Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01025/USCOURTS-azd-2_10-cv-01025-8/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 - Diversity: Securities Fraud

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Robert Facciola, et al., 

Plaintiffs, 

vs.

Greenberg Traurig LLP, et al., 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-10-1025-PHX-FJM

ORDER

We now have before us class counsels’ motion for attorneys’ fees and costs (doc.

428), and supplemental memorandum (doc. 465), RB Liquidation, LLC counsels’ motion for

attorneys’ fees and costs (doc. 432), and supplemental memorandum (doc. 467). 

I

The court has an independent obligation to ensure that an award of attorneys’ fees is

reasonable, even if the parties have already agreed to an amount. In re Bluetooth Headset

Prod. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011). Where a settlement produces a

common fund for the benefit of an entire class, the court has discretion to use either the

lodestar method or the percentage-of-recovery method for determining reasonable fees. Id.

at 942. Regardless of the method applied, however, we are “guided by the fundamental

principle that fee awards out of common funds be reasonable under the circumstances.” In

re Washington Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1296 (9th Cir. 1994). 

Case 2:10-cv-01025-FJM Document 468 Filed 10/03/12 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

Class counsel have requested attorneys’ fees in the amount of $13,342,093 to be paid

from the settlement fund. They assert that these fees are reasonable under either the

percentage-of-recovery method or the lodestar/multiplier method. 

The percentage-of-recovery is an award based on a percentage of the total common

fund. The Ninth Circuit has used 25% as a benchmark for reasonableness. In re Bluetooth,

654 F.3d at 942. However, that benchmark must be adjusted or replaced by a lodestar

calculation when “the percentage recovery would be either too small or too large in light of

the hours devoted to the case or other relevant factors.” Six Mexican Workers v. Arizona

Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). For example, awarding 25% of a

“megafund” (funds of $50 million or more) may yield unreasonable windfall profits for class

counsel as compared to the hours spent on the case. In re Bluetooth, 654 F.3d at 942.

We agree with class counsel that an award of fees at 15% of the settlement fund is

reasonable in this case. After two years of litigation within a firm, but fair time frame, class

counsel have generated proposed class settlements that create a common fund of

$88,947,288. The result achieved by counsel is significant. An award of 15% of the

settlement fund is appropriately below the median for funds ranging from $25 million to

$100 million. See Dr. Renzo Comolli, Recent Trends in Securities Class Action Litigation:

2012 Mid-Year Review, NERA Economic Consulting, July 24, 2012 (noting median fee of

27% for funds between $25 and $100 million); see also In re Mercury Inter. Corp. Sec. Litig.,

No. CV-05-3395, 2011WL826797, at *2 (N.D. Cal. March 3, 2011) (awarding 22% of

$117.5 million common fund). Class Counsel were retained on a purely contingent basis in

a complex case fraught with uncertainty. Counsel advanced litigation costs in excess of $1.5

million in order to prosecute this action, shouldering the risk of non-payment. Absent class

counsels’ willingness to advance these litigation costs, there likely would have been no

common fund. Finally, counsel have demonstrated outstanding expertise, diligence, and

professionalism at every stage of this litigation. 

Case 2:10-cv-01025-FJM Document 468 Filed 10/03/12 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

Class counsel have lodged under seal billing detail to allow the court to perform a

lodestar cross-check. The clerk shall file the lodged documents under seal (doc. 465).

- 3 -

A lodestar cross-check confirms the reasonableness of the requested fee.1 The

lodestar amount is calculated by multiplying the number of hours reasonably expended on

the litigation, by a reasonable hourly rate for the region and the experience of the lawyer.

We may adjust the lodestar amount by a multiplier based on “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, 654 F.3d at 942 (citation omitted). 

The records show that collectively class counsel and their professional staff expended

over 28,000 hours litigating this action at an average hourly rate of $364 for a total lodestar

of $10,243,574. We find nothing in the record that would suggest that the hours claimed

should be disallowed. Counsels’ requested fee of $13,342,093, therefore, represents a

multiplier of 1.3 over the lodestar amount. 

