APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA.
Seitz, Chief Judge, Garth and Rosenn, Circuit Judges.
Pantry Pride, Inc. (Pantry Pride), Burlington Food Stores, Inc. (Burlington), and Frankford-Quaker Grocery Co. (Frankford-Quaker) appeal from two orders of the district court. One appeal, No. 82-1048, is from an order denying appellants' Rule 60(b) motion to vacate an award of attorney's fees to the law firm of Danzansky, Dickey, Tydings, Quint and Gordon (Danzansky, Dickey). The other, No. 82-1047, is from an order granting supplemental fees to Finley, Kumble, Wagner, Heine, Underberg and Casey (Finley, Kumble) for services performed by members of the firm who had belonged to Danzansky, Dickey before a merger of the two firms. The district court directed the entry of each order as a final judgment under Federal Rule of Civil Procedure 54(b) based upon an express determination of no just reason for delay. This court has jurisdiction of these consolidated appeals under 28 U.S.C. § 1291 (1976).
These appeals concern two awards of attorneys' fees following the settlement of a class action, the procedural history of which is set out in In re Sugar Industry Antitrust Litigation, 73 F.R.D. 322, 332-33 (E.D.Pa. 1976). Appellant Frankford-Quaker was one of the class members in Eastern Sugar. Appellants Pantry Pride and Burlington, although not class members, participated in the settlements between the class and all of the defendants except RSN Projects, Inc., and the National Sugar Refining Co. (National defendants). Appellee Finley, Kumble represented the National defendants until October 19, 1981, when the district court ordered its withdrawal. Danzansky, Dickey represented the retail grocer class; its managing partner, Joseph Tydings, also acted as co-lead counsel for plaintiff class. Danzansky, Dickey merged with Finley, Kumble on February 1, 1981, taking the name of the latter firm.
The settlement agreement between class plaintiffs and the eleven defendant sugar refiners occurred in two relevant phases. On August 6, 1979, the district court approved settlements between class plaintiffs and eight of the eleven defendants which produced a single settlement fund of $23,633,000. Appellants Pantry Pride and Burlington participated in these settlements by permission of the district court. At the time of the court's approval, neither appellants nor any class member objected to the settlements or to the proposed payment of attorneys' fees out of the fund.
The following December, plaintiff class came to terms with defendant Borden, Inc. (Borden), and the National defendants for the sum of $1,750,000. This amount was subsequently apportioned between Borden, ($1,100,000) and the National defendants ($650,000). Appellants Pantry Pride and Burlington participated in the settlement between plaintiff class and defendant Borden, but preferred to continue their separate suits against the National defendants. The district court gave preliminary approval to the Borden and National settlements on January 15, 1980, and entered its final approval without objection on May 16, 1980.
To compensate Danzansky, Dickey for services performed for the plaintiff class, the district court after notice and hearing entered two orders authorizing payment of attorneys' fees to the firm out of the settlement fund. The first order, entered as a final judgment on October 19, 1980, awarded attorneys' fees of $868,755.70 to Danzansky, Dickey for services performed from the beginning of its representation in 1975 until February 1, 1980. On December 24, 1980, appellants filed a motion under Federal Rule of Civil Procedure 60(b) requesting the district court to vacate this order as a sanction for the alleged failure of Danzansky, Dickey to make a timely disclosure of its merger negotiations with Finley, Kumble. The district court denied appellants' rule 60(b) motion by an order entered October 19, 1981. Appellants filed a notice of appeal from this denial on November 7, 1981.
The court's second fee award order, entered as a final judgment on September 16, 1981, granted Finley, Kumble supplemental attorneys' fees of $120,880.47 for services performed by former members of Danzansky, Dickey from February 2, 1980 to February 1, 1981. Appellants filed a notice of appeal from this order on October 12, 1981.
This court ordered consolidation of the two appeals, in which appellants ask that Finley, Kumble be ordered to restore $195,068 to the settlement fund. This sum represents the fees and costs awarded as compensation for services performed for the plaintiff class between November 1979, the date on which appellants suggest that disclosure of the merger negotiations was required, and February 1, 1981.
As a preliminary matter, Finley, Kumble contends that because Pantry Pride and Burlington were not parties to the class action, they lack standing to challenge either the district court's denial of the Rule 60(b) motion or its award of supplemental attorneys' fees. The general rule is that in order to have standing to appeal, the appellant must be privy to the record and aggrieved by the order appealed from. Commonwealth of Pennsylvania v. Rizzo, 530 F.2d 501, 509 (3d Cir.), cert. denied, 426 U.S. 921, 49 L. Ed. 2d 375, 96 S. Ct. 2628 (1976); 9 J. Moore, Moore's Federal Practice § 203.06, at 3-20 (1980 ed.). Pantry Pride and Burlington have sufficient ties to the proceedings below by virtue of their participation in the class settlements with nine of the eleven defendants. See 9 J. Moore, Moore's Federal Practice § 203.06, at 3-23. Furthermore, appellants Pantry Pride and Burlington are aggrieved by the court's orders because the fees awarded to Danzansky, Dickey were paid out of the settlement fund, reducing appellants' recovery from that ...