the plaintiffs are entitled to an award of attorney fees because the severance plan explicitly states that Mobil would pay “all reasonable legal fees and expenses” incurred by a covered worker “in pursuing any claim” under the plan in which the worker “prevails in any material respect.” Exxon Mobil’s lawyers — Mark S. Dichter, Richard G. Rosenblatt and Jeremy P. Blumenfeld of Morgan Lewis & Bockius — argued that the plaintiffs were not entitled to attorney fees because the severance plan promised fees only for claims pursued under the administrative claims procedure, not for claims pursued through a lawsuit. The defense team also argued that any claim for fees should be pursued first with the plan administrator before petitioning the court, and that, if Rufe did award fees, they should be limited to the plaintiffs attorneys’ “lodestar” — their hours multiplied by their billing rates — rather than a percentage of the recovery. Rufe disagreed, saying, “the court finds that it would be futile for plaintiffs to pursue attorney fees with the … plan administrator, and will not require them to do so.” None of the language in the plan limits the term “claim” to an administrative claim, Rufe found. “The plain meaning of the term ‘claim’ includes claims made in federal court,” Rufe wrote. Rufe also refused to reduce the fee award by granting fees only for time spent litigating the one successful claim. “The plain language of the … plan obligates the defendants to pay all reasonable fees incurred in pursuing a claim in which the employee prevails in any material respect. … Here, the four counts in the complaint were pled as alternative theories of the case, and they were all related claims,” Rufe wrote. Defense lawyers urged Rufe to limit attorney fees to the actual time spent litigating the one successful claim, but Rufe found that “such parsing of claims would be impossible given the nature of the litigation.” In calculating the fees, Rufe found that the starting point was the plaintiffs’ fee agreement which contemplated a one-third contingency fee. Rufe found that she had “wide discretion” in awarding fees, and that she was empowered to consider both the contingent nature of the plaintiffs lawyers’ success and the quality of their work. In weighing the contingent nature of success, Rufe said, courts consider six factors: �The probability or likelihood of success viewed at the time of filing the suit. �The probability of the defendant’s liability. �Whether the case is asserted under well-settled law or is advancing a novel theory. �Whether damages were easy or difficult to prove. �The risks assumed in developing the case, including the number of hours of labor risked without guarantee of remuneration, costs to the firm of processing motions, taking depositions, etc., and the development of prior expertise. �The delay in receipt of payment for services rendered. Rufe found that the plaintiffs lawyers had documented more than 6,000 hours of work, “all performed without guarantee of remuneration.” And since the case was filed in October 2000, Rufe found that the plaintiffs lawyers had “worked on this matter for over four years without any payment for services rendered.” The case was also complex, Rufe found, and involved unsettled questions of law, so the probability of success “was by no means certain.” Turning to the quality of the plaintiffs lawyers’ work, Rufe found that the plaintiffs “attained a judgment for the full value of the enhanced severance benefits.” Throughout the litigation, Rufe said, “the court has been impressed by the quality of counsel’s work. The court finds that the quality and effectiveness of counsel’s representation of the 52 plaintiffs in this case warrants fees exceeding the level of compensation provided based on the lodestar calculation.” As a result, Rufe said, the plaintiffs lawyers were entitled to an enhancement of their fees, and their requested multiplier of about 1.61 “seems fair and reasonable.”

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