Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-57159/USCOURTS-ca9-13-57159-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

---

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STEPHEN STETSON, individual and

all others similarly situated; SHANE

LAVIGNE, individual and all others

similarly situated; CHRISTINE LEIGH

BROWN-ROBERTS, individual and all

others similarly situated; VALENTIN

YURI KARPENKO, individual and all

others similarly situated; JAKE

JEREMIAH FATHY, individual and all

others similarly situated,

Plaintiffs-Appellees/

Cross-Appellants,

and

WEST PUBLISHING CORPORATION, a

Minnesota Corporation, DBA

BAR/BRI; KAPLAN, INC.,

Defendants-Appellees/

Cross-Appellants,

v.

SETH BRYANT GRISSOM; JAMES

RALPH GARRISON, III; DUSTIN

KENNEMER; NATHAN HUNT; JOHN

KELLEY; JOHN AMARI,

Objectors-Appellants/

Cross-Appellees.

Nos. 13-57061

13-57159

D.C. No.

2:08-cv-00810-

R-E

OPINION

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 1 of 16
2 STETSON V. GRISSOM

Appeal from the United States District Court

for the Central District of California

Manuel L. Real, District Judge, Presiding

Argued and Submitted

February 2, 2016—Pasadena, California

Filed May 11, 2016

Before: STEPHEN REINHARDT, RICHARD A. PAEZ,

and MILAN D. SMITH, JR., Circuit Judges.

Opinion by Judge Milan D. Smith, Jr.

SUMMARY*

Settlement / Attorneys’ Fees

The panel vacated the district court’s order reducing class

counsel’s fees following a settlement.

The panel held that in a class action, an objector need not

establish standing to object to an award of attorneys’ fees by

the district court. If the objector seeks to appeal the award,

however, then he must demonstrate standing. An objector

has standing to appeal a denial of his own request for fees. 

Here, the objectors were not yet entitled to any fees because

the panel vacated the district court’s order awarding

attorneys’ fees to class counsel.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 2 of 16
STETSON V. GRISSOM 3

The panel held that in this common-fund case, the district

court acted well within its discretion in using the lodestar

method to calculate fees. The district court abused its

discretion, however, in failing specifically to articulate the

reasoning supporting the large disparity between the

requested fees and the awarded fees. In addition, the district

court’s reduction of class counsel’s costs was based on

clearly erroneous findings of fact.

The panel vacated the district court’s award of costs and

fees and remanded with instructions for the district court to

(1) clearly provide reasons for the factors in its lodestar

computation; (2) expressly consider both a risk multiplier and

the Kerr reasonableness factors; and (3) base its decision on

facts supported by the record. The panel directed that the

case be reassigned to a different district judge on remand.

COUNSEL

Joseph L. Tucker (argued), Jackson & Tucker PC,

Birmingham, Alabama, for Objectors-Appellants/CrossAppellees.

Alan Harris (argued), Harris & Ruble, Los Angeles,

California; Perrin F. Disner (argued), Law Offices of Perrin

F. Disner, Los Angeles, California, for PlaintiffsAppellees/Cross-Appellants.

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 3 of 16
4 STETSON V. GRISSOM

OPINION

M. SMITH, Circuit Judge:

We consider in this disposition whether, when a commonfund settlement agreement has been reached in a class action

and fees have been awarded to class counsel, a nonparticipating class member who objects only to the fee award

has standing to appeal the denial of his own request for fees.

We also consider a cross-appeal concerning the district

court’s reduction of Plaintiffs’ attorney’s fees and costs. We

vacate and remand.

