PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 21-2093

ARTEM V. GELIS; BHAWAR PATEL; ROBERT MCDONALD; JAMES V. OLSON; GREGORY HEYMAN; SUSAN HEYMAN; DEBRA P. WARD; DARRIAN STOVALL; ALEX MARTINEZ; AMANDA GOREY;

CHRIS WILLIAMS; AS HOK PATEL; KENNETH GAGNON; MICHAEL CERNY; MARIA MEZA; ANDRE MALSKE; NICOLE GUY; DAVID RICHARDSON; STACEY TURNER; ERIC T. ZINN, individually and on behalf of all others similarly situated

v.

BMW OF NORTH AMERICA, LLC,

Appellant

Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 2-17-cv-07386)

Magistrate Judge: Cathy L. Waldor2 Argued on June 7, 2022

Before: AMBRO, RENDELL, and FUENTES, Circuit Judges

(Opinion Filed: September 9, 2022)

Christopher J. Dalton (Argued) 550 Broad Street, Suite 810 Newark, NJ 07102

Jacqueline M. Weyand Buchanan Ingersoll & Rooney 640 5th Avenue, 9th Floor New York, NY 10019 Counsel for Appellant

Jay I. Brody Gary S. Graifman (Argued)
Kantrowitz Goldhamer & Graifman 135 Chestnut Ridge Road, Suite 200 Montvale, NJ 07645

Randee Matloff Bruce H. Nagel (Argued) Nagle Rice 103 Eisenhower Parkway Roseland, NJ 07068

Thomas P. Sobran 7 Evergreen Lane Hingham, MA 02043 Counsel for Appellees3 OPINION

AMBRO, Circuit Judge

After the dust settles in a cl ass action lawsuit, lawyers often remain to squabble over class counsel fees. Trying to avoid that fate, the parties here made an agreement: Appellant BMW of North America, LLC w ould not object to an award up to $1,500,000, and class counsel would not request an award above $3,700,000. BMW now a ppeals the District Court’s approval of a fee award at the upper limit of that range. It argues (1) that the Court’s cal culation of the “lodestar” (essentially a multiplication of the hours counsel reasonably bill on a case by a reasonable h ourly rate) was based on an insufficient record, and (2) that the Court erred in applying a lodestar multiplier to the fee award. We agree with BMW that

the lodestar was based on an insu fficient record and so vacate the District Court’s judgment and remand for further proceedings.

I. Background

This appeal stems from the settlement of a consumer

class action suit filed in 2017 against BMW and its German
parent, 1 claiming they knowingly manufactured and sold vehicles equipped with defectiv e N20 and N26 engines. After the District Court granted in pa rt and denied in part BMW’s

1 The parties later stipulated to the dismissal of BMW’s parent, Bayerische Motoren Werke Aktienges ellschaft, as a defendant.4 motion to dismiss, the named plaintiffs filed a Second Consolidated Amended Complaint bringing 20 causes of

action under federal and state la w, including an alleged breach of warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. (a federal fee-shifting statute), breach of the implied warranty of merchantability, violation of various state consumer fraud and deceptiv e trade practice statutes, and unjust enrichment.

The parties subsequently engaged a mediator and

reached a settlement to reimburs e class members for expenses incurred and provide them extende d warranties. Because they did not know how many consumers would be eligible or make claims for certain benefits, the total value of the settlement was

unknown. The District Cour t nonetheless concluded it was worth at least $27 milli on. As part of the settlement, the parties “agree[d] to submit the issue of at torneys’ fees” to a Magistrate Judge “for final evaluation and decision of the exact amount of

. . . fees . . . that should reasona bly be awarded in this case.”

While the Court would have the final say, the parties decided

to resolve the fee issu e with a “high-low” provision, stipulating

that

Settlement Class Counsel may apply to the Court for an award of attorneys’ fees . . . and [BMW] may object to or oppose that application, although [BMW] will not object to Settlement Class Counsel’s application for an award of attorneys’ fees [of] . . . up to $1,500,0 00 in the aggregate. While not agreeing to the total amount of such an award, the Parties have agreed that Settlement Class Counsel may apply for an5 award of attorneys’ fees . . . not to exceed $3,700,000 in the aggregate.

