## Facts

- Boeing called for redemption of certain convertible debentures and gave notice by newspaper publication and mailings to registered holders, setting a deadline to convert or redeem.
- The notices offered redemption at $103.25 per $100 principal or conversion into two shares of Boeing common stock by March 29, 1966.
- On the conversion deadline, two shares were worth substantially more than the redemption price; holders of debentures totaling $1,544,300 in face value failed to convert.
- Debenture holders, led by Van Gemert, sued as a certified class alleging Boeing failed to provide reasonably adequate notice required by New York law (and asserted federal and state claims).
- After appellate reversal on liability, the district court awarded classwide damages equal to the difference between the redemption price and the value of the shares on the last conversion day.
- The district court entered a lump-sum judgment fixing Boeing’s total liability and each member’s per-$100 entitlement, and provided that each recovery would bear a proportionate share of attorney’s fees and costs.
- Boeing deposited the full judgment (plus interest) into an escrow account, creating a fund that later exceeded $7 million with interest and income.
- Boeing appealed only the fee allocation, arguing fees could not be charged against unclaimed portions of the fund.

## Issues

1. Whether, after a class action creates a lump-sum judgment fund with fixed, mathematically ascertainable individual entitlements, attorney’s fees may be assessed against the entire fund, including unclaimed amounts.

## Decision

- The Supreme Court affirmed the Second Circuit in a unanimous opinion by Justice Powell.
- The Court held that awarding attorney’s fees from the entire judgment fund, including the unclaimed portion, was a proper application of the common fund doctrine.
- The Court rejected the argument that nonclaiming class members received no benefit, reasoning that each member obtained a present vested right to claim a definite share upon proving class membership.
- The Court rejected the argument that the fee award violated the American rule because the fees were paid from the fund belonging to the class, not shifted to Boeing as the losing party.

## Legal Principles

- Under the common fund doctrine, those who benefit from litigation may be required to share litigation expenses to prevent unjust enrichment of passive beneficiaries.
- The doctrine applies when each certified class member has an undisputed, mathematically ascertainable claim to a portion of a lump-sum judgment and need only establish membership to recover.
- A legally enforceable right to claim a share of the judgment is a sufficient benefit to support assessing fees against that member’s share, even if the member does not file a claim.
- Assessing fees against the fund (including unclaimed amounts) is not impermissible fee shifting under the American rule because the source of payment is the class’s recovery.

## Conclusion

The Court held that when a certified class obtains a lump-sum judgment establishing fixed entitlements for each member, class counsel’s fees may be taken proportionately from the entire common fund—including unclaimed amounts—because all class members receive the benefit of a vested right to recover from the fund and must share the costs of creating it.


Boeing Co. v. Van Gemert, 444 U.S. 472 (1980)