FACTS AND PRIOR PROCEEDINGS

This case is before us for the third time. Plaintiffs Stetson

et al. first appealed the district court’s order dismissing their

complaint in May 2008. After oral argument, we referred the

case to mediation. A settlement was reached, and we

remanded the case to the district court “for the limited

purpose of considering approval of and approving the

settlement agreement between the putative Class and

Defendants.” The district court rejected the proposed

settlement, and we reasserted jurisdiction. We then reversed

the district court’s order of dismissal (the order from which

the appeal had originally been taken) but again referred the

case to mediation. By February 2013, a new settlement had

been reached, and we issued our mandate, returning

jurisdiction to the district court.

The parties presented the new settlement agreement—

which included a $9.5 million gross settlement fund—to the

district court for approval. Plaintiffs’ attorneys (Class

Counsel) sought $1.9 million in fees as compensation, which

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 4 of 16
STETSON V. GRISSOM 5

represented approximately 20 percent of the common fund.

Class Counsel also sought $49,934.89 in costs. Certain class

members (Objectors) objected to the fee request (but not to

the underlying settlement), asserting that Class Counsel were

entitled to no more than $380,000 in fees. Objectors then

sought 20 percent of any reduction in Class Counsel’s fees as

their own fee award, as well as $1,000 in incentive awards for

each individual objector.

The district court granted $585,000 in fees to Class

Counsel, which reflected a reduction of requested fees of

approximately 70 percent. It also reduced Class Counsel’s

costs reimbursement to $20,588.17. The district court

announced its reasoning from the bench, as follows:

The Court finds that the lodestar method is

preferable in the circumstances of this case. In

re Bluetooth Headset Prods. Litig., 654 F.3d

936 (9th Cir. 2011).

Using the lodestar method, the Court first

determines the reasonable fee by multiplying

the reasonable hourly rate by the reasonable

hours expended in the litigation. Here, class

counsel has provided a declaration with the

schedule of hourly rates charged by each

attorney who worked on the matter and how

many hours were expended by those

attorneys. After review of the timesheet

submissions and declarations of counsel, the

Court finds that the hourly fee and hours

expended are not reasonable.

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 5 of 16
6 STETSON V. GRISSOM

First, the hourly fee charged by counsel is

beyond the prevalent market rate. The Court

finds that a reasonable hourly fee for an

attorney with the experience of class counsel

dealing with a case of this magnitude and

degree of difficulty in the Central District is

$450 per hour. See Trevinu v. Gates, 99 F.3d

911 (9th Cir. 1996).

Second, the Court finds that many of the

hours billed by class counsel were redundant,

excessive, or otherwise unnecessary. Hensley

v. Eckerhart, 461 U.S. 424 (1983).

For instance, Class Counsel Disner’s time

sheet does not separate and describe the time

and tasks performed by each attorney; indeed,

it appears that on many entries two attorneys

billed for the same work. In sum, the Court

finds that class counsel’s reasonable fee is

$585,000. This is using the $450 per hour rate

applied across all counsel and to the total

1300 hours reasonably spent on this case.

Further, taking account of class counsel’s

experience, skill in litigating this case, the

complexity of the issues involved, and the

customary fees charged by counsel in similar

cases, the Court finds that the lodestar fee is

reasonable and, on balance, the Kerr factors

do not justify an upward or downward

adjustment. Kerr v. Screen Actors Guild, Inc.,

526 F.2d 97 (9th Cir. 1975).

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 6 of 16
STETSON V. GRISSOM 7

The district court also found that Class Counsel

“inadequatelysupported its claim for expert fees; specifically,

with the exception of Mr. Rook, class counsel has not

provided the Court with information regarding how crucial or

indispensable the unnamed experts were to the litigation.”

Finally, the district court denied Objectors’ fee request in its

entirety, finding that Objectors’ role was not “even minimally

material in bringing about the successful settlement” because

Objectors “did not add anything to the Court’s independent

analysis.”

Both Plaintiffs and Objectors appealed.

DISCUSSION

We review an award of attorney’s fees for abuse of

discretion. Stanger v. China Elec. Motor, Inc., 812 F.3d 734,

739 (9th Cir. 2016). A district court abuses its discretion

when it applies an incorrect rule of decision, or when it

applies the correct rule to factual conclusions that are

“illogical, implausible, or without support in the record.”