Id.

Class counsel sought $3.7 m illion in attorneys’ fees, the

maximum allowable under the high-low provision, submitting to the Magistrate Judge three ch arts (one for each plaintiffs’ firm) detailing at a summary le vel the time devoted to various categories of legal work, aggr egated across the entire threeyear litigation period.6 Id. at 218–19.

Id. at 241.7 Id. at 254. In addition, class counsel filed declarations that added more detail about the work completed while still not specifying the time sp ent on particular tas ks, who did those tasks, or the dates they were performed, and d eclarations that described the experience of each lawyer who billed for the case. BMW objected to the ma ximum fee request. It argued, among other things, that (1) class counsel did not provide enough documentation to support the requested lodestar award, and (2) a lodestar multiplier (a fac tor by which a lodestar award is enhanced) was unwarranted here.

The Magistrate Judge held a telephonic hearing. After listening to the parties’ arguments, the Court ruled that the summary charts were “m ore than sufficient” and provided “a good indicator of the time spent.” Id. at 436. Applying the lodestar approach, it adopted cla ss counsel’s requested lodestar8 amount of $1,934,000. It th en applied class counsel’s requested multiplier of 1.9 to re ach a total fee award of $3.7 million—the full amount class counsel sought. BMW now appeals.

II. Standard of Review 2

Though we lo ok anew (or de novo ) at the legal standards used by the Court to calculat e a fee award, “so long as it employs correct standards and procedures and makes findings of fact [that are] not clearly erroneous,” a district court has

discretion to decide the amount of an award. In re Rite Aid Corp. Sec. Litig. , 396 F.3d 294, 299 (3d Cir. 2005) (quoting Pub. Interest Research Grp. of N.J., Inc. v. Windall , 51 F.3d 1179, 1184 (3d Cir. 1995)). We also require that district courts “clearly set forth their reasoning fo r fee awards so that we will

have a sufficient basis to review for abuse of discretion.” Id

. at 301.

III. Discussion

A. Waiver of the right to appeal the District Court’s fee

determination

Before addressing the merits of BMW’s arguments, we address a threshold issue: whether BMW waived its right to appeal the District Court’s attorn eys’ fees ruling through (1) its purported judicial admissions, or (2) by agreeing to submit the issue of attorneys’ fees to the District Court “for final evaluation and decision,” Appx. at 199. We conclude no.

2 The District Court had juri sdiction under the diversity provision of the Class Action Fa irness Act of 2005, 28 U.S.C. § 1332(d). We have jurisdic tion under 28 U.S.C. § 1291.9 As to the former, class coun sel contends the “doctrine of ‘judicial admissions’” bars BMW’s appeal here. Appellee Br. 24 n.18. They point to an exchange between the Court and Christopher Dalton (BMW’s counsel) that occurred immediately after it grante d class counsel’s motion for attorneys’ fees. The Court asked Mr. Dalton if there was “anything you need—or I need to put on the record for your purposes.” Appx. at 437. Mr. Dalton replied: “Your Honor has already gone through her ba ses and rationale for making this determination. We put it in the hands of the Court, and you’ve made your decision, Judge.” Id

.

Case law requires that judicial admissions be “unequivocal” or “deliberate, clear, and unambiguous.” In re Motors Liquidation Co. , 957 F.3d 357, 360 (2d Cir. 2020) (per curiam) (collecting cases). As Mr. Dalton’s statements can be plausibly construed as merely acknowledging the adverse result of the hearing, they do not meet this standard.

