
    James GENDEN, et al., Plaintiffs, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., a corporation, Defendant.
    No. 85 Civ. 7928(WCC).
    United States District Court, S.D. New York.
    July 18, 1990.
    See also 700 F.Supp. 208.
    Meites, Frackman & Mulder, Chicago, Ill. (Thomas R. Meites, Lynn Sara Frackman, Michael M. Mulder, Joan H. Burger, of counsel), Sinnreich, Wasserman & Grubin, New York City (Richard Wasserman, of counsel), for plaintiffs.
   OPINION AND ORDER

WILLIAM C. CONNER, District Judge:

Plaintiffs’ class counsel seeks an order to disburse the settlement fund and to award certain fees and expenses to class counsel and to the Settlement Administrator.

BACKGROUND

Plaintiffs James K. Genden and Alma Koppedraijer brought this securities class action against Merrill, Lynch, Pierce, Fen-ner & Smith (“Merrill Lynch”), alleging that Merrill Lynch failed to disclose that mortgage subsidy bonds contained in Municipal Investment Trust Funds (“MITF”) it marketed were subject to the possibility of special mandatory early redemption.

A class of “original issue purchasers” was certified in the Northern District of Illinois before the case was transferred here and on January 30, 1987, I granted plaintiffs’ motion to redefine the class. On April 8, 1988, the parties agreed to the terms of a settlement, embodied in a stipulation. Under the settlement, Merrill Lynch agreed to create a fund to pay the claims of class members, attorney’s fees, litigation expenses, and costs, by placing $4,000,000 into an interest-bearing account (“the settlement fund”). Appropriate notice of the proposed settlement was mailed to the individual members of the class, and published in both the national and regional editions of the Wall Street Journal. No class member objected to the settlement.

In May 1988, after preliminary approval of the settlement and with the permission of the Court, class counsel hired KPMG Peat Marwick Settlement Administration Services (“Peat Marwick”), Garden City, New York as Settlement Administrator for the claims review process.

On October 14, 1988, I approved the settlement after considering memoranda submitted by the parties and holding a hearing in which I determined that the settlement was fair, reasonable and adequate. Class counsel currently moves to disburse the settlement fund and to award reasonable fees and expenses to class counsel and the Settlement Administrator.

DISCUSSION

7. Disbursement of Settlement Fund

Between June 1988 and the present, Peat Marwick received and processed 16,-545 claims to share in the settlement proceeds. Of these claims, 151 were postmarked after the claims filing deadline of November 17, 1988, but were treated as if timely filed. Claimants who failed to supply the requested information were notified by letter as to the steps required to perfect their claims. If those claimants failed to provide the information requested in the first letter, a follow-up letter was sent advising them what documentation was required to complete their claims. 1,422 claimants had incomplete or ineligible claims after the two letters and were sent a final rejection notice informing them that they were ineligible to share in the settlement proceeds. The letter also advised these claimants of their right to appeal their rejected claim and the appropriate method for doing so. None of these claimants chose to appeal.

Class counsel recommends a total of 15,-123 claims for approval, including 137 claims that were initially submitted after the claims deadline. Each of these claims has been completely documented as required by the instructions on the Court-approved claim form. This Court agrees with class counsel's recommendation that the claims of the 1,422 claimants who received a final rejection notice claims be disapproved, and that the remaining 15,123 claims be approved.

II. Costs, Fees and Expenses

A. Costs of Notice

Class counsel expended a total of $60,014.64 between April and July 1988 to notify the class of the pendency of this action, the terms of the settlement and the procedures for submitting claims. Included in this sum are expenses for printing and preparing the notice and claims forms for mailing, first class postage, printed notice of the settlement in the Wall Street Journal and computer services necessary to create mailing labels from information regarding claimants received from Merrill Lynch, its co-underwriters and sponsors of the MITF series at issue and the MITF trustees.

This Court, having reviewed the affidavit delineating these costs in detail, determines that such steps were necessary to provide notice to the class of their right to share in the settlement proceeds. The Court therefore awards the entire sum of $60,014.64 to class counsel.

B.Costs of Administering the Settlement Fund

Class counsel advanced $9,783.25 for expenses which it asserts should be charged against the settlement fund. This sum represents the maintenance fee charged by the National Westminster Bank, fees for legal services rendered on the issue of income tax liability with respect to interest earned on the settlement proceeds, and the amount due the Internal Revenue Service for 1989 income taxes and a revenue ruling request filing fee. Since these costs were appropriately expended on behalf of the class, class counsel is entitled to reimbursement of $9,783.25 in expenses prior to the distribution of the settlement fund.

C.Other Costs Advanced by Class Counsel

Class counsel claims to have expended $3,591.55 on travel, photocopying, long distance telephone services, expert consultation, computer legal research and express delivery services since the final approval of the settlement.

In the notice of the pendency of this action and of the proposed settlement, the class was notified that class counsel would seek approximately $60,000 in reimbursement for costs of litigation. This Court has previously authorized payment of $47,-190.02 for expenses incurred prior to the final approval of the settlement. The amount sought here will bring the total amount awarded class counsel for reimbursement of costs to $50,781.57, an amount noticeably less than the expenses estimated when the settlement was proposed. The Court, having reviewed the affidavits setting forth these expenses, finds the requested amount reasonable and hereby approves it.

D.Attorneys’ Fees and Paralegal Expenses

Class counsel and local counsel aver that they have expended a total of 181.3 hours on this case since September 15, 1988. Counsel have submitted affidavits and other materials detailing the quantity and types of services performed by each of the attorneys. Billed at the usual hourly rates of the individual attorneys, the unadjusted “lodestar” fee submitted by counsel is $26,190.00.