Rodriguez v. Disner (Rodriguez II), 688 F.3d 645, 653 (9th

Cir. 2012). Findings of fact are reviewed for clear error;

conclusions of law are reviewed de novo. Stanger, 812 F.3d

at 738.

I. Objectors’ Standing to Appeal

In a class action, an objector need not establish standing

to object to an award of attorney’s fees by the district court.

The district court has “the authority and duty to pass upon the

fairness of the attorneys’ fees settlement independently of

whether there was objection.” Zucker v. Occidental

Petroleum Corp., 192 F.3d 1323, 1329 (9th Cir. 1999). The

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 7 of 16
8 STETSON V. GRISSOM

objector therefore needs only a procedural vehicle with which

to place his arguments before the district court, which is

provided by Federal Rule of Civil Procedure 23(h)(2): “A

class member, or a party from whom payment is sought, may

object to the motion [for class counsel’s fees].”

If, however, an objector seeks to appeal an award of fees

to class counsel, he “must independently satisfy Article

III”—that is, he must demonstrate standing to appeal

independent of his ability to object before the district court.

Knisley v. Network Assocs., Inc., 312 F.3d 1123, 1126 n.1

(9th Cir. 2002). Where an objector has participated in the

common-fund settlement, he has standing to appeal because

a reduction in class counsel’s fees will likely increase his own

award from the common fund. Id. at 1126. Even where an

objector has not participated in the common fund settlement,

he may still have standing to appeal the settlement: if he

prevails, a better settlement might be obtained on remand in

which he could participate. Thus, his injury is likely

redressable on appeal. Id. By contrast, an objector who has

refused to participate in the common-fund settlement and who

objects only to class counsel’s fees generally will not have

standing to appeal the fee award: Because he has not

participated in the settlement, a reduction in class-counsel

fees will not benefit him, and therefore (barring some unusual

terms in the settlement agreement) he has no injury that is

redressable. Id. at 1126–27.

Nevertheless, an objector has standing to appeal a denial

of his own claim for fees. If the district court reduces class

counsel’s fees but denies fees to the objector, that denial

creates a particularized injury to the objector that can be

redressed on appeal. A particularized, redressable injury of

that sort is sufficient to confer standing. Knisley, 312 F.3d at

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 8 of 16
STETSON V. GRISSOM 9

1126–27. Thus we concluded in Rodriguez II that even if an

objector does not submit a settlement claim, he nevertheless

has standing to appeal the denial of his request for fees

because “an attorney who confers a benefit on the class is

entitled to fees based on equitable principles of unjust

enrichment, and has standing to challenge the denial of such

fees, regardless whether the attorney’s client will receive any

of the savings.” 688 F.3d at 660 n.11.

Here, Class Counsel challenge Objectors’ standing to

appeal the denial of their petition for fees. Objectors concede

that they “did not file a claim to receive a share of the

settlement proceeds.” However, their appeal does not concern

the district court’s award of fees to Class Counsel. They

appeal only the district court’s denial of their own petition for

fees, which is a particularized injury to the Objectors we can

redress. Thus, Knisley is distinguishable, and as in Rodriguez

II, Objectors have standing to appeal the district court’s

denial of their petition for fees.

