Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-17-15067/USCOURTS-ca9-17-15067-0/pdf.json

Parties Involved:
Christopher Andrews
Appellant
Hitachi Ltd.
Appellee
Hitachi-LG Data Storage Korea, Inc.
Appellee
Hitachi-LG Data Storage, Inc.
Appellee
Indirect Purchaser Class
Appellee
NEC Corporation
Appellee
Optical Disk Drive Products Antitrust Litigation

Panasonic Corporation
Appellee
Panasonic Corporation of North America
Appellee
Sony Corporation
Appellee
Sony NEC Optiarc, Inc.
Appellee
Sony Optiarc America, inc.
Appellee
Sony Optiarc, Inc.
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE OPTICAL DISK DRIVE

PRODUCTS ANTITRUST LITIGATION,

INDIRECT PURCHASER CLASS,

Plaintiff-Appellee,

v.

CONNER ERWIN,

Objector-Appellant,

v.

PANASONIC CORPORATION;

PANASONIC CORPORATION OF

NORTH AMERICA; NEC

CORPORATION; SONY CORPORATION;

SONY OPTIARC, INC.; SONY OPTIARC

AMERICA, INC.; SONY NEC

OPTIARC, INC.; HITACHI LTD.;

HITACHI-LG DATA STORAGE, INC.;

HITACHI-LG DATA STORAGE

KOREA, INC.,

Defendants-Appellees.

Nos. 17-15065

17-17439

D.C. No.

3:10-md-02143-

RS

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2 IN RE OPTICAL DISK DRIVE PRODS.

IN RE OPTICAL DISK DRIVE

PRODUCTS ANTITRUST LITIGATION,

INDIRECT PURCHASER CLASS,

Plaintiff-Appellee,

v.

CHRISTOPHER ANDREWS,

Objector-Appellant,

v.

PANASONIC CORPORATION;

PANASONIC CORPORATION OF

NORTH AMERICA; NEC

CORPORATION; SONY CORPORATION;

SONY OPTIARC, INC.; SONY OPTIARC

AMERICA, INC.; SONY NEC

OPTIARC, INC.; HITACHI LTD.;

HITACHI-LG DATA STORAGE, INC.;

HITACHI-LG DATA STORAGE

KOREA, INC.,

Defendants-Appellees.

Nos. 17-15067

17-17436

D.C. No.

3:10-md-02143-

RS

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IN RE OPTICAL DISK DRIVE PRODS. 3

IN RE OPTICAL DISK DRIVE

PRODUCTS ANTITRUST LITIGATION,

INDIRECT PURCHASER CLASS,

Plaintiff-Appellee,

v.

BARBARA COCHRAN,

Objector-Appellant,

v.

PANASONIC CORPORATION;

PANASONIC CORPORATION OF

NORTH AMERICA; NEC

CORPORATION; SONY CORPORATION;

SONY OPTIARC, INC.; SONY OPTIARC

AMERICA, INC.; SONY NEC

OPTIARC, INC.; HITACHI LTD.;

HITACHI-LG DATA STORAGE, INC.;

HITACHI-LG DATA STORAGE

KOREA, INC.,

Defendants-Appellees.

No. 17-15143

D.C. No.

3:10-md-02143-

RS

OPINION

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4 IN RE OPTICAL DISK DRIVE PRODS.

Appeal from the United States District Court

for the Northern District of California

Richard Seeborg, District Judge, Presiding

Argued and Submitted October 21, 2019

Submission Vacated January 24, 2020

Resubmitted May 8, 2020

Portland, Oregon

Filed May 15, 2020

Before: Jerome Farris, Carlos T. Bea, and

Morgan Christen, Circuit Judges.

Opinion by Judge Christen

SUMMARY*

Class Action Settlement / Attorneys’ Fees

The panel vacated the district court’s award of attorneys’

fees and litigation expenses to class counsel, following

approval of two rounds of settlements in consumer class

action litigation concerning antitrust violations in the optical

disk drive industry, and remanded for further consideration

and findings. 

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

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

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IN RE OPTICAL DISK DRIVE PRODS. 5

The claims of direct purchaser plaintiffs (DPPs) and

indirect purchaser plaintiffs (IPPs) were consolidated in

multidistrict litigation. Three groups of attorneys applied for

appointment as class counsel. The district court received

their bids under seal and appointed one group. The DPPs

obtained certification of a settlement class and entered into

settlement agreements resolving their claims. The district

court also granted the IPPs’ motion for class certification. 

The IPP class reached a tentative settlement with four groups

of affiliated corporate entities, yielding a common fund. 

Counsel moved for fees, proposing a percentage-of-recovery

fee structure different from the structure proposed in its

sealed bid. IPP class members objected that the requested fee

was excessive. The district court approved the first

settlement and the requested attorneys’ fees and litigation

expenses. The IPP class reached a second settlement with

three additional groups of affiliated defendants, resulting in

an additional common fund. The district court largely

adopted class counsel’s proposed order approving a second

motion for fees and expenses. The IPP class reached a third

settlement with two additional defendant groups, and the

district court approved counsel’s third fee request.

The district court’s approval of the first- and secondround settlements was addressed in a separately filed

memorandum disposition. Objections to the third-round fee

award also were addressed in a separate memorandum

disposition.

In its opinion, the panel addressed objectors’ appeals

arising from the district court’s awards of fees and litigation

expenses for the first- and second-round settlements pursuant

to Federal Rule of Civil Procedure 23(h). The panel held that

in awarding fees, the district court properly considered the

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6 IN RE OPTICAL DISK DRIVE PRODS.

size of the common funds, which qualified as “megafunds.”