It is the fee applicant’s burden to produce satisfactory evidence that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. See Blum v. Stenson, 465 U.S. 886, 896 n. 11, 104 S.Ct. 1541, 1547 n. 11, 79 L.Ed.2d 891 (1984). Thomas R. Meites, a partner in the Chicago law firm of Meites, Frackman & Mulder, and Richard Wasserman, a partner in the New York law firm of Sinnreich Wasserman & Grubin, have submitted affidavits stating that the hourly rates requested in this case are the current rates charged by the respective firms in their non-contingent practice for the various attorneys who have worked on this matter.

The Settlement Notice sent to the class in July 1988 informed the class that the class attorneys’ fees would not exceed twenty-five percent of the settlement award. The $26,190.00 award requested here, in addition to the $627,272.43 previously awarded by this Court, results in a total of $653,462.43, or 16.43 percent of the settlement fund, exclusive of accrued interest. This percentage of the settlement fund is at the low range of attorney’s fees typically awarded in class action settlements. See e.g. Weseley v. Spear, Leeds & Kellogg, 711 F.Supp. 713, 718 (E.D.N.Y.1989) (“In this circuit, fees typically range from 15% to 30% of the recovery.”); In Re Warner Communications Securities Litigation, 618 F.Supp. 735, 749-50 (S.D.N.Y. 1985), aff'd, 798 F.2d 35 (2d Cir.1986) (collecting cases in which fee awards ranged from 20% to 50% of the recovery). Based on the foregoing factors, class counsel’s request for $26,190.00 is therefore approved.

Class counsel also renews its September, 1988 request for $22,542 in paralegal expenses, which this Court did not separately award in its December 7, 1988 opinion and order, 700 F.Supp. 208. In Missouri v. Jenkins, — U.S. -, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989), the Supreme Court ruled that if the prevailing practice in a community is to bill paralegal time separately at prevailing market rates, paralegal time should be compensated at market rates. In Chambless v. Masters, Mates & Pilots Pension Plan, 885 F.2d 1053 (1989), cert. denied, — U.S. -, 110 S.Ct. 2587, 110 L.Ed.2d 268 (1990), the Second Circuit Court, following Jenkins, ruled that if a finding is made that New York City law firms customarily bill at market rates for paralegal services, plaintiff’s attorneys should be reimbursed for paralegal time accordingly. While each of those cases involved an award of attorney’s fees pursuant to fee-shifting statutes and not an award of attorney’s fees under the common fund doctrine, their reasoning is equally applicable to the present situation.

Class counsel and local counsel have submitted affidavits stating that it is customary in both the Chicago and New York legal communities to bill paralegal rates in excess of $40 an hour. In light of Jenkins and Chambless, both decided after this Court’s December 1988 order, this Court grants class counsel’s request for reimbursement for the 563.55 hours of paralegal time devoted to this case at the rate of $40 per hour, the amount requested in 1988, for a total award of $22,542, to be deducted from the settlement fund prior to distribution to the approved claimants.

E. Settlement Administrator’s Fees and Expenses

The Settlement Administrator alleges that it is owed $142,425.13 for services rendered in the claims review process since the date of the last payment approved by the Court in July 1989. The Settlement Administrator also estimates that an additional $25,787 is needed to complete the settlement administration process, including the distribution of the settlement fund to approved claimants.

G. Peter Buchband, Chief Operating Officer of Settlement Administration Services for Peat Marwick, has attached to his affidavit a list of invoices supported by a computer printout of the individual Peat Mar-wick staff members who provided services in administering the settlement fund, as well as a schedule showing the expenses incurred during the time period covered by the invoice. A separate estimate of fees and expenses necessary to complete distribution of the settlement funds is also provided.

The Court has previously approved payment to the Settlement Administrator of fees and expenses totalling $339,472.32. With approval of the amount here, the Settlement Administrator will receive a total of $507,684.45 for its services, or $30.69 per claim processed. The Court finds the amount requested reasonable in light of the duties performed in administering the settlement fund. The Court therefore approves the fees and expenses requested by the Settlement Administrator in the amount of $168,212.13 ($142,425.13 + $25,-787).

SUMMARY

As of June 18, 1990, the amount available for distribution in the settlement fund was $3,550,944.55. The Court hereby approves the claims listed in Appendix 1 to the Memorandum in Support of Class Counsel’s Motion "for Entry of Order to Disburse Settlement Fund and disapproves the claims listed in Appendix 2. The settlement fund is to be distributed as follows:

Meites, Frackman & Mulder disbursements $ 73,389.44

attorneys’ fees $ 26,190.00

paralegal expense $ 22,542.00

TOTAL $ 122,121.44

KPMG Peat Marwick Settlement

Administrative Services $ 168,212.13

Approved Claimants $3,260,610.98

TOTAL $3,550,944.55

SO ORDERED. 
      
      . Class counsel was advised by the Settlement Administrator in early 1989 that he thought the law regarding the treatment of interest income earned on designated settlement funds under the Tax Reform Act of 1986 ("Act”) was unclear and that class counsel should apply to the IRS for a letter ruling clarifying the Settlement Administrator’s reporting and withholding obligations under the Act. Peat Marwick submitted such a request in April 1989 on behalf of class counsel. In May 1990, class counsel and the Settlement Administrator determined to withdraw the ruling request, as the IRS had taken no action on it and no response was likely within the next six months. Since the class counsel has paid income tax on the interest earned on the settlement fund in accordance with the most conservative possible IRS ruling, this Court finds that it is not in the interest of the class to delay further the distribution of the settlement fund.
     
      
      . Attorney Thomas R. Meites spent 14.85 hours in connection with this action at a rate of $220 an hour. Attorney Richard Wasserman spent 17.70 hours at $200 an hour, attorney Michael
     
      
       plus interest accumulated from June 18, 1990
     