Class Counsel also assert that Objectors’ objection was

untimely. All agree that Objectors filed their objection on

July 29, 2013. The district court’s order setting forth the

relevant deadlines is ambiguous. In one paragraph, the order

provides that a putative objector, “no later than twenty-one

days before the August 19, 2013, Final Settlement Hearing

(presently, July 29, 2013), must file a written notice of

intention to object” (emphasis added). Elsewhere, however,

it provides that “[a]ll Claim Forms, objections, and exclusion

requests, if submitted by Class Members via U.S. mail, must

be postmarked no later than July 8, 2013; all Claim Forms, if

submitted online, must be submitted no later than July 8,

2013” (emphases added). Adding to the confusion, the

Settlement Agreement approved by the district court provides

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 9 of 16
10 STETSON V. GRISSOM

that objections must be lodged “no later than twenty-one (21)

days before the Final Settlement hearing”—which

corresponds with the July 29 date. All relevant documents

were drafted by Class Counsel. Thus, in accordance with the

general principle of contra proferentem, we construe the

ambiguity against them. See generally, e.g., United States v.

Transfiguracion, 442 F.3d 1222, 1228 (9th Cir. 2006) (plea

agreement); In re Kahan, 28 F.3d 79, 82 (9th Cir. 1994)

(bankruptcy schedules). Objectors’ objection is deemed

timely.

However, to be entitled to funds, an objector must

“increase the fund or otherwise substantially benefit the class

members.” Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1051

(9th Cir. 2002); see also Rodriguez II, 668 F.3d at 658. In

Part II, infra, we vacate and remand the district court’s

decision reducing Class Counsel’s fees. Objectors are

therefore not yet entitled to attorney’s fees. On remand, if the

district court again reduces Class Counsel’s fee award, it can

also determine—with specificity—the extent to which

Objectors’ arguments influenced its decision. For now,

therefore, we vacate and remand the district court’s decision

concerning Objectors’ entitlement to fees.

II. Class Counsel’s Petition for Fees and Costs

“In class action litigation, a district court ‘may award

reasonable attorney’s fees and nontaxable costs that are

authorized by law or by the parties’ agreement.’” Rodriguez

v. Disner (Rodriguez II), 688 F.3d 645, 653 (9th Cir. 2012)

(quoting Fed. R. Civ. P. 23(h)). In the absence of a

contractual or statutory basis for awarding fees, the district

court may award reasonable fees as a matter of federal

common law when class counsel has recovered a “common

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 10 of 16
STETSON V. GRISSOM 11

fund.” Id. (citing Boeing Co. v. Van Gemert, 444 U.S. 472,

478 (1980)). A “common fund” exists when “each member of

a certified class has an undisputed and mathematically

ascertainable claim to part of a lump-sum judgment recovered

on his behalf.” Boeing Co., 444 U.S. at 479. Fees awarded out

of the common fund are thus apportioned among the class. It

is not disputed that this is a common-fund case.

To calculate the fee in a common-fund case, the district

court “has discretion to apply either the lodestar method or

the percentage-of-the-fund method in calculating a fee

award.” Fischel v. Equitable Life Assurance Soc’y, 307 F.3d

997, 1006 (9th Cir. 2002). Under the former method, the

district court “multiplies a reasonable number of hours by a

reasonable hourly rate”; under the latter method, the

“benchmark” award is 25 percent of the fund, which the

district court may “adjust[] upward or downward to account

for any unusual circumstances involved in the case.” Id.

(quotation marks and alteration omitted). There is a strong

presumption that the lodestar is a reasonable fee. Id. at 1007.

In general “the choice to apply the lodestar method, rather

than the percentage-of-fund method, [is] well within the

district court’s discretion.” Stanger v. China Elec. Motor,

Inc., 812 F.3d 734, 739 (9th Cir. 2016).

Stanger was also a class action involving a common-fund

settlement, and it was an appeal from the same district judge

that decided this case. In Stanger, the district judge drastically

reduced class counsel’s fees with onlyminimal reasoning and

analysis. Id. at 739. We explained that

[i]n order for this Court to conduct a

meaningful review of the fee award’s

reasonableness . . . the district court must

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 11 of 16
12 STETSON V. GRISSOM

“provide a concise but clear explanation of its

reasons for the fee award.” The district court

must state not only the grounds on which it

relied, but also how it weighed the various

competing considerations. . . . Especially

“where the disparity between the requested

fee and the final award is larger, a more

specific articulation of the court’s reasoning is

expected.”

