Metropolitan News-Enterprise


Thursday, May 16, 2002


Page 3


Ninth Circuit Upholds $27 Million Fee Award in Microsoft ‘Freelancers’ Case


By a MetNews Staff Writer


The Ninth U.S. Circuit Court of Appeals yesterday upheld an award of more than $27 million in fees to the Seattle firm that represented thousands of Microsoft Corporation workers in a class action challenging the company’s insistence on treating them as independent contractors.

U.S. District Judge John C. Coughenour of the Western District of Washington did not abuse his discretion in ruling that the Seattle firm of Bendich, Stobaugh and Strong deserves the huge fee for its “exceptional” work in the case.

The class action settled last year, after 11 years of litigation, including two appeals to keep the suit alive, when Microsoft agreed to pay about $97 million and to hire more than 3,000 of the “freelancers” as regular employees with  health and pension benefits and the same right as other employees to purchase Microsoft stock at a discount.

Two class members challenged the law firm’s request for the fees, which amount to 28 percent of the settlement fund.

But the district judge said the amount of the settlement, the risk the lawyers took in accepting a case for which there was no established precedent against a well-heeled and aggressive adversary, the benefits obtained in addition to the cash settlement, the length of the litigation, the amount of other business the lawyers had to forego, and the fact they advanced hundreds of thousands of dollars in costs justified the high fees.

Senior U.S. District Judge William Schwartzer, sitting on the Ninth Circuit by designation, said the objecting class members had done nothing to refute Coughenour’s findings.

The district judge, Schwartzer noted, “cross-checked” the award by finding that the attorneys would have been entitled to nearly $7.5 million at prevailing hourly rates. Awarding a fee more than three times that lodestar, Schwarzer said, was reasonable given the risks, duration, and complexity of the litigation.

The jurist surveyed more than 30 class actions resulting in common settlement funds of more than $50 million over a five-year period. The majority, he noted, resulted in fee awards that were between 20 and 30 percent of the settlement amount and more than double the lodestar.

Schwarzer went on to say that the district judge was correct in ruling that the objectors’ attorneys were not entitled to payment from the common fund, since they did nothing to increase the fund or substantially benefit the class.

The case is Vizcaino v. Microsoft Corporation, 01-35494.


Copyright 2002, Metropolitan News Company