Alternatively, class counse l argues BMW waived its right to appeal by agreeing “to submit the issue of attorneys’ fees” to the Magistrate Judge “ for final evaluation and

decision ” of the fee amount “within the $1,500,000 to $3,700,000 range agreed upon by the Parties.” Appx. at 199 (emphasis added). But the plai n language of this provision does not explicitly waive either party’s right to appeal. Rather, it provides only that the District Court would decide the issue after briefing and argument, 3 plus it is silent as to appellate rights.

3 Class counsel also points to non-published decisions from our Court dealing with high-low fee provisions— Vargo v.10 Our inquiry does not end here , however. We must also consider whether BMW waived its right to appeal by not explicitly reserving that right in the agreement. To this, In re Odyssey Contracting Corp. , 944 F.3d 483 (3d Cir. 2019), is

instructive. There we consider ed whether Odyssey waived its right to appeal a bankruptcy court’s determination of a payment dispute in an adversary proceeding. It had signed a stipulation stating that if the Court made a certain determination, “all of the Par ties’ pending claims will be withdrawn and disposed of in their entirety with prejudice,” and the proceeding “shall be deemed to be finally concluded in all respects.” Id . at 487–88. The stipul ation was silent on the specific right to appeal. Id . at 488. After the Bankruptcy Court

made the relevant determina tion, Odyssey appealed the

dismissal of its claims to the Di strict Court and, eventually, our

Court. Id . at 486. We held Odyssey had waived its right to appeal because “the party seek ing to appeal must make its

intent to do so clear at th e time of the stipulation.” Id . at 489.

In that ruling we distingui shed the stipulation in Odyssey from class action settlement cases in which other

Mangus , 94 F. App’x 941 (3d Cir. 2004), and Bryan v. Erie Cnty. Off. of Children & Youth , 637 F. App’x 693 (3d Cir. 2016)—and a New Jersey Supreme Court decision discussing high-low agreements in th e context of jury trials— Serico v. Rothberg , 189 A.3d 343, 349–51 (N.J . 2018). But because the attorneys’ fees provision at i ssue here does not include an unambiguous, explicit waiver of appeal, the Third Circuit cases fall off point. Serico is also out of place, as it merely involved enforcing the upper bound of a high-low agreement according to the agreement’s plain language. Id

.11 circuits have required express waiver of the right to appeal when the parties have stipulat ed that a court will decide a

certain issue. Id

. (citing In re Deepwater Horizon , 785 F.3d 986, 997 (5th Cir. 2015); Montez v. Hickenlooper , 640 F.3d 1126, 1132 (10th Cir. 20 11)). We explained that “[t]he interest

at stake in those cases was different from that at issue” in Odyssey because “[i]n class actions, settlement agreements cannot be approved unless the c ourt determines that they are fundamentally fair, reasonable, and adequate, the purpose of which is to protect unnamed me mbers of the class from unjust

or unfair settlements.” Id . at 489–90 (interna l quotation marks omitted). “[T]hat interest d[id] not apply in [ Odyssey ], which involve[d] a dispute between so phisticated business entities.”

Id . at 490.

As our case presents a situati on closer to the class action cases distinguished in Odyssey , we hold that stipulations regarding attorneys’ fees in class actions must contain an express waiver of appeal. This tracks our case law in this area, which recognizes that the “unique relationship among plaintiffs’ counsel, plaintiffs, and defendants in class actions imposes a special responsibility upon appellate courts to hear challenges to fee awards.” In re Cendant Corp. PRIDES Litig.

, 243 F.3d 722, 728 (3d Cir. 2001). Because BMW did not expressly waive its right to appeal the District Court’s fee determination, it preserved that right.

B. Sufficiency of the record underlying the District

Court’s lodestar calculation

With waiver out of the way, we turn to the merits. BMW argues the District Court granted class counsel’s fee request on an insufficien t record. We agree.12 For context, there are two main ways to calculate attorneys’ fees: the percenta ge-of-recovery method and the

lodestar method. See Cendant , 243 F.3d at 732. The former is as simple as it’s named. “Lod estar,” though, is a term-of-art used by courts to denote an award that is “calculated by multiplying the number of hours [the lawyer] reasonably worked on a client’s case by a reasonable hourly billing rate for such services based on the given geographical area, the nature of the services provide d, and the experience of the attorney[].” Rite Aid , 396 F.3d at 305. These approaches are typically employed in diffe rent contexts. While the “percentage-of-recovery method is generally favored in cases involving a common fund,” the lodestar method, pioneered by

our Court in Lindy Brothers Builders, In c. of Philadelphia v.