Id. (quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983);

Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir.

2008)) (citations and alteration omitted). We therefore held

that we had “no choice” but to vacate and remand. Id. at 740

(quotation marks omitted). Because the district court’s

decision was materially similar to the situation here, Stanger

largely controls the outcome of Class Counsel’s appeal of

their fee and costs award in this case.

A. Fees

The district court used the lodestar method to calculate

fees, and it acted well within its discretion to do so. See

Stanger, 812 F.3d at 739; Fischel, 307 F.3d at 1007. But the

disparity between the requested fees ($1.9 million) and the

awarded fees ($585,000) is $1,315,000—a nearly 70 percent

reduction from the requested fees and a 36 percent reduction

from Class Counsel’s computed lodestar fee. Such a large

disparity requires a relatively specific articulation of the

court’s reasoning. Stanger, 812 F.3d at 739 (requiring a more

specific articulation for a 30 percent reduction in hours);

Costa v. Comm’r of Soc. Sec. Admin., 690 F.3d 1132,

1136–37 (9th Cir. 2012) (similar); Moreno v. City of

Sacramento, 534 F.3d 1106, 1111–13 (9th Cir. 2008)

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 12 of 16
STETSON V. GRISSOM 13

(similar). Failure to do so is an abuse of discretion. See

Stanger, 812 F.3d at 739. There are a number of areas in

which the district court here should have been more specific

as to its reasoning.

1. Hours. The district court reduced Class Counsel’s

declared time expended by 241.2 hours, asserting that “many

of the hours billed . . . were redundant, excessive, or

otherwise unnecessary.” As in Stanger, “[w]hile the court

noted one or two considerations that might have supported its

decision, it failed to explain how it weighed those

considerations when calculating the final award.” 812 F.3d at

739. Specifically, the court provided no explanation for why

it reduced the lodestar by 241.2 hours, “as opposed to any

other number of hours.” See id. On remand, the district court

should take into account the reality that some amount of

duplicative work is “inherent in the process of litigating over

time.” Moreno, 534 F.3d at 1112.

2. Hourly fee. As in Stanger, the district court’s

declaration that a reasonable hourly fee for Class Counsel is

$450 per hour “gives us no clue on whether it relied on Class

Counsel’s current or historic rates.” 812 F.3d at 740. The

district court provided no reasoning other than an offhand

citation to Trevino v. Gates, 99 F.3d 911 (9th Cir. 1996). To

the extent that the district court relied on the evidence in

Trevino that “the reasonable hourly rate in the community for

experienced private attorneys handling complex litigation

ranged from $250 to $550/hour,” id. at 924, relying on a 1996

case to determine prevailing hourly rates in 2013 was clear

error. See Fischel, 307 F.3d at 1010; Moreno, 534 F.3d at

1115. The lodestar should be computed either using an hourly

rate that reflects the prevailing rate as of the date of the fee

request, to compensate class counsel for delays in payment

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 13 of 16
14 STETSON V. GRISSOM

inherent in contingency-fee cases, or using historical rates

and compensating for delays with a prime-rate enhancement.

Stanger, 812 F.3d at 740; Fischel, 307 F.3d at 1010. The

district court’s failure to do either (or to explain what it was

doing) was also an abuse of discretion.

3. Risk multiplier. “The district court must apply a risk

multiplier to the lodestar ‘when (1) attorneys take a case with

the expectation they will receive a risk enhancement if they

prevail, (2) their hourly rate does not reflect that risk, and

(3) there is evidence the case was risky.’ Failure to apply a

risk multiplier in cases that meet these criteria is an abuse of

discretion.” Stanger, 812 F.3d at 741 (quoting Fischel,

307 F.3d at 1008) (emphasis added). Here, there is some

evidence of risk—after all, the district court initially

dismissed the case before being reversed on appeal—but the

record is not developed on the extent of that risk, or on the

other two elements. The district court failed entirely to

consider whether Class Counsel’s representation merited a

risk multiplier. On remand, the decision to apply a risk

multiplier—or not—remains within the district court’s

discretion, but in either event it “must fully and adequately

explain the basis for its decision.” Stanger, 812 F.3d at 741.

