-6-
that was based simply on Swiden’s lost wages and employment
benefits. This proposal was rejected by the plaintiffs.
Finally, on September 17, 1999, while in the presiding Judge’s
chambers, counsel for the parties to the lawsuit agreed that the
defendants would pay a total of $350,000 to the plaintiffs in
settlement of the lawsuit, inclusive of attorney’s fees and
litigation costs, and that the plaintiffs and their attorneys
would have to apportion this amount among them. The record does
not explain the mechanics underlying the calculation of the
$350,000 payment. Nor did the parties to the lawsuit
specifically allocate any portion of that amount to a particular
claim raised in the lawsuit.
The law firm of Nageley, Meredith & Miller (Nageley) and the
Pacific Legal Foundation (Pacific) represented the plaintiffs in
the lawsuit. In 2000, the defendants paid the $350,000 to
Nageley in its capacity as the trustee responsible for
distributing the proper portions of this payment to the
plaintiffs and their counsel. Nageley paid itself and Pacific a
total of $75,000 of the $350,000 for attorney’s fees and, on the
basis of an agreement between the plaintiffs, paid $132,000 to
Kidd and the rest ($143,000) to Swiden. Nageley did not withhold
any Federal income taxes on the $132,000 payment that it made to
Kidd.
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