The panel followed case law declining to adopt a bright-line

rule requiring the use of sliding-scale fee awards for class

counsel in megafund cases. The panel held that the district

court erred by failing to explain adequately the significant

variance between the fee grid included in counsel’s

appointment application and the actual awards. The panel

explained that it was difficult to tell what role the fee bid

played in the district court’s approval of the motions for fees

and expenses. Given the record and the fiduciary duty the

court owes to the class at the fee award stage, the panel

vacated and remanded the first- and second-round fee awards

for further consideration and findings.

The panel held 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. Here, class counsel argued that an upward

departure from its bid was warranted in part because it did not

anticipate the need to litigate a second class-certification

motion or interlocutory appeals. Without more, these factors

were insufficient to justify a variance of the magnitude

approved in the first- and second-round fee awards. The

panel explained that the bid to become interim class counsel

clearly contemplated that counsel 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. In

addition, the proposed fee structure in this case explicitly

contemplated appellate litigation.

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IN RE OPTICAL DISK DRIVE PRODS. 7

The panel also vacated the district court’s award of

litigation-relatedexpenses and remanded. The panel held that

the district court properly interpreted counsel’s bid as

encompassing all litigation expenses. Nonetheless,the record

was unclear about whether the district court had the

opportunity to take this into account when it reviewed the

expense requests associated with the first two settlement

rounds. Because the bid was under seal, objectors did not

have the information necessary to squarely raise this issue

before the district court, but the fiduciary duty the court owed

to the class required that the case be remanded so the class

could be assured the issue was considered.

COUNSEL

Robert Clore (argued) and Christopher A. Bandas, Bandas

Law FirmP.C.,Corpus Christi,Texas,for Objector-Appellant

Connor Erwin.

George W. Cochran, Law Office of George W. Cochran,

Streetsboro, Ohio, for Objector-Appellant Barbara Cochran.

Christopher Andrews (argued), Livonia, Michigan, pro se

Objector-Appellant.

Kevin Kamuf Green (argued), Hagens Berman Sobol Shapiro

LLP, San Diego, California; Steve W. Berman, Hagens

Berman Sobol Shapiro LLP, Seattle, Washington; Jeff D.

Friedman and Shana E. Scarlett, Hagens Berman Sobol

Shapiro LLP, Berkeley, California; for Plaintiff-Appellee

Indirect Purchaser Class.

No appearance by Defendants-Appellees.

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8 IN RE OPTICAL DISK DRIVE PRODS.

OPINION

CHRISTEN, Circuit Judge:

Objectors appeal the district court’s approval of two

rounds of settlements in this consumer class action litigation,

as well as the district court’s award of fees and litigation

expenses to class counsel. Objectors also argue that the

district court erred by allowing class counsel’s fee bid to

remain under seal when it considered the motions to approve

the settlements and awards of fees and expenses.

We have jurisdiction pursuant to 28 U.S.C. § 1291. In a

separately filed memorandum disposition, we affirm the

district court’s approval of the first- and second-round

settlements. Here, we vacate the awards of fees and litigation

expenses and remand for a more complete explanation of the

district court’s reasoning.

I.

In 2009, the Department of Justice disclosed that it was

conducting a criminal investigation into possible antitrust

violations based on price-fixing within the optical disk drive

(ODD) industry.1 As a result of the federal criminal

investigation, Hitachi-LG Data Storage (Hitachi) and several

of its senior officials pleaded guilty to criminal antitrust

violations. TheDOJ investigation resulted in significant fines

and at least four prison terms.

1 Optical disk drives are hardware products that can read and write

data. They were once commonly included in computers and video game

consoles.

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IN RE OPTICAL DISK DRIVE PRODS. 9

Several putative class claims were filed alleging civil

antitrust violations arising from the same activity that was the

focus of the DOJ investigation, and in April 2010, the panel

on multidistrict litigation consolidated the claims. The

consolidated case was assigned to Judge Vaughn Walker in

the Northern District of California. Two groups of plaintiffs

sought class certification—direct purchaser plaintiffs (DPPs)

and indirect purchaser plaintiffs (IPPs). The former

prospective class comprised individuals and entities who

purchased ODDs directly, such as personal computer

manufacturers; the latter included plaintiffs who purchased

products containing ODDs. The IPPs alleged that eleven

groups of associated corporate defendants had conspired to

restrain competition for ODDs. Objectors here are members

of the IPP class.

As firms jockeyed to represent the putative class of IPPs

in the consolidated action, the district court ordered

prospective class counsel “to provide information on any

subject pertinent to the appointment and to propose terms for

attorney fees and costs in representing a prospective class.” 

The court reasoned that it was “appropriate to consider the

matter of fees and costs at the outset.”2 Three groups of

attorneys, including Hagens Berman, applied for appointment

as interim class counsel and the district court granted their

motions to seal their respective bids. The court explained that

“[b]ecause their applications contain attorney work product,

all three groups requested that the precise terms of their

2 For a discussion of the use of competitive bidding to select lead

counsel in class actions, see 3 William B. Rubenstein, Newberg on Class

Actions § 10:14 (5th ed. 2012). It appears this type of competitive bidding

process is not widely used by trial courts.

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10 IN RE OPTICAL DISK DRIVE PRODS.

applications remain confidential during the pendency of this

litigation.”

Hagens Berman proposed a sliding-scale award for both

fees and costs based on the percentage-of-recovery method,

specifically citing the district court’s earlier decisions

endorsing this approach. See, e.g., Wenderhold v. Cylink

Corp., 188 F.R.D. 577, 588 (N.D. Cal. 1999) (“Wenderhold

I”); Wenderhold v. Cylink Corp., 189 F.R.D. 570, 572 (N.D.

