Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_02-cv-03581/USCOURTS-cand-4_02-cv-03581-1/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

NOT FOR CITATION

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

In re RIVERSTONE NETWORKS, INC.,

SECURITIES LITIGATION No. C-02-3581 PJH

_______________________________

ORDER RE MOTION FOR

THIS DOCUMENT RELATES TO: ATTORNEYS’ FEES

ALL ACTIONS

_______________________________/

Before the court are motions by two objectors, seeking attorneys’ fees in connection

with their participation in the litigation of the settlement of the above-entitled class action

alleging violations of the federal securities laws. 

The proposed settlement agreement provided for payment to class counsel of 25% of

the $18.5 million settlement common, or $4,625,000, plus reasonable expenses. The court

preliminarily approved the proposed settlement on January 21, 2005, but also indicated at the

hearing that the amount of the fee award would depend upon the reaction of the class and the

court’s further consideration of the issue. 

On February 14, 2005, settlement class member the New York State Teachers’

Retirement System (“NYSTRS”) filed an objection to the 25% proposed attorneys’ fee, and

negotiated the objection with class counsel. Class counsel eventually reduced the fee request

to 19% of the common fund, or $3,515,000. On February 28, 2005, NYSTRS requested leave

Case 4:02-cv-03581-PJH Document 175 Filed 10/19/05 Page 1 of 5
United States District Court

For the Northern District of California

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 Prior to the hearing, the court received a brief submission from a fourth objector (who

did not appear at the hearing), as well as requests from five individuals seeking to be excluded

from the class, two ofwhom also objected to the amount of the fees requested by class counsel

(but did not appear at the hearing).

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to withdraw its objection.

On March 30, 2005, settlement class member Sheldon Chandler, unaware that class

counsel had reduced the fee request in response to NYSTRS’ objection, filed an objection to

the 25% proposed attorneys’ fee, suggesting that an appropriate fee would be in the range of

13.4% to 18% of the settlement fund. 

On April 1, 2005, settlement class member Charles L. Grimes filed an objection to the

Plan of Allocation proposed in the settlement, and to the application of class counsel for

attorneys’ fees in the amount of 19% of the settlement fund. After Mr. Grimes filed the

objection, his counsel met with class counsel to discuss the objection to the Plan of Allocation,

and class counsel agreed to modify one aspect of the Plan of Allocation and to clarify another

aspect. 

On April 6, 2005, Mr. Chandler requested leave to file a supplemental objection to the

terms of the settlement and to the amount of attorneys’ fees requested by class counsel. On

the same date, he filed a supplemental objection, claiming that the settlement notice that was

sent to the members of the class was deficient because it did not state the percentage of

actual damages represented by the settlement amount and because it did not include a copy

of the actual settlement agreement. He also asserted that the fee application was inadequate

because it did not include lodestar cross-check documentation. On April 27, 2005, the

court heard argument in lead plaintiffs’ motion for final approval of the settlement, including

argument by counsel for Mr. Chandler and Mr. Grimes.1 

On May 17, 2005, the court approved the settlement and revised Plan of Allocation,

and awarded class counsel 15% of the settlement fund, or $2,775,000, in attorneys’ fees, plus

$140,015.78 in expenses.

Counsel for Mr. Chandler now seeks a “reasonable” fee, “based on any proper and

available method for setting such a fee.” His claimed lodestar is $40,614.50, but he suggests

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that as the fee awarded to class counsel represents approximately 2.3 times class counsel’s

lodestar, he should receive the same “multiplier” as class counsel, or a fee of $93,413.35. He

also seeks reimbursement of expenses in the amount of $1,558.20, and requests $1,000 for

Mr. Chandler as an “incentive award.” 

Counsel for Mr. Grimes seeks $36,607.96 in fees, representing his lodestar, plus

$3,839.88 in expenses. He argues that payment of this fee is warranted because Mr. Grimes

provided a benefit to the class by encouraging lead class counsel to change the Plan of

Allocation, and also contributed to the court’s decision to award 15% of the common fund as

attorneys’ fees rather than the 19% requested by lead counsel. Mr. Grimes’ requested fees

also include compensation for services performed by California attorney Michael Mee, who

appeared as local counsel on papers filed by Mr. Grimes’ Delaware attorneys.

