Monday, May 18, 2020
Law Firm, in Its Bid, Offered Services, If Appointed as Class Counsel, for $25 Million; In Determining Fees In Connection With First Two Rounds of Settlements, Judge Apparently Placed Little or No Reliance on It
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals Friday vacated orders for more than $52 million in attorney fees and expenses in a class action because the District Court judge failed to consider the law firm’s bid in seeking to become appointed as class counsel and inadequately set forth his reasoning in setting the amounts he awarded.
In its bid, the firm said it would do the work for $25 million without adding expenses.
Its action was taken in two opinions. A published one, authored by Circuit Court Judge Morgan Christen, deals with fees and expenses amounting to more than $47 million relating to the first two rounds of settlements of antitrust claims against various companies in the optical disk drive industry; a memorandum opinion concerns $5 million in fees, with no recompense for expenses, in connection with a third round, in which the remaining defendants settled.
The class in the multi-district litigation was comprised of indirect purchasers of the disks (which the published opinion defines as “hardware products that can read and write data” which “were once commonly included in computers and video game consoles.”) Settlements with the various defendants totaled $205 million.
Separate litigation was waged by direct purchasers.
Assigned to Seeborg
The Seattle law firm of Hagens Berman Sobol Shapiro LLP was appointed by District Court Judge Vaughn Walker of the Northern District of California in 2010. He retired the following year and the case was assigned to Judge Richard Seeborg, who saw it (and the direct purchasers case) through to the conclusion.
It appeared that he did not review Hagens Berman’s bid—which was, and remains, sealed—during consideration of the first two rounds of settlements but did look at it when ordering fees relating to the third round, but seeming did not place heavy reliance on it.
The objectors argued that the bid ought to have been regarded as essential to a determination of fees and that the judge should have provided a detailed explanation of why the award substantially exceeded the amount of that bid.
Hagens Berman argued that there were unforeseen complications justifying higher fees.
Agreeing with the objectors, Christen said in In re Optical Disk Drive Products Antitrust Litigation, 2020 S.O.S. 17-15065:
“We now hold that when class counsel secures appointment as interim lead counsel by proposing a fee structure in a competitive bidding process, that bid becomes the starting point for determining a reasonable fee. The district court may adjust fees upward or downward depending on circumstances not contemplated at the time of the bid, but the court must provide an adequate explanation for any variance.”
She recited that Hagens Berman pointed to its need to make a second class certification motion and that there were interlocutory appeals it had to handle. The judge commented:
“The bid to become interim class counsel clearly contemplated that Hagens Berman would move to certify the plaintiff class and it is not unusual for interim class counsel to have to take more than one run at class certification. Finally, the proposed fee structure in this case explicitly contemplated appellate litigation.”
Christen remarked that there is uncertainty as to “what role the fee bid played in the district court’s approval of the motions for fees and expenses,” noting that the bid “was likely not available to the court during the first and second fairness hearings.” She noted that Seeborg, in awarding $31.125 million in fees out of the first-round settlements for $124.5 million, said the bid “does not apply” but in awarding $11,655,000 in fees from the $55.5 million second-round settlements, declared that the bid ‘remained relevant.’ ”
She said that on remand, the court should explain any increase from the amount Hagens Berman set forth in its bid and whether it is taking into account that the bid does not call for recompense for expenses.
Christen was joined on the panel by Senior Circuit Judges Carlos T. Bea and Jerome Farris.
Comprising the panel that joined in the memorandum opinion—in Erwin v. Samsung Electronics Co., Ltd., 19-15538—were Christen, Circuit Judge Ronald M. Gould, and District Court Judge Robert S. Lasnik of the Western District of Washington, sitting by designation. The panel said:
“In an opinion vacating class counsel’s first- and second-round fee awards in this class action, a different panel of our court clarified the standard for determining reasonable attorneys’ fees in cases where class counsel obtains appointment through a competitive bidding process. The opinion also concluded that the district court’s stated reasons for approving a very sizeable variance from class counsel’s bid in the first- and second-round fee awards were inadequate given the magnitude of the difference. We vacate and remand the third-round fee award for further findings consistent with the standard set forth in the concurrently filed opinion addressing the first- and second-round fee awards.”
The objector, Conner Erwin, argued that Seeborg abused his discretion in denying a motion to unseal Hagens Berman’s bid. Noting that the law firm’s lawyer, at oral argument, expressed no objection to an unsealing. It was ordered.
In a third opinion arising from the litigation issued on Friday, a three-judge panel—Christen, Bea and Farris—gave short-shrift to contentions by an objector, Christopher Andrews, to Seeborg’s orders approving settlements. His arguments, the panel said, without enumerating them, lack merit.
The opinion goes on to say:
“Andrews contends the district court committed reversible error by not addressing his objections to the second-round settlement agreements in its order approving those settlements. Andrews filed his objections with an improperly noticed motion to unseal records, which likely caused the district court and Hagens Berman to overlook them.”
“Because Andrews’s objections to the second-round settlement agreements were frivolous, the district court’s failure to address them was not erroneous.”
That case is Indirect Purchaser Class v. Erwin, 17-15065.
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