Cal. 1999) (“Wenderhold II”). The firm’s sealed bid included

a grid with a sliding-scale fee calculated as a percentage of

the class recovery. One axis of the grid comprised four stages

of litigation. The grid called for lower fees for earlier-stage

recovery scenarios, and higher fees if the case proceeded to

trial and/or appeal. The grid’s other axis depicted the size of

the class recovery and showed a lower fee percentage as the

overall class recovery increased. The grid’s maximum fee

award was fourteen percent of the class recovery from each

defendant.

In June of 2010, the district court appointed Hagens

Berman interim class counsel pursuant to Federal Rule of

Civil Procedure 23(g)(3). The appointment order explained

that the competing firms’ applications focused primarily on

“their respective fee and cost proposals and an analysis of the

prospects for a recovery.” Without revealing the actual fee

percentages in Hagens Berman’s grid, the court’s

appointment order concluded that the fee proposals favored

Hagens Berman, and explained that the firm proposed

declining fees for larger recoveries, and its “proposal

entail[ed] one fee that covers both compensation of attorneys

[fees] and reimbursement of attorneys’ out-of-pocket

expenses.” The court’s order specifically observed that

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IN RE OPTICAL DISK DRIVE PRODS. 11

Hagens Berman had proposed “folding expense recovery into

the fee.”

The IPPs’ putative class action was reassigned to Judge

Seeborg in October 2010, and the parties began extensive

discovery and litigation practice. Four years later, the district

court denied the motions for class certification filed by the

IPP and DPP putative classes. After our court denied

interlocutory review, DPPs obtained certification of a

settlement class and entered into settlement agreements

resolving their claims. Hagens Berman continued litigating

on behalf of the putative IPP class, and eventually prevailed

on its renewed motion for class certification in February

2016. Our court denied defendants’ request for interlocutory

review in June 2016.

During the period immediately before and after class

certification, the IPP class reached tentative settlement

agreements with four groups of affiliated corporate entities

(Hitachi, NEC, Panasonic, and Sony) that yielded a common

fund totaling $124.5 million.3

In its first motion for fees,

Hagens Berman requested twenty-five percent of the total

first-round recovery as attorneys’ fees, or $31.125 million,

and separately requested $3,704,323.97 for litigation

expenses. The motion for fees and litigation expenses was

filed six years after the district court’s appointment order. 

The motion did not mention that the firm’s sealed bid had

proposed a different structure for fees and expenses. The

3 We refer to affiliated defendants by their primary names. For the

first-round settlements, Hitachi contributed $73 million, NEC contributed

$6.5 million, Panasonic contributed $16.5 million, and Sony contributed

$28.5 million.

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12 IN RE OPTICAL DISK DRIVE PRODS.

motion stated that the request for a twenty-five percent fee

equated to a 1.29 lodestar multiplier.

Class members objected that the requested fee was

excessive because the common fund constituted a

“megafund,” and objector Conner Erwin asked the district

court to unseal class counsel’s fee bid so the class could learn

what fee arrangement the firm proposed when it sought

appointment. In response to the objections, class counsel

stated that it would have been awarded twelve to thirteen

percent of the first-round settlement fund pursuant to what it

called its “fee proposal structure.” Class counsel also argued

that Erwin and his attorney were professional objectors with

suspect motives.

The district court held a fairness hearing in December

2016 to consider the first-round settlements. With minor

modifications, the court adopted class counsel’s proposed

order granting final approval of the $124.5million settlement,

as well as the requested fees and separate litigation expenses. 

The district court did not require that counsel unseal its

original bid, and it overruled all objections in an order that

stated the “original fee structure does not apply.” The order

suggested the firm’s proposal had not contemplated that it

would have to litigate a second motion for class certification

and multiple appeals to the Ninth Circuit. One objector

appealed the approval of the first settlement: Christopher

Andrews. Three objectors appealed the order awarding fees

and expenses for the first settlement: Erwin, Andrews, and

Barbara Cochran.

While the appeal of the first-round settlements was

pending, the underlying ODD litigation continued, and in

2017, the class entered into a second round of tentative

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IN RE OPTICAL DISK DRIVE PRODS. 13

settlement agreements with three additional groups of

affiliated defendants (PLDS, Pioneer, and Teac). The

second-round settlements resulted in an additional $55.5

million common fund.4 Class counsel moved for a fee award

of twenty-one percent of the common fund, or $11.655

million. The motion stated this was equivalent to a lodestar

multiplier of 1.53 for the cumulative fee award (a

$42,905,000 fee for the 76,772 attorney and non-attorney

hours that generated the cumulative, $180 million, common

fund). The motion also requested $1,368,718.95 for litigation

expenses incurred after the first-round settlements. As

before, the firm’s fee motion did not state that its request

diverged from its original fee and expense proposal. Several

objections were filed, including one by Erwin, who

complained that the class still did not have access to class

counsel’s original bid. Erwin also objected that the second

lodestar cross-check should be limited to the hours invested

since the last fee award, or the additional $3.7 million that

class counsel said it invested after its first motion for fees. 

Erwin measured the requested fee against the $55.5 million

common fund and calculated the second lodestar multiplier at

3.08. In response to the objection that twenty-one percent

was too high, the firm represented that “[u]nder the interim

lead counsel application, the fee guide was 12 percent.”

A second fairness hearing was held in September 2017,

and the district court largely adopted class counsel’s proposed

order approving its second motion for fees and expenses. The

district court again denied Erwin’s request to unseal class

counsel’s fee bid, along with all other objections. The court

4 For the second-round settlements, PLDS contributed $40 million,

Pioneer contributed $10.5 million, and Teac contributed $5 million.

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14 IN RE OPTICAL DISK DRIVE PRODS.

relied on class counsel’s lodestar cross-check, which used the

cumulative lodestar (all time invested) measured against the

total recovery ($180 million), but the court acknowledged

that if the second settlement were viewed in isolation, the

multiplier would be in line with Erwin’s calculation.