American Radiator & St andard Sanitary Corp. , 487 F.2d 161(3d Cir. 1973), “is more commonly applied in statutory feeshifting cases . . . .” In re Prudential Ins. Co. Am. Sales Practice Litig. , 148 F.3d 283, 333 (3d Cir. 1998). The lodestar approach may also be used in cases, such as here, “where the nature of the recovery does not allow the determination of the settlement’s value necessary for application of the percentageof-recovery method.” 4 Id

.

As such, was the District Court’s calculation of the

lodestar award based on a suffi cient record? Our case law requires that “[a]ny hours to be used in calculating attorneys’ fees . . . be detailed with sufficient specificity.” Keenan v. City of Philadelphia , 983 F.2d 459, 472 (1992 ). In other words, the

4 As BMW does not challenge the District Court’s choice to use the lodestar method, we do not question that aspect of its ruling.13 fee application must “be specifi c enough to allow the district

court to determine if the hours claimed are unreasonable for the work performed.” Rode v. Dellarciprete , 892 F.2d 1177, 1190 (3d Cir. 1990) (inter nal quotation marks omitted). The petition

should therefore “include ‘some fairly definite information as to the hours devoted to various ge neral activities, e. g.[,] pretrial discovery, settlement negotiations, and the hours spent by various classes of attorneys, e.g., senior partners, junior partners, associates.’” Keenan , 983 F.2d at 473 (quoting Rode

, 892 F.2d at 1190). “[I]t is not necessary,” however, “to know

the exact number of minutes spent nor the precise activity to

which each hour was devoted nor the specific attainments of each attorney.” Rode , 892 F.2d at 1190 (internal quotation marks omitted).

BMW argues the summary charts submitted by class counsel cannot justify the award because they “do not detail in any explicit manner how the to tal hours worked . . . were generated.” Appellant Br. at 14. In particular, it contends the charts “provided no dates to info rm the District Court of when the task was performed; nor . . . information to show what any specific activity was, how much time was devoted to any specific activity, on any specific date, by which specific individual, for a particular charge.” Id . at 15 (citing Appx. at 218–19, 241, 254) (emphases in original). As an initial observation, we note that the summary charts total only three

pages but purport to summarize hours billed across a threeyear period. And while the charts do provide some information

about the hours devoted to litigation activities (such as “Discovery Activities,” “Pre -Litigation Investigation,” “Drafting Complaints (original/amended)”), the hours billed by each attorney are aggregated across the entir e three-year litigation period. Appx. at 218–19 , 241, 254. That sort of14 aggregation, without more detail, is an insufficient basis for an attorneys’ fee award. 5 See Keenan , 983 F.2d at 473 (portion of fee petition consisting of summari es detailing “only monthly

cumulative totals of [attorney’s] hours” wa s not “sufficiently specific”). 6 We simply cannot discern from the charts whether certain hours are duplicative (a determination that is particularly crucial here, given that three plaintiffs’ firms seek fees for performing the same categories of work) or whether

the total hours billed were reasona ble for the work performed.

In a last-ditch attempt to salvage the award, class counsel asserts they “offer[ed] to provide the [District Court] with several hundred pages of contemporaneous billing records,” but it declined the offer. Appellees Br. at 30. While

5 Class counsel caution against re stricting our review to the summary charts, pointing to, among other things, their declarations “describing discre te tasks engaged in by each firm.” Appellees Br. at 30. But the declarations do not

associate the discrete tasks with particular time-keepers or the time spent on the tasks detailed therein. More fundamentally, there is no way to use those declarations with the summary charts (and other information pr ovided) to discern whether the hours reported by class counsel were reasonable for the work performed.

