## Facts

- Civil rights suits were filed by persons injured and representatives of persons killed in the May 4, 1970 Kent State shootings against Ohio officials, including the Governor.
- The litigation proceeded under 42 U.S.C. § 1983 and related theories and involved extensive proceedings, including dismissal on Eleventh Amendment grounds that was later reversed, and a mistrial.
- Plaintiffs and defendants ultimately reached a court-approved global settlement requiring payment of $675,000: $600,000 to plaintiffs, $50,000 for attorneys’ fees, and $25,000 for expenses.
- The settling state entity conditioned the offer on plaintiffs receiving not less than $600,000 net, without reduction for attorneys’ fees.
- Attorney Steven Sindell had contingent-fee contracts with some plaintiffs providing approximately 33.5% of any recovery.
- Counsel arrangements during the case designated ACLU lawyers as lead counsel for appellate proceedings and later phases; the ACLU played a central role in the later trial work and settlement negotiations.
- Under the settlement’s fee structure, Sindell and associated firms received $33,740 from the $50,000 fee pool; ACLU lawyers received none.
- Sindell objected that the fee cap and allocation effectively displaced his private contingency contracts and sought enforcement of his contractual percentage from the plaintiffs’ recovery.

## Issues

1. Whether a federal district court, when approving and supervising settlement of complex civil rights litigation, may limit attorneys’ fees and override private contingent-fee contracts.
2. Whether the district court abused its discretion by fixing a total fee award of $50,000 rather than allowing Sindell to recover approximately 33.5% under his contracts.

## Decision

- The court of appeals affirmed the district court’s orders approving the settlement and limiting attorneys’ fees.
- The district court had broad equitable authority to supervise contingent-fee arrangements in the context of settlement approval and could limit fees to prevent unreasonable results.
- Given the settlement condition guaranteeing plaintiffs a $600,000 net recovery, enforcing Sindell’s contractual percentage would have conflicted with the settlement structure and threatened consummation of the agreement.
- The district court did not abuse its discretion in capping total fees at $50,000 as part of an equitable settlement approval.

## Legal Principles

- Federal courts have equitable power to supervise, modify, or limit contingent-fee contracts when necessary to prevent unreasonable or excessive fees in light of changed circumstances.
- In court-supervised settlements, fee arrangements may be constrained to protect the fairness and effectiveness of the settlement and the clients’ recovery.
- When a settlement is conditioned on plaintiffs receiving a fixed net amount, a court may cap fees to preserve that condition and ensure the settlement can be implemented.
- Attorneys’ contractual expectations may yield to court supervision where enforcement would be inequitable or inconsistent with the court’s duty to oversee settlement fairness.
- Appellate review of a district court’s settlement-related fee determination is for abuse of discretion.

## Conclusion

The Sixth Circuit held that, in approving a settlement conditioned on plaintiffs’ receipt of a guaranteed net recovery, the district court acted within its equitable authority and discretion by capping total attorneys’ fees and declining to enforce a larger contingent-fee recovery that would have reduced plaintiffs’ net proceeds or disrupted the settlement.


Krause v. Rhodes, 640 F.2d 214 (6th Cir. 1981)