Erwin timely appealed the district court’s order awarding

fees and expenses for the second-round settlements. Andrews

objected to the second-round settlement agreements, but did

not assert specific objections to Hagens Berman’s motion for

fees and expenses arising from those settlements. Cochran

did not object to the second-round fee award.

Class counsel filed a third motion for fees in 2018 after

the IPP class reached settlement agreements with two

additional defendant groups (Samsung and Toshiba). At the

third fairness hearing, the district court stated that it had been

unable to find Hagens Berman’s bid in the court files and

directed the firm to submit a copy of the bid for in camera

review. The order approving Hagens Berman’s third fee

request was issued two weeks later, and it acknowledged that

the previous awards had been “substantially higher than . . .

the terms of [the firm’s] proposal.” The order partially

granted Erwin’s request to unseal class counsel’s bid,

requiring counsel to file the single page of the bid showing

the sliding-scale fee grid. The third order observed that

Hagens Berman’s original bid “offered to accept

representation on the terms that no separate expense award

would be made on top of any percentage-based fee award,”

and denied class counsel’s request for expenses “in light of

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IN RE OPTICAL DISK DRIVE PRODS. 15

the total fee and expense recovery to date, and given that

Hagens Berman obtained the right to represent IPPs in part as

a result of the payment structure it proposed.” The order

approved the requested twenty percent fee, an additional

$5 million.

Six months later, Hagens Berman filed on the public

docket the single page of its bid showing the fee grid, but

other portions of its fee application remain under seal.5 The

objectors who appealed the firm’s fee and expense awards

arising from the first- and second-round settlements did not

have access to the sliding-scale fee grid when they briefed the

issues on appeal, but they did have the grid by the time oral

argument was held before our court.

In a separately filed memorandum disposition, we affirm

the district court’s approval of the first- and second-round

settlements. This opinion addresses the appeals filed by

Erwin,Andrews, and Cochran arising fromthe district court’s

awards of fees and litigation expenses for these settlements.6

Objections to the third-round fee award are also addressed in

a separate memorandum disposition.

5 Class counsel represented to us in a related appeal that the firm’s bid

was filed within twenty-four hours after the third fairness hearing. It may

be that, within twenty-four hours, the firm submitted a copy of the bid in

response to the district court’s request for in camera review, but the single

page of the bid that the court ordered unsealed did not appear on the

public docket until six months after the third fairness hearing.

6 All arguments raised by Cochran that we do not address here are

deemedwaived because they were either inadequately briefed or raised for

the first time on appeal. See Yamada v. Nobel Biocare Holding AG,

825 F.3d 536, 543 (9th Cir. 2016).

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16 IN RE OPTICAL DISK DRIVE PRODS.

II.

“[W]e review for abuse of discretion the district court’s

award of attorney’s fees and costs to class counsel as well as

its method of calculating the fees.” In re Hyundai & Kia Fuel

Econ. Litig., 926 F.3d 539, 556 (9th Cir. 2019) (en banc). 

The factual findings underlying these decisions are reviewed

for clear error. Id. “In order for this [c]ourt to conduct a

meaningful review of the fee award’s reasonableness, . . . the

district court must ‘provide a concise but clear explanation of

its reasons for the fee award.’” Stanger v. China Elec. Motor,

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

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

III.

Courts must ensure that attorneys’ fees awarded pursuant

to Federal Rule of Civil Procedure 23(h) are reasonable. In

re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 949 (9th

Cir. 2015). This duty exists independent of any objection

from a member of the class. Zucker v. Occidental Petroleum

Corp., 192 F.3d 1323, 1328–29 (9th Cir. 1999). District

courts have discretion to choose which method they use to

calculate fees, but their discretion must be exercised to reach

a reasonable result. In re Bluetooth Headset Prods. Liab.

Litig., 654 F.3d 935, 942 (9th Cir. 2011). We have approved

fee awards in class litigation using either the lodestar method

or the percentage-of-recovery method. Hyundai, 926 F.3d

at 570. And we have encouraged courts using the percentageof-recovery method to perform a cross-check by applying the

lodestar method to confirm that the percentage-of-recovery

amount is reasonable. Online DVD-Rental, 779 F.3d at 949.

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IN RE OPTICAL DISK DRIVE PRODS. 17

Because the relationship between class counsel and class

members turns adversarial at the fee-setting stage, district

courts assume a fiduciary role that requires close scrutiny of

class counsel’s requests for fees and expenses from the

common fund. Vizcaino v. Microsoft Corp., 290 F.3d 1043,

1052 (9th Cir. 2002); see also In re Mercury Interactive

Corp. Sec. Litig., 618 F.3d 988, 994 (9th Cir. 2010) (“As a

fiduciary for the class, the district court must ‘act with a

jealous regard to the rights of those who are interested in the

fund in determining what a proper fee award is.’” (internal

quotation marks omitted) (quoting In re Wash. Pub. Power

Supply Sys. Sec. Litig., 19 F.3d 1291, 1302 (9th Cir. 1994)

(“WPPSS”))); 4 William B. Rubenstein, Newberg on Class

Actions § 13:40 (5th ed. 2012).

In Vizcaino, we identified several factors courts may

consider when assessing requests for attorneys’ fees

calculated pursuant to the percentage-of-recovery method:

(1) the extent to which class counsel achieved exceptional

results for the class; (2) whether the case was risky for class

counsel; (3) whether counsel’s performance generated

benefits beyond the cash settlement fund; (4) the market rate

for the particular field of law; (5) the burdens class counsel

experienced while litigating the case; (6) and whether the

case was handled on a contingency basis. 290 F.3d

at 1048–50; see also Online DVD-Rental, 779 F.3d

at 954–55.