6 BMW also argues the summary charts “do not comply with the District of New Jersey’s re quirements for fee applications,”

as laid out in that Court’s local rules. See Appellant Br. at 30;

D.N.J. L. Civ. R. 54.2. Wh ile we may overturn a district court’s ruling for failing to abide by its own local rules in some circumstances, see Advanced Fluid Systems, Inc. v. Huber , 958 F.3d 168, 181 (3d Cir. 2020), we need not reach this issue here, as we are overturning the fee aw ard on an altern ative ground.15 not required, “contemporaneously recorded time sheets are the preferred practice.” Keenan , 983 F.2d at 472 (alteration adopted) (quoting Webb v. Cnty. Bd. of Educ. , 471 U.S. 234, 238 n.6 (1985)). And th at preference is especially strong here, where class counsel’s summary charts were so condensed, high-level, and lacking in specif ic detail that we would likely need the underlying billing reco rds to parse them. So class counsel’s mere offer to provi de the District Court more

documentation does not cure the Court’s failure to take counsel up on that offer and review th e complete records. As its lodestar award was thus based on an insufficient record, we vacate its order and remand for further proceedings.

C. The propriety of applying a lodestar multiplier to

the fee award

BMW also argues the District Court improperly applied a lodestar multiplier to class counsel’s fee award. It cites Perdue v. Kenny A. ex rel. Winn , in which the Supreme Court held that “there is a ‘strong pr esumption’ that the lodestar figure is reasonable, but that presumption may be overcome in

those rare circumstances in which the lodestar does not adequately take into account a factor that may properly be considered in determining a reas onable fee.” 559 U.S. 542, 554 (2010). Because Perdue concerned federal fee-shifting

statutes, id . at 547, the parties disagr ee about whether it applies

here. Class counsel maintains Perdue does not govern, as our matter “is not a pure statutory fee shifting case because it encompasses common law counts in cluding unjust enrichment, equitable relief claims, and breach of express and implied warranty counts which survived BMW[’s] motion to dismiss.” Appellees Br. at 38. BMW, on the other hand, contends “multipliers are inappropriate wh ere fees are based on a fee-16 shifting statute, determined by a lodestar calculation, as they were here.” Reply Br. at 11.

As we vacate and remand the District Court’s fee award

because the lodestar calculati on was based on an insufficient record, we decline to decide whether the District Court was bound by the strictures of Perdue in considering a fee enhancement. We do, however, no te two things for the parties

and the Court to consider on remand. First, we think the parties’ focus on the statutes un der which named plaintiffs sued is misplaced, as the “Court awarded the attorney’s fees pursuant to a contract—the settlement agreement—not pursuant to a statute.” In re Home Depot Inc. , 931 F.3d 1065, 1082 (11th Cir. 2019); see also Brytus v. Spang & Co. , 203 F.3d 238, 246 (3d Cir. 2000) (“When there has been a settlement, the basis for the stat utory fee has been discharged, and it is only the fund that remains.”). Second, we urge the District Court on remand to provide additional reasoning for its decision whether to add a lodestar multiplier. In the fee hearing, the Court explained it would add a multiplier of 1.9

because it “is well within approved multip liers in our jurisdiction,” and because the award “falls well within the appropriate Gunter factors.” Appx. at 437 (citing Gunter v. Ridgewood Energy Corp. , 223 F.3d 190 (3d Cir. 2000)). This is not enough reasoning to give us “a sufficient basis to review”

its fee enhancement. Rite Aid , 396 F.3d at 301.

* * *

In their class action settleme nt the parties agreed to

cabin class counsel’s attorneys’ fees reque st within a high-low range, subject to final determina tion by the District Court. Though it granted a fee award at the high end of that range, its calculation was not supported by th e record before it. Because17 we cannot tell whether the hour s class counsel billed were reasonable for the work performed, we vacate the Court’s order

and remand for furt her proceedings.