Wednesday, November 1, 2017
Ninth Circuit Vetoes Attorney Fee Award for Second Time
Panel Says Klausner Failed to Take Into Account Relevant Factors in Awarding $880,000 In Attorney Fees for Services in Challenging BAR/BRI Bar Review Practices
By a MetNews Staff Writer
The Ninth U.S. Court of Appeals has, for a second time, remanded a case to the District Court for the Central District of California for a determination as to how much of a $9.5 million settlement fund in a class action against West Publishing Corporation will go to the plaintiffs’ attorneys.
The lawsuit alleged that BAR/BRI, a bar exam preparatory course then owned by West, conspired with Kaplan, Inc. to limit competition in the field. District Court Judge R. Gary Klausner awarded class counsel attorney fees in the amount of $883,475.50 and $20,734.89 in costs.
Six class members had protested the $1.9 million in fees and $49,934.89 in cost being sought. Klausner granted the objectors attorney fees in the amount of $7,354.90 based on their success in getting the award pared, and provided for incentive awards of $500 to each of the objectors.
Class members were those who purchased the BAR/BRI course at any time from Aug. 1, 2006 to March 21, 2011.
Lodestar Method Approved
A three-judge panel, composed of Judges Stephen Reinhardt, Richard Paez and Milan Smith, found in their memorandum opinion on Monday that Judge R. Gary Klausner correctly used the lodestar method of calculating the award—multiplying the number of hours reasonably expended by the prevailing rate for attorney fees—as Judge Manuel L. Real had last year when he presided over the case. An alternative method would have been a percentage of the settlement.
However, the judges said that Klausner, to whom the case was assigned following a reversal of Real’s award, failed “to update the lodestar calculation to compensate for the delayed payment.” He used the 2016 calculations, without either taking into account the increase between then and now in the prevailing rates or applying a “prime-rate enhancement,” the opinion says.
The judges also faulted him for not using a multiplier based on the risk factor in undertaking a case without certainty of an award.
However, the judges said Klausner was correct in finding the case was not a rare one in which the fee needed to be adjusted up or down to meet the test of reasonableness, and that he was justified in excluding expert fees that were not properly documented.
The panel affirmed the award of costs.
Monday’s decision, in Stetson v. West Publishing Corporation, No. 16-56313, marks the fourth appeal in the case.
The first appeal was from an order of dismissal. Real held that the action by purchasers of a bar review course operated by West were barred from suing based on the settlement with a class that had sued earlier (and received a $49 million settlement).
During oral argument before the Ninth Circuit, the case was referred to mediation. A settlement was reached and the case was remanded to the district court “for the limited purpose of considering approval of and approving the settlement agreement between the putative Class and Defendants.”
Real rejected the proposed settlement; the Ninth Circuit on Nov. 7, 2011, reversed Real’s earlier order of dismissal; it again sent to case to mediation; a new settlement was reached, and the case was remanded.
Real awarded $585,000 in attorney fees. The Ninth Circuit held on May 11, 2016, that he had not adequately articulated his reasons and that the award was arbitrary.
Remanding, it said that “[i]n light of the history of this case and related litigation,” it was directing “that the case be reassigned to a different district judge.”
New York Cases
BAR/BRI’s practices have spawned litigation elsewhere.
On Oct. 22, 2008, U.S. District Court Judge William H. Pauley III of the Southern District of New York approved a $13 million settlement a class action based on bundling materials—tying the purchase of courses reviewing New York state law with those preparing bar candidates for the Multistate Bar Examination.
In a 2007 ruling, Pauley noted the success of BAR/BRI, saying:
“Although Defendants are not the sole provider of bar review courses, 80 to 90 percent of students taking preparation courses for the state-specific portion of the bar examination enroll with BAR/BRI….Annually, Defendants sell about 40,000 integrated courses nationwide, generating approximately $125 million in revenues and $60 million in net profits.”
U.S. District Court Judge Katherine Polk Failla of the Southern District of New York on Sept. 25 dismissed a $50 million antitrust trust action against Barbri, Inc. She observed that “[t]he animating force behind this lawsuit” is Barbri and 11 named law schools “have conspired to make Barbri the country’s leading—and only—bar review company,” and declared:
“[S]horn of its internal contradictions and conclusory assertions, the first amended complaint does not plausibly support that belief.”
Thomson Reuters, which owns West, in April 2011 sold BAR/BRI to Leeds Equity Partners.
In 1974, San Francisco’s Bay Area Review—“BAR”—Chicago’s Bar Review Inc., “BRI,” were purchased and combined by Harcourt, Brace, Jovanovich. Thomson bought it in 2001.
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