Vizcaino did not establish an exhaustive list of factors for

assessing fee requests calculated using the percentage-ofrecovery method, but district courts have frequently referred

to the factors it identified when considering fee awards for

class counsel. See Online DVD-Rental, 779 F.3d at 955. 

Ultimately, district courts must ensure their fee awards are

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18 IN RE OPTICAL DISK DRIVE PRODS.

“supported by findings that take into account all of the

circumstances of the case.” Vizcaino, 290 F.3d at 1048; see

also id. at 1050 (affirming fee award where “the district court

considered the relevant circumstances”). Vizcaino recognized

that in some class action litigation, “lawyers compete for lead

counsel status and may even bid in a court-supervised

auction,” but because counsel in Vizcaino had not submitted

that type of fee proposal, our court did not have occasion to

consider how or whether such a bid should factor into the

analysis when requests for fees and expenses are considered. 

Id. at 1049. Nor has our court had such an occasion since

Vizcaino.

7

IV.

Class counsel’s motion for fees and expenses was

submitted over six years after Hagens Berman was appointed

interim class counsel, and nearly 2,000 district court docket

entries later, but it included just one reference to counsel’s

bid: “Had this case been successfully certified originally

according to typical proceedings projected at the outset of the

case, [Hagens Berman]’s lodestar and total attorneys’ fees for

resolution at that stage would have been less.” A twentypage attorney declaration accompanied the fee motion, but

the closest it came to mentioning the fee bid was the

7 Counsel and the named plaintiffs in Vizcaino had entered into

retainer agreements “promising to pay class counsel 30% of any

recovery.” 290 F.3d at 1049. The court noted that “[w]here evidence

exists . . . about the percentage fee to which some plaintiffs agreed ex

ante, that evidence may be probative of the fee award’s reasonableness.” 

Id. at 1050. The circumstances here are different because counsel made

representations about its proposed fee structure directly to the district court

in a competitive bidding process. Its fee bid remained under seal at the

time objectors had an opportunity to weigh in on the motion for fees.

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IN RE OPTICAL DISK DRIVE PRODS. 19

acknowledgment that “Judge Walker appointed Hagens

Berman as sole lead counsel on behalf of the indirect

purchaser class in a contested leadership fight.”

The motion for attorneys’ fees and litigation expenses

arising fromthe first-round settlements requested twenty-five

percent of the common fund, approximately double the

amount called for by the firm’s fee bid. Perhaps mindful that

we have said a twenty-five percent benchmark may be “of

little assistance” in megafund cases, Vizcaino, 290 F.3d

at 1048, the fee motion acknowledged that the request was

“not per se valid,” Online DVD-Rental, 779 F.3d at 955. But

the motion argued that each of Vizcaino’s enumerated factors

supported the requested award.

Erwin, Andrews, and Cochran objected to the first-round

request for fees and expenses on various grounds, and Erwin

sought disclosure of the sealed bid. Erwin argued that the

class had no way of knowing whether a fee less than twentyfive percent had been proposed at the competitive bidding

stage. In response, class counsel disclosed that the firm

would have been awarded “12 to 13 percent” of the recovery

pursuant to its proposed fee structure, and also identified the

four stages of litigation on one axis of its fee grid: “(1) From

Pleading Through Decision on Motion to Dismiss; (2) After

Motion to Dismiss Through Adjudication of Class

Certification; (3) After Adjudication of Summary Judgment;

and (4) Through Trial Verdict and Final Appellate

Determination.” Counsel also argued that its original fee

structure did not apply, invoking Judge Walker’s statement at

the outset of the case that there were many “imponderables”

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that could impact the litigation.8 The firm argued that its bid

had not contemplated the possibility that its first motion for

class certification might be denied, that it devoted an

additional two years to successfully litigate a second class

certification motion, and that the period following the denial

of the first certification motion was a period of heightened

risk. Class counsel argued that it invested $5.6 million in

hourly fees during that period, and it drew a favorable

contrast with the outcomes achieved by counsel for DPPs,

who settled after the district court declined to certify the

proposed DPP class.

The firm opposed objectors’ request that the bid be

unsealed, arguing that disclosure of the bid was unnecessary

because the court had a copy of the bid and the class had the

court’s original appointment order.9 The district court

8 Counsel’s reference to “imponderables” quotes Judge Walker’s

appointment order, which used “imponderables” to refer to the fact that

the ultimate size of class recovery was unknowable. It was in this context

that the district court’s appointment order explained that, in holding a

competitive bidding process for prospective counsel, the court

“understood fully that counsel, at this early stage of litigation, have limited

information concerning the probability of a recovery and the amount or

range of such recovery,” and that unlike other types of cases, “potential

recovery . . . in this litigation is subject to a greater variety of

imponderables.” The order observed that Hagens Berman’s bid presented

“a very impressive array of possible recovery scenarios that suggest a high

level of analysis of potential recoveries.”

9

In fact, it appears the district court did not have a copy of the firm’s

bid. The bids submitted by the firms competing for appointment were

filed under seal, and although there were docket entries showing they were

filed, the bids were not available on the public docket. It appears they

were stored separately.

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overruled all objections to the first-round settlements,

approved the request for fees and litigation expenses, and

denied objectors’ request to unseal the bid. This order did not

discuss the variance between the actual amount the court

awarded and the amount class counsel would have received

pursuant to its proposal.

A similar process followed the request for fees and

expenses arising from the second-round settlements. The

motion sought twenty-one percent of the $55.5 million

settlement fund and an additional $1,368,718.95 in litigation

expenses. It discussed why the enumerated Vizcaino factors

supported counsel’s request, but it did not address the bid or

the variance from its proposed fee award, nor identify the

amount that would have been called for had the grid been

followed. Erwin again objected that Hagens Berman’s bid

should be unsealed, and class counsel again responded that

unsealing the bid would benefit the remaining defendants

without providing useful information to the class. The firm’s

response to the objectors represented that it would have been

entitled to a twelve percent award pursuant to its bid.

