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EDWARDS v. ALASKA PULP CORP.6/28/1996
I. INTRODUCTION
This appeal is brought by plaintiffs who settled a class action suit for private nuisance against a Sitka pulp mill. Plaintiffs sought $1 million in attorney's fees under the common fund doctrine. The trial court declined to apply the common fund doctrine, apparently concerned that it conflicts with Alaska Civil Rule 82. Applying Rule 82, the court awarded only $500,000 to plaintiffs' counsel, and plaintiffs appeal that award. We reverse the judgment of the superior court and remand the case for determination of a reasonable attorney's fee award under the common fund doctrine.
II. FACTS AND PROCEEDINGS
In February 1992, Larry Edwards, representing a class of shoreline property owners, sued the Alaska Pulp Corporation (APC) and its parent company for nuisance. Edwards complained about discharges into air and water from the defendants' Sitka pulp mill.
The plaintiff class was represented by an attorney from Sitka, as well as law firms from Soldotna; Burlington, Vermont; and Washington, D.C. The plaintiffs retained their counsel under a 33 1/3% contingency fee arrangement.
The parties litigated the case vigorously for several years before it settled. The parties contested a number of pretrial matters, including the addition of APC's parent corporation as a defendant, class certification and an unsuccessful motion for decertification, a successful motion for change of venue from Juneau to Sitka, an initially unsuccessful motion for change of venue out of Sitka, and a change of venue from Sitka to Juneau based on responses to the jury questionnaire in Sitka. The parties engaged in pretrial discovery involving over 100,000 pages of documents, eighty depositions, and several disputes over the adequacy and confidentiality of responses. The defendants made several motions for summary judgment, all of which were denied completely or in part. The plaintiffs successfully challenged the constitutionality of a new statute that would have retroactively barred the suit.
APC closed its pulp mill on September 30, 1993. In September 1994, before trial began in Juneau, the parties reached a settlement agreement. The agreement required APC to establish a Sitka Alaska Permanent Charitable Trust (the Trust) to support educational and charitable activities in Sitka. APC was to provide $3 million to fund the Trust, making an initial payment of $2 million followed by five annual installments of $200,000. The agreement stated that " n no event shall any member of the class be entitled to receive any payment from the Settlement."
The settlement agreement allowed the plaintiffs' counsel to apply to the court for attorney's fees and costs "in accordance with Alaska Rules of Civil Procedure 23," and provided that any fees and costs awarded to plaintiffs' counsel would be paid out of the Trust, to a maximum of $270,000 in costs and $1 million in fees. The agreement further limited funding for attorney's fees and costs to no more than half of the initial endowment and subsequent net income of the Trust.
Following the settlement, the plaintiffs' attorneys applied to the superior court for $1 million of fees under the common fund doctrine. In response, the defendants urged that under Alaska Civil Rule 82, counsel for the plaintiffs should receive either nothing, because they were not the prevailing party,
or $84,500.
Counsel for the plaintiffs calculated the value of their legal work at over $1.7 million; plaintiffs' counsel also incurred $285,000 in costs. By comparison, the defendants incurred legal fees of $3.4 million, in addition to $1.07 million in costs. The superior court found that
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