Class counsel do not object to the awarding of fees and expenses to counsel for Mr.

Grimes in connection with the changes made to the Plan of Allocation, but argue that no fees

should be awarded based on the court’s decision to award class counsel 15% of the

settlement fund as attorneys’ fees, on the basis that the court had previously expressed

misgivings with regard to the amount of the fee requested by class counsel, and the Grimes

objections provided no benefit to the class. Similarly, class counsel contend that the Chandler

objections provided no benefit to the class, noting that the court had already expressed

reservations with regard to the amount requested, and that Mr. Chandler’s counsel simply

repeated many of the arguments made by counsel for NYSTRS. Class counsel also object to

the suggestion that any attorneys’ fees awarded to counsel for the objectors be deducted from

the fees awarded to class counsel.

Objectors can play a useful role in the court’s evaluation of the terms proposed for

settlement of a class action. “Objectors can provide important information regarding the

fairness, adequacy, and reasonableness of settlements. Objectors can also play a beneficial

role in opening a proposed settlement to scrutiny and identifying areas that need

improvement.” Manual for Complex Litigation (Fourth) § 21.643 (2004). “The equitable

common fund/common benefit doctrine authorizes attorney fees only when the litigants

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preserve or create a common fund for the benefit of others as well as themselves.” Vizcaino v.

Microsoft Corp., 290 F.3d 1043, 1051-52 (9th Cir. 2002) (citation and quotation omitted). An

award of attorneys’ fees depends on whether the services provided by the attorneys

benefitted the fund – “whether they tended to create, increase, protect, or preserve the fund.” 

Class Plaintiffs v. Jaffe & Schlesinger, P.A., 19 F.3d 1306, 1308 (9th Cir. 1994) (citation and

quotation omitted). 

Here, the court finds that the objectors provided some – though not a major or

extensive – benefit to the common fund. It is true, as class counsel point out, that the court

expressed concern at the hearing on the motion for preliminary approval of the settlement with

regard to the amount of the fee request (25% of the gross settlement proceeds); that shortly

after that hearing, NYSTRS wrote a letter to the court expressing strong objection to the

amount of the fee request; and that only later did Mr. Chandler and Mr. Grimes file their

objections. Nevertheless, the fact that two objectors other than NYSTRS retained counsel to

submit objections made it easier for the court to justify reducing the amount of the fees even

below the 19% proposed by class counsel. In addition, Mr. Grimes’ objection to certain

provisions in the Plan of Allocation created, to some extent, a benefit for the class.

The court finds, however, that the amounts requested are excessive in comparison with

the benefit conferred. Counsel for NYSTRS managed to communicate NYSTRS’ objection to

the amount of the fees in a three-page letter to the court. Yet counsel for both Mr. Chandler

and Mr. Grimes required more than 100 hours to accomplish essentially the same thing. In

view of the objectors’ respective contributions to the settlement, the court finds that a

reasonable award of attorneys’ fees in this case would be $5,000 to counsel for Mr. Chandler

and $10,000 to counsel for Mr. Grimes, plus $1,500 to each for travel to and attendance at the

hearing. The court is unaware of any authority to support Mr. Chandler’s request for a $1,000

“incentive” fee. 

In the absence of any authority for requiring class counsel to pay the award from their

own attorneys’ fees award, the court finds that the only possible source for payment of the

award is the settlement fund, to the extent that any money remains in the fund. The court

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recognizes that the fact that this matter has been pending before the court for some time may

in practical terms mean that there are no funds available to satisfy these awards. However, it

simply did not occur to the court to consider the source of the funds prior to the time it was

able to turn to a review of the papers filed in connection with the present motions. 

IT IS SO ORDERED.

Dated: October 19, 2005 

______________________________

PHYLLIS J. HAMILTON

United States District Judge

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