The district court’s order approving the second fee motion

adopted the firm’s analysis of the Vizcaino factors and

counsel’s arguments in favor of keeping the bid sealed. 

Regarding the firm’s bid, the court’s written order stated that

The proposed order class counsel lodged approving its second-round

fee and expense request included the statement that the district court “did

not request the original proposed fee guidelines.” The district court struck

that line, but the record does not show whether the district court requested

a copy of the bid at that time. As explained infra, the district court stated

during the third fairness hearing that the sealed bid was unavailable in the

court file, and asked class counsel to file a copy.

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“[t]he guidelines submitted at the outset of the case . . . have

remained relevant” because the court awarded less than

counsel’s twenty-five percent benchmark, “even though

absent those guidelines, an argument could be made that the

circumstances here might warrant an upward deviation from

the benchmark.” The order concluded that a lodestar crosscheck “confirms that an upward variance from the original

proposed fee guidelines is amply justified.”10

V.

We begin by considering objectors’ arguments that the

district court abused its discretion by approving Hagens

Berman’s fee requests. On appeal, objectors first argue the

district court erred by not taking into account the size of the

common fund, which they refer to as a “megafund,” when it

determined the appropriateness of the fee request. We have

not identified a bright-line definition for “megafund,” but the

first-round settlements here yielded a $124.5 million common

fund, and there is no question that a common fund of this size

qualifies. See Vizcaino, 290 F.3d at 1047; 5 William B.

Rubenstein, Newberg on Class Actions § 15:81 (5th ed. 2012)

(noting that “[m]ost courts define mega-funds as those in

excess of $100 million”). It is also clear that where a

megafund recovery is achieved, “fund size is one relevant

circumstance to which courts must refer” in determining the

10 With both motions for fees, counsel submitted summaries showing

the total hours worked and hourly rate for each timekeeper to support its

suggested lodestar cross-check. The firm offered to provide the district

court with time records, and one of the objectors argued that billing

records should be filed, but the district court determined that this was

unnecessary. Thus, the court’s references to lodestar cross-checks refer

to class counsel’s summary calculations.

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fee award. Vizcaino, 290 F.3d at 1047. We have cautioned

that the twenty-five percent benchmark referred to in other

cases—and upon which Hagens Berman anchored its fee

requests—“is of little assistance” in megafund cases. Id. at

1047–48 (quoting WPPSS, 19 F.3d at 1297).

Objectors argue that a megafund settlement warrants a

lower fee percentage because “it isn’t ten times as hard to try

a $100 million case as it a $10 million case.” This argument

is consistent with our observation that “in many instances the

increase in recovery is merely a factor of the size of the class

and has no direct relationship to the efforts of counsel.” 

Bluetooth, 654 F.3d at 943 (quoting In re Prudential Ins. Co.

Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 339

(3d Cir. 1998)). Other circuits have made the same general

observation. See, e.g., Wal-Mart Stores, Inc. v. Visa U.S.A.,

Inc., 396 F.3d 96, 122 (2d Cir. 2005) (reasoning that because

“economies of scale could cause windfalls in common fund

cases, courts have traditionally awarded fees for common

fund cases in the lower range of what is reasonable”). 

Consistent with this case law, counsel’s bid for appointment

recognized and employed the same sliding-scale fee grid that

Judge Walker had approved in earlier cases. The bid also

quoted Judge Walker’s observation in Wenderhold II that

“increasing amounts of recovery do not require

correspondingly increased levels of attorney effort.” 

189 F.R.D. at 572.

We agree with objectors’ contention that the district court

was required to consider the size of the first- and secondround settlements, but the record does not support the

objectors’ assertion that the district court overlooked this

factor. During the first fairness hearing, the court recognized

that the percentage-of-recovery awarded as fees typically

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declines as the size of the common fund increases. And when

the second-round settlements generated another $55.5million

common fund, the district court correctly recognized that the

overall recovery had grown to $180 million. We are

persuaded by our review of the record that the district court

considered the size of the two settlements when it assessed

fees and litigation expenses for the first- and second-round

settlements.

Next, Erwin and Cochran urge this court to adopt a new

rule requiring a sliding-scale fee award. Specifically, they

advocate a rule requiring that percentage-based fee awards

must decline as the size of class recovery increases to account

for economies of scale in megafund settlements. But we have

already declined to adopt a bright-line rule requiring the use

of sliding-scale fee awards for class counsel in megafund

cases, and we are bound by circuit precedent. See Vizcaino,

290 F.3d at 1047.

Objectors separately argue that class counsel’s fee grid

was a critical factor in securing appointment as interim class

counsel, and they argue the court erred by failing to consider

it adequately. We agree that the proposed fee grid was a

relevant circumstance the district court was required to

consider, see id. at 1048–1050; Stanger, 812 F.3d at 739, but

the objectors do not persuasively argue that the district court

was bound by it. Objectors’ stronger argument is that the

district court erred by failing to explain adequately the

variance between counsel’s fee grid and the actual awards. 

The variance was significant. Based on class counsel’s

approximation of the percentage that would have been called

for had the grid been applied, Erwin argues that the first fee

award was double what it should have been, and

approximately $21 million too high.

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It is difficult to tell what role the fee bid played in the

district court’s approval of the motions for fees and expenses. 