4. Kerr factors. The district court also has discretion to

adjust the lodestar upward or downward using a multiplier

that reflects “a host of ‘reasonableness’ factors, including the

quality of representation, the benefit obtained for the class,

the complexity and novelty of the issues presented, and the

risk of nonpayment.” In re Bluetooth Headset Prods. Liab.

Litig., 654 F.3d 935, 941–42 (9th Cir. 2011) (quotation marks

omitted). These factors are known as the Kerr factors. See

Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.

1975), abrogated on other grounds by City of Burlington v.

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 14 of 16
STETSON V. GRISSOM 15

Dague, 505 U.S. 557 (1992). Class Counsel provided a

detailed analysis of these factors on pages 16–21 of their

motion for attorney’s fees; the district court brieflymentioned

the factors and then, without any analysis, dismissed them.

On remand, the court “must explicitly discuss why the Kerr

reasonableness factors do or do not favor applying a

multiplier (positive or negative) in this case.” See Stanger,

812 F.3d at 740.

B. Costs

The district court found that Class Counsel had

“inadequately supported its claim for expert fees.”

Specifically, the court found, “with the exception of Mr.

Rook, class counsel has not provided the Court with

information regarding how crucial or indispensable the

unnamed experts were to the litigation.” In a declaration

submitted to the district court on August 12, 2013, however,

Class Counsel named two other experts—Dr. Safir and Dr.

Gikas—and explained that they were consulted on “the range

of possible damages and the various ways in which settlement

might be achieved.” Class Counsel provided almost two full

pages explaining how these experts were used and why their

input was crucial or indispensable. The district court’s

reduction of Class Counsel’s costs was therefore based on

clearly erroneous findings of fact.

Thus, for all the foregoing reasons, the district court’s

award of costs and fees to Class Counsel is vacated as

arbitrary and remanded for further consideration. On remand,

the district court should (1) clearly provide reasons for the

factors in its lodestar computation; (2) expressly consider

both a risk multiplier and the Kerr factors; and (3) base its

decision on facts supported by the record.

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 15 of 16
16 STETSON V. GRISSOM

CONCLUSION

As we previously observed, this case is before us for the

third time. Moreover, in a related matter before the same

district judge, decimations and denials of attorneys fees have

been appealed three times, and each time we have reversed

the district court, at least in part. See Rodriguez v. W. Publ’g

Corp. (Rodriguez III), 602 F. App’x 385, 387 (9th Cir. 2015);

Rodriguez II, 688 F.3d at 660; Rodriguez v. W. Publ’g Corp.

(Rodriguez I), 563 F.3d 948, 969 (9th Cir. 2009). In addition,

we have already mentioned the similarity of the district

judge’s decision in Stanger to his reasoning in this case.

In light of the history of this case and related litigation, it

is clear to us that the district judge would have “substantial

difficulty in putting out of his . . . mind” his previously

expressed, erroneous findings and conclusions, and that

“reassignment is advisable to preserve the appearance of

justice.” See United States v. Atondo-Santos, 385 F.3d 1199,

1201 (9th Cir. 2004) (quotation marks omitted). Accordingly,

exercising our supervisory powers under 28 U.S.C. § 2106,

the award of attorney’s fees and costs to Class Counsel and

the denial of attorney’s fees to Objectors are VACATED and

REMANDED with direction that the case be reassigned to a

different district judge. Each party shall bear its own costs on

appeal.

 Case: 13-57159, 05/11/2016, ID: 9972340, DktEntry: 43-1, Page 16 of 16