In the

United States Court of Appeals

For the Seventh Circuit

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No. 04-3140

DANIEL JT TAUBENFELD and

RAIZEL TAUBENFELD,

Plaintiffs-Appellees,

v.

AON CORP.,

Defendant-Appellee.

Appeal of: HANNAH FELDMAN

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Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 02 CV 5631—Harry D. Leinenweber, Judge.

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ARGUED MARCH 30, 2005—DECIDED JULY 5, 2005

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Before BAUER, RIPPLE, and KANNE, Circuit Judges.

KANNE, Circuit Judge. On August 8, 2002, the first of ten

class action lawsuits alleging that Aon Corporation had

violated federal securities laws was filed in the Northern

District of Illinois. In October 2002, the court appointed

Caldwell & Orkin, Inc., as the lead plaintiff for the consolidated actions. Caldwell & Orkin had no retainer agreement

in place with its chosen lead council, Shiffrin & Barroway.
2 No. 04-3140

The parties reached a settlement agreement on April 14,

2004. After a fairness hearing on July 27, 2004, the court

approved the $7.25 million settlement, which provided

recovery of $0.053 per share of Aon common stock before

fees and expenses.

The class was given written notice of this settlement

agreement and informed of members’ right to file objections

to it. On the subject of attorneys’ fees and expenses, the

notice stated that lead counsel intended to apply for “fees of

up to 33 and 1/3 percent (33.3%) of the Settlement Fund,

and for reimbursement of expenses incurred in connection

with the prosecution of this Action in the approximate

amount of $100,000.” (R. 38, Ex. A.1 ¶ 7.) Hannah Feldman

was the lone class member to object to the settlement

agreement. She alleged both inadequate notice and excessive fees relative to the level of success achieved by the

class. The district court overruled her objection and

awarded lead counsel the fees and expenses it requested:

30% of the settlement fund plus $111,054.06 in expenses.

Feldman does not appeal the district court’s ruling on

adequacy of notice, arguing now only that the fees and expenses awarded to lead counsel were excessive. Her primary

argument is that the district court’s method for determining

proper attorneys’ fees and expenses was improper under In

re Synthroid Marketing Litigation, 264 F.3d 712 (7th Cir.

2001) (“Synthroid I”). In that case, we reiterated that “when

deciding on appropriate fee levels in common-fund cases,

courts must do their best to award counsel the market price

for legal services, in light of the risk of nonpayment and the

normal rate of compensation in the market at the time.” Id.

at 718; see also Florin v. Nationsbank of Ga., N.A., 34 F.3d

560, 565 (7th Cir. 1994) (directing district court to determine fair attorneys’ fees in class action by considering the

probability of success at the outset of litigation); In re

Continental Ill. Sec. Litig., 962 F.2d 566, 572 (7th Cir. 1992)

(“The object in awarding a reasonable attorney’s fee . . . is
No. 04-3140 3

to give the lawyer what he would have gotten in the way of

a fee in an arm’s length negotiation, had one been feasible.”). Although is it impossible to know ex post exactly what

terms would have resulted from arm’s-length bargaining ex

ante, courts must do their best to recreate the market by

considering factors such as actual fee contracts that were

privately negotiated for similar litigation, information from

other cases, and data from class-counsel auctions. Synthroid

I, 264 F.3d at 719. In this case, Feldman argues, the district

court’s consideration of the Synthroid I factors was inadequate and amounted to a “benchmark” approach in which

counsel is awarded exactly what attorneys in other cases

were awarded, regardless of the risk present or result

achieved in this particular case.

Unfortunately for the objector, she did not articulate her

argument regarding fee-setting methodology to the court

below. Instead, she cited only the lower court’s Synthroid

opinion (on remand from Synthroid I) for the fact that bids

as low as 15% for contractual attorneys’ fees have been observed in cases where law firms participated in an auction

for the position of lead counsel. See In re Synthroid Mktg.

Litig., 201 F. Supp. 2d 861, 873 (N.D. Ill. 2002), aff’d in part

and vacated in part by 325 F.3d 974 (7th Cir. 2003)

(“Synthroid II”). Feldman’s written objection contained

conclusory allegations that 33% of the settlement fund

would be a “grossly excessive” fee in light of the “very poor

settlement obtained for the class,” but did not address or

propose a proper fee-setting methodology. (R. 41.) Even

when asked point blank for an elaboration of the objection

to attorneys’ fees at the fairness hearing, Feldman’s counsel

did not raise the argument that the court had not ade-
4 No. 04-3140

1 The transcript reads as follows:

THE COURT: Counsel, your objection?