The record makes clear that Hagens Berman’s proposed fee

structure, while not the lowest-cost proposal, was an

important factor in Judge Walker’s decision to appoint the

firm as interim class counsel. But despite the bid’s

importance in the appointment process, the bid was likely not

available to the court during the first and second fairness

hearings. The district court’s order awarding $31.125 million

in fees from the $124.5 million in first-round settlements

stated that class counsel’s bid “does not apply,” but the

court’s second order awarding $11,655,000 in fees from the

$55.5 million in second-round settlements included the

statement that the firm’s bid “remained relevant.” Finally,

after the court requested a copy of the fee bid at the third

fairness hearing and had an opportunity to review it, the court

declined to award any expenses for the third-round

settlements because class counsel had “obtained the right to

represent IPPs in part as a result of the payment structure it

proposed.”

In the district court, part of class counsel’s rationale in

support of its fee award was its suggestion that it encountered

unanticipated litigation challenges during the course of the

litigation. Counsel cited the initial denial of its first class

certification motion and the need to litigate a discovery

dispute in an interlocutory appeal to our court. The latter was

undertaken jointly with DPPs to affirm the district court’s

order allowing plaintiffs to subpoena records from DOJ’s

criminal investigation.11 The firm cited the need for multiple

11 TSST-Korea, a joint venture between Toshiba and Samsung, and

an anonymous individual were included in telephonic conversations

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26 IN RE OPTICAL DISK DRIVE PRODS.

interimappeals, but only the discovery dispute concerning the

DOJ investigation was litigated on an interlocutory basis—we

denied interlocutory review of the district court’s orders

regarding class certification. See In re Optical Disk Drive

Antitrust Litig., 801 F.3d 1072 (9th Cir. 2015). It appears that

both of these circumstances were contemplated by the stages

of litigation incorporated into the fee grid, which called for a

somewhat increased fee as the case advanced through the

various stages of litigation. If other unexpected difficulties

accounted for the district court’s fee awards, they are not

evident in the orders from which these appeals were taken.

Given this record and the fiduciary duty the court owes to

the class at the fee award stage, we remand the first- and

second-round fee awards for further consideration and

findings. Both parties now agree that the bid is a factor that

must be considered and that the bid may now be unsealed.12

We agree with Hagens Berman that the district court was not

bound by the original bid, but counsel’s continued reliance on

the twenty-five percent benchmark—the firm referred to the

benchmark as “granite” in its briefing on the third-round fee

award—misses the mark. We have expressly stated that this

benchmark is of little assistance in megafund cases. See

Vizcaino, 290 F.3d at 1047–48; WPPSS, 19 F.3d at 1297.

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

recorded during DOJ’s criminal investigation. They sought to quash the

subpoena of these records.

12The memorandumdisposition in Case Number 19-15538 directs the

district court to unseal the bid on remand.

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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. See Stanger, 812 F.3d at 739. We do not endeavor

to create a comprehensive list of circumstances that may

warrant departure from a fee bid, but we note that a district

court would likely not abuse its discretion by departing from

a bid based on circumstances the bid did not contemplate. 

Conversely, departure froma bid based on circumstances that

were known at the time the bid was filed may be an abuse of

discretion given the court’s fiduciary duty to members of the

class. Here, class counsel argues that an upward departure

from its bid was warranted in part because it did not

anticipate the need to litigate a second class certification

motion or interlocutory appeals. Without more, these factors

are insufficient to justify a variance of the magnitude

approved in the first- and second-round fee awards. 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.

VI.

We briefly address other arguments raised by objectors

because the district court is likely to encounter them on

remand.

First, the district court’s orders awarding fees adopted

class counsel’s contention that the DOJ criminal investigation

increased the litigation risk for the IPP class. Cochran and

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Andrews contend that it was error to weigh the DOJ

investigation as a factor that increased the risk of this

litigation, because absent the discovery generated by the

criminal investigation, pursuing this consumer class action

would have required significantly more effort and risk. We

recognize the non-indicted defendants attempted to argue that

they were not civilly liable because they were not subjects of

the criminal investigation, but Hagens Berman did not offer

a plausible explanation in support of its contention that this

circumstance increased the litigation risk. That said, the court

cited other factors that amply supported its determination that

this litigation was very risky. Indeed, the last two nonsettling defendants ultimately prevailed over the class at the

summary judgment stage. See In re Optical Disk Drive

Prods. Antitrust Litig., 785 F. App’x 406 (9th Cir. 2019)

(concluding that the class did not advance sufficient evidence

of “pass-through,” and therefore failed to create a genuine

dispute of material fact as to injury, causation, and damages).

Overall, the district court did not err in assessing the Vizcaino

risk factor.

Second, class counsel’s descriptions of the sliding-scale

fee grid were not entirely consistent. Objectors noted some

of these inconsistencies, but they were not well positioned to

assess whether the discrepancies were significant because the

grid remained under seal. Some of the variables may seem

minor, but they can make a significant difference when

applied to a megafund case. Equally important, given that the

bulk of the fee proposal remains under seal, these

inconsistencies make it difficult for class members to have

confidence that a fair outcome is reached. For example, in its

response to objections raised to the first fee motion, class

counsel stated that its fee grid would have yielded an award

based on twelve to thirteen percent of the recovery. The firm

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IN RE OPTICAL DISK DRIVE PRODS. 29

seems to have reached that estimate by treating each of the

four settlements comprising the first-round recovery as

separate awards, rather than inputting a lump-sum $124.5

million recovery. The text above the grid on the single

unsealed page of the firm’s proposal permits this approach,

but the firm applied the grid differently for the second

fairness hearing. There, it treated the second recovery as a

$55.5 million lump sum rather than plugging in the individual

components that made up the second settlement. Separately,

the firm asserted in a related appeal before our court, No. 19-

15538, that the award for the first-round settlements “would

have been in the range of 12% to 14% . . . had the grid been

dispositive,” rather than twelve to thirteen percent, as it

argued at the first fairness hearing. These discrepancies may

be addressed on remand.

