United States District Court, D. Massachusetts
ARKANSAS TEACHER RETIREMENT SYSTEM, on behalf of itself and all others similarly situated, Plaintiff
STATE STREET BANK AND TRUST COMPANY, Defendants. ARNOLD HENRIQUEZ, MICHAEL T. COHN, WILLIAM R. TAYLOR, RICHARD A. SUTHERLAND, and those similarly-situated, Plaintiff
STATE STREET BANK AND TRUST COMPANY, Defendants. THE ANDOVER COMPANIES EMPLOYEE SAVINGS AND PROFIT SHARING PLAN, on behalf of itself, and JAMES PEHOUSHEK-STANGELAND and all others similarly situated, Plaintiff
STATE STREET BANK AND TRUST COMPANY, Defendants.
MEMORANDUM AND ORDER
March 8, 2017, pursuant to Federal Rule of Civil Procedure
53, the court appointed Retired United States District Judge
Gerald Rosen as a Special Master. See Docket No.
173. The Special Master was directed to investigate, among
other things, the accuracy and reliability of the
representations made by counsel for the class in this case
("Plaintiffs1 Counsel") in their successful request
for an award of more than $75, 000, 000 in attorneys1 fees
and expenses, the reasonableness of that award in view of
information and issues that have emerged since it was made by
the court in November 2016, and whether the award should be
reduced. Id., ¶2. The Special Master was
ordered to proceed with all reasonable diligence and to
submit, by October 10, 2017 if possible, a report and
recommendation to the court. Id., §3. The court
authorized the Special Master to retain other individuals and
organizations to assist him. Id., ¶1.
Special Master retained William Sinnott, Esq. as his counsel.
After the Special Master spoke and corresponded with the
attorney for Plaintiffs' Counsel, Mr. Sinnott engaged
John Toothman, Esq. to assist the Special Master and him in
the performance of their duties because of Mr. Toothman*s
experience in matters concerning the reasonableness of
attorneys' fees in class actions and other cases. Three
of the eight firms that represent class members -- Labaton
Sucharow LLP ("Labaton"), Thornton Law Firm LLP
("Thornton"), and Lieff Cabraser Heiman &
Bernstein LLP ("Lieff") (collectively
"Objecting Counsel") --objected to the retention of
Mr. Toothman. See Docket No. 194. The Special Master
denied their objection. See Docket No. 193.
Objecting Counsel have appealed that decision to the court.
See Docket No. 199.
reasons explained in this Memorandum, the court finds that
the Special Master did not make an error of fact or law in
allowing his counsel to retain Mr. Toothman. Nor did the
Special Master abuse his discretion in doing so. Therefore,
Objecting Counsel's appeal is being denied.
indicated earlier, after providing Plaintiffs' Counsel
notice and an opportunity to be heard, the court appointed
Retired Judge Rosen to serve as Special Master in this case.
Among other things, Plaintiffs' Counsel agreed that Judge
Rosen was not disqualified from serving under the standards
established by 28 U.S.C. §455. See Fed.R.Civ.P.
53(a)(2); Docket No. 129 at 2. Plaintiffs' Counsel have
not since modified that view. The Special Master was directed
to investigate issues relating to the earlier award to
Plaintiffs' Counsel of more than $75, 000, 000 in
attorneys' fees and expenses, and to submit a report and
recommendation to the court. See Docket No. 173.
Special Master was given the full power provided by Federal
Rule of Civil Procedure 53(c)(1), which includes the
authority to "take all appropriate measures to perform
the assigned duties fairly and efficiently."
Fed.R.Civ.P. 53(c)(2); Docket No. 173, ¶4. The Special
Master was specifically authorized to "retain any firm,
organization, or individual he deems necessary to
assist him in the performance of his duties." Docket No.
173, ¶1 (emphasis added).
case, the Special Master has a hybrid role, functioning in
part like an investigator and in part like a judicial
officer. In recognition of this dual role, as permitted by
Federal Rule of Civil Procedure 53(b)(2)(B), the court
authorized the Special Master to communicate with any party
ex parte. See Docket No. 173, ¶5. It
would be impermissible for a judge to have such
communications. See, e.g., Guide to Judiciary
Policy, Vol. 2A, Ch. 2, Code of Conduct for United
States Judges, Cannon 3, subpart (A)(4) (precluding a judge
from "initiat[ing], permitting], or consider[ing] ex
parte communications" except where authorized
by law or, when circumstances require it, "for
scheduling, administrative, or emergency purposes.");
Haller v. Robbins, 409 F.2d 857, 859 (1st Cir.
1969). Submissions to the court indicate that the attorney
for Plaintiffs' Counsel and the Special Master have had,
orally and in writing, direct, ex parte
communications. See, e.g., Docket Nos. 193 at 3; 199
at 2, 3.
other things, the Special Master told the attorney for
Plaintiffs' Counsel that he was considering retaining Mr.
Toothman. See, e.g., Docket Nos. 193 at 3; 199 at
2-3. After consulting her clients, she informed the Special
Master that they objected to Mr. Toothman being engaged.
Nevertheless Mr. Toothman was retained.
Counsel subsequently filed with the Special Master a written
objection to Mr. Toothman's employment. See
Docket No. 194. Objecting Counsel argued that: (1) Mr.
Toothman could only be retained as a court-appointed expert
pursuant to Federal Rule of Evidence 706; (2) Mr.
Toothman's positions in other cases involving
attorneys' fees demonstrate that he is biased against
attorneys who represent plaintiffs in class actions; and,
therefore, (3) Mr. Toothman is not eligible for appointment
under Rule 706. See Docket No. 194. More
specifically, Objecting Counsel asserted that Mr. Toothman
had been previously retained as an expert in another class
action by Theodore Frank, Esq., who objected to the
reasonableness of the requested attorneys' fees in that
case and has attempted to intervene in this case to do so as
well. Id. at 5-6.
Special Master denied the objection. See Docket No.
193. The Special Master explained that Mr. Toothman had not
been appointed as an expert witness under Rule 706.
Id. at 4-5, 7-8. Rather, Mr. Toothman was engaged as
an exercise of the Special Master's authority to retain
anyone he deemed necessary to perform his assigned duties.
Id. at 4-5.
Special Master stated that:
Mr. Toothman will be generally responsible for providing
consulting services to assist the Special Master and
his counsel in fulfilling the duties set forth in the . . .
Order of Appointment. The Special Master expects these
services to include, among other things, assisting in the
preparation and ...