The multiplier is adequately supported by the factors in this case. Again, the quality

of class counsel’s representation was superb. The benefit obtained by the class exceeds what

is generally awarded in securities fraud cases. The issues in this case were both novel and

complex. And finally, the risk to class counsel of nonpayment was significant. 

We conclude that under all the circumstances of this case class counsels’ request for

fees is reasonable. We also conclude that counsels’ request for reimbursement of $1,435,527

in taxable and non-taxable litigation expenses is reasonable. Class counsels’ motion for

award of attorneys’ fees and costs is granted (doc. 428).

II

Counsel for RB Liquidation LLC request fees in the amount of $704,000. Counsel

state that the amount is less than 3% of the amount contributed to the settlement fund by

Quarles. On a lodestar cross-check, counsel explain that the total time expended since

October 2008 is approximately 1,700 for all shareholders, associates and paralegals, which,

at an average hourly rate of $286, amounts to a lodestar fee of $486,988.50. Therefore, the

Case 2:10-cv-01025-FJM Document 468 Filed 10/03/12 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

requested amount of $704,000 represents a multiplier of 1.4 over the lodestar amount.

Counsel also represent that they have incurred $14,859.25 in non-taxable costs, but they do

not request a separate reimbursement. Instead, they suggest that the costs will be paid from

the $704,000 award. 

We decline to apply the percentage-of-recovery method in calculating fees for RB

Liquidation counsel. While we agree that their efforts likely benefitted the class, the RB

Liquidation lawyers were not representing a class, but were retained by a liquidation entity

in bankruptcy. 

Therefore, we consider the reasonableness of the fee request based on a lodestar

analysis. We first question the propriety of including fees related to counsels’ representation

of Radical Bunny and its principals in the course of the SEC investigation. Approximately

700 of the 1,700 hours claimed were incurred during the two years before RB Liquidation

LLC was formed. Without specifying an amount, counsel acknowledge that they “have

received some compensation for representing Radical Bunny and its members in the SEC and

ACC actions.” Motion at 4 n.6. They nevertheless include those fees in this application, id.,

suggesting a double recovery, which is clearly unreasonable.

We also decline to apply a multiplier to RB Liquidation counsel’s lodestar amount.

We have no way to assess the quality of counsel’s representation, or to determine to what

extent RB Liquidation counsels’ efforts actually contributed to the establishment of the

common fund. We agree that the issues addressed by RB Liquidation counsel were novel

and complex and that they bore a risk of non-payment by assuming the representation on a

contingency basis. But we do not believe that these factors alone warrant an enhancement

of fees over those actually incurred. 

Based on counsels’ representation that they have already been compensated for some

of the claimed hours, and further reducing the hours by an estimate of hours incurred during

the SEC representation that did not ultimately contribute to the benefit of the class, we reduce

the compensable hours to 1400, for a total attorneys’ fees award of $400,400. Because we

have declined to approve an enhanced award, we separately grant counsel reimbursement of

Case 2:10-cv-01025-FJM Document 468 Filed 10/03/12 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

$14,859.25 in non-taxable costs.

III

IT IS ORDERED GRANTING class counsels’ motion for an award of attorneys’

fees (doc. 428), and awarding fees in the amount of $13,342,093, and taxable and nontaxable costs in the amount of $1,435,527.

IT IS ORDERED GRANTING in part RB Liquidation LLC’s counsels’ motion for

an award of attorneys’ fees (doc. 432), and awarding fees in the amount of $400,400, and

non-taxable costs in the amount of $14,859.25.

Because this order modifies the Net Settlement Fund, the parties shall file within 10

days of the date of this order, revised proposed orders and final judgments and plans of

allocation incorporating the revised Net Settlement Fund. The parties shall also itemize all

deductions from the gross Settlement Funds, including deductions made for administrative

fees and notice costs so that the court can effectively reconcile the difference between the

gross and net settlement funds. 

DATED this 3rd day of October, 2012.

Case 2:10-cv-01025-FJM Document 468 Filed 10/03/12 Page 5 of 5