Third, Erwin contends the district court erred by not

considering the role of future settlements when it approved

Hagens Berman’s first fee award. In particular, Erwin argues

that the first award should have been adjusted downward

because additional defendants remained in the case and there

were likely to be additional recoveries. We disagree. No

future settlements were guaranteed when the first settlement

was approved, and the district court was mindful that any

future settlement should take into account the firm’s

cumulative award. The court correctly reasoned that it could

address any potential double-counting if and when future

settlements materialized.

VII.

We next turn to the district court’s award of litigationrelated expenses. The district court awarded $5,073,042.92

in litigation expenses for the first- and second-round

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settlements. By the time this appeal was argued, the district

court had conducted a third fairness hearing, requested that a

copy of the bid be filed, and decided not to award expenses

for the third settlement. The court explained that the firm

“offered to accept representation on the terms that no separate

expense award would be made on top of any percentagebased fee award.” Before our panel, class counsel argued that

the original bid’s reference to “costs” did not encompass all

litigation expenses. Class counsel more specifically pressed

this position when it briefed the district court’s third-round

fee award. There, counsel argued that its original bid

proposed absorbing only the taxable costs, not the much

larger category of nontaxable costs, or litigation expenses. 

Hagens Berman does not identify any language in its original

fee bid that supports this interpretation, and the record

squarely refutes it.13

Hagens Berman’s sealed bid proposed a single award for

attorneys’ fees and costs without specifying taxable or nontaxable costs. Notably, the proposal cited Judge Walker’s

orders in Wenderhold I, 188 F.R.D. 577, and Wenderhold II,

189 F.R.D 570. In Wenderhold I, Judge Walker presided

over seven consolidated securities fraud class actions and

issued an order announcing that the court would select lead

counsel by sealed-bid auction. 188 F.R.D. at 578, 587. The

order specified that firms’ bids should describe their

experience and qualifications, as well as provide evidence

that the applicant had evaluated the securities case at bar,

including the range and probability of recovery. Id.

13 See 5 William B. Rubenstein, Newberg on Class Actions § 16:5

(5th ed. 2012) (observing that the terms “nontaxable costs” and

“nontaxable expenses,” as used in Rule 23(h)(1) and Rule 54(d)(2), are

interchangeable).

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at 587–88. The district court’s order required that the firms’

bids identify the percentage of recovery the firm would

charge in the event of a recovery “as fees and costs for all

work performed in connection with the case set forth on the

Fee Schedule Grid[] affixed as Appendix A” to the order. Id.

at 588. One axis of the grid that appeared on the court’s

Appendix A exactly mirrors the four stages of litigation

reflected in the fee grid Hagens Berman submitted in this

case; the other axis identifies potential common fund

recoveries, from $500,000 up to any amount over

$20,000,000. Id. The sample grid in Judge Walker’s

Appendix A left the fee percentages blank. Id.

In Wenderhold II, Judge Walker issued a second order

explaining that just one bid had been received in response to

the court’s request for proposals, and the court rejected it. 

189 F.R.D. at 571. The defect that rendered the bid

unacceptable was that it called for separate awards of fees and

expenses. Id. at 573. In particular, the court explained that

its first order solicited bids setting forth a percentage to be

charged as fees and costs for all work performed in

connection with the case. Id. at 572. Contrary to the court’s

invitation for bids, the rejected proposal stated that the

bidding firmwould seek separate reimbursement for expenses

out of any fund created as a result of the litigation. Id. at

572–73. The court declined to allow fees and costs to be

“divorce[d],” because it reasoned that such an arrangement

could encourage counsel to categorize as costs “anything that

could conceivably be so considered.” Id. at 573. The district

court viewed computer database and internet connection

charges for research and investigation to be, in varying

degrees, substitutes for attorney or paralegal library work,

document review, and witness interviews. Id. The court

sought to incentivize the least costly mix of inputs, and

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32 IN RE OPTICAL DISK DRIVE PRODS.

concluded “[c]ompensation which covers attorney effort and

all other expenses affords that incentive, while a percentage

award that omits non-attorney expenses does not.” Id.

We express no opinion on the appointment order’s

characterization of reasonable litigation expenses, but recite

the details of Wenderhold I and II to explain that the district

court correctly interpreted Hagens Berman’s bid. The

proposal clearly offered to absorb litigation expenses. The

orders entered in Wenderhold I and II, and the bid’s citations

to those orders, is important context supporting Judge

Walker’s statement that the firm’s bid proposed “one fee that

covers both compensation of attorneys [fees] and

reimbursement of attorneys’ out-of-pocket expenses.” Judge

Seeborg interpreted counsel’s bid the same way when he

described the firm’s bid as an offer “to accept representation

on the terms that no separate expense award would be made

on top of any percentage-based fee award.”

Though we agree with this part of the court’s

interpretation of the bid, the record is unclear about whether

the district court had the opportunity to take this into account

when it reviewed the expense requests associated with the

first two settlement rounds. Objectors did not have the

information necessary to squarely raise this issue before the

district court, but the fiduciary duty we owe to the class

requires that this case be remanded so the class may be

assured the issue is considered.

VIII.

District courts enjoy broad discretion to determine

reasonable fee awards, but the size of the variance between

the bid and the awards in this case requires more explanation. 

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IN RE OPTICAL DISK DRIVE PRODS. 33

More detailed findings are particularly important because the

bid remained under seal, putting objectors at a disadvantage

in trying to assess the reasonableness of the fees. Separately,

we reject class counsel’s assertion that it did not offer to

absorb litigation expenses. Therefore, we vacate the district

court’s award of fees and litigation expenses arising from the

first- and second-round settlements, and remand to the district

court for further proceedings consistent with this opinion.

VACATED AND REMANDED.

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