MR. BOGOT: Your Honor, I really don’t have much more to

add than what is in our brief. In some cases thirty percent is

reasonable. It depends on the case. Considering the amount of

settlement here, I think there are grounds to object but I will

just stand on our objection.

(Tr. at 10.)

quately re-created the market in assessing fees.1 Thus,

Feldman has waived the argument that the district court

did not comport with the methodology mandated by

Synthroid I in granting attorneys’ fees. See, e.g., Heller v.

Equitable Life Assurance Soc’y, 833 F.2d 1253, 1261-62 (7th

Cir. 1987) (“On numerous occasions we have held that if a

party fails to press an argument before the district court, he

waives the right to present that argument on appeal. . . . As

we have made clear, it is axiomatic that arguments not

raised below are waived on appeal.”) (citations and quotation marks omitted).

Noting that lead counsel’s memorandum to the district

court in support of its application for fees and expenses

contained an analysis of the strength of the class’s case,

data on fees awarded in other class actions in the jurisdiction, and evidence of the quality of legal services rendered—

the same type of evidence needed to mimic the market per

Synthroid I—we decline to undertake the de novo review of

the procedure used to arrive at the award to which the

objector would have been entitled if she had not waived the

argument. See Harman v. Lyphomed, Inc., 945 F.2d 969,

973 (7th Cir. 1991).

We proceed to review the award for abuse of discretion;

under that standard, the award must be reversed if it cannot be rationally supported by the record. See id. As we said

in Harman, “[d]istrict courts are far better suited than
No. 04-3140 5

appellate courts to assess a reasonable fee in light of the

case’s history.” Id. In this case, the district court based its

decision on a number of factors adequately supported by the

record.

First, the court considered awards made by courts in

other class actions. Lead counsel submitted a table of thirteen cases in the Northern District of Illinois where counsel

was awarded fees amounting to 30-39% of the settlement

fund. (R. at 44.) These data are relevant for purposes other

than “benchmarking” as defined by the objector; attorneys’

fees from analogous class action settlements are indicative

of a rational relationship between the record in this similar

case and the fees awarded by the district court.

The district court also evaluated other factors in its decision on attorneys’ fees. It considered the quality of legal

services rendered and the contingent nature of the case.

The court found that lead counsel was taking on a significant degree of risk of nonpayment with the case. (Tr. at 11

(“[T]he Court believes that counsel adequately pressed this

suit and took it on a contingent basis. [In t]hese cases,

obviously, [it is] not easy to prove securities fraud. You have

to prove fraud. Usually it’s negligence rather than fraud.”).)

Indeed, an SEC investigation essentially cleared Aon of any

perceived wrongdoing and bolsters the finding that this was

not an “easy” case for lead counsel. (R. at 44.) Given the

legal hurdles that lead counsel faced in proving liability, the

$7.5 million settlement obtained for the class at a relatively

early point in time also seems reasonable and bears a

rational relationship to the amount of attorneys’ fees

awarded. See Donovan v. Estate of Frank E. Fitzsimmons,

778 F.2d 298, 309 (7th Cir. 1985) (noting the risk of losing

on the merits and the time value of money among the

factors to be considered in evaluating the reasonableness of

a settlement). In light of this record, it cannot be said that

there is no evidence supporting the attorneys’ fees granted

in this case or that the district court abused its discretion

in making the award.
6 No. 04-3140

The objector’s quarrel with the portion of lead counsel’s

award pertaining to reimbursement for expenses barely

warrants comment. Feldman argues that the class was only

given notice for fees in the amount of $100,000, but lead

counsel was actually awarded $111,054.06. Again, Feldman

did not make this argument in the district court and has

thus waived it. See, e.g., Heller, 833 F.2d at 1261-62.

Moreover, this argument would have been meritless; notice

was given for expenses “in the approximate amount of

$100,000” and the amount awarded is in fact “approximately” that much.

For the foregoing reasons, lead counsel’s award for fees

and expenses is AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—7-5-05