09-0008-cv MBA V. WORLD AIRWAYS, INC. 

### UNITED STATES COURT OF APPEALS FOR THE SECO ND CIRCUIT SUMMARY ORDER Rulings by summary order do not have precedential effe ct. Citation to a summary order filed on or after January 1, 2007, is p ermitted and is governed by Fe deral Rule of Appellate Pro cedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a do cument filed with this Court, a party must cite either the federal appendix or an electronic database (with the notation “summary order”). A party citing a summary order must serve a copy of it on any party not represented by counsel. At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United St ates Courthouse, 500 P earl Street , in the City of New York, on the 10 th day of March, two thousand ten. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 PRESENT: AMALYA L. KEARSE, ROBERT A. KATZMANN, DEBRA ANN LIVINGSTON , Circuit Judges

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____________________________________________________________ Ijeoma Mba, Rachel Jones, Patience Jones, Plaintiffs-Appellants , -v.- No. 09-0008-cv World Airways, Inc., Defendant-A ppellee , O. Peter Obafemi, Dr., Ritetime Aviation and Travel Services, Inc., Defendants

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____________________________________________________________ 23 24 25 26 27 28 29 30 31 32 33 34 Roger Bennet Adler (O. Benjamin Okeke, of c ounsel), Brooklyn, NY, for Plaintiffs-Appellants

. Malcolm L. Benge, Zuckert, Scoutt & Rasenberger, LLP, Washington, DC (Patrick J. B onner, Freehill, Hogan & Mahar, LLP, New York, NY, on the brief ), for Defendant-Appellee

. David M. Goldhaber, C. Kinnier Lastim osa, Sedgwick, Detert, Moran & Arnold LLP, Chicago, IL, for Amicus Curiae Capitol Indemnity Corporation

.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, AND DECREED that the judgment of the district court be AFFIRMED in part and VACATED and REMANDED in part. Plaintiffs-Appellants Ijeoma Mba, Rachel Jone s, and Patience Jones (“Plaintiffs”) appeal from orders of the United States District Cour t for the Eastern District of New York (Dearie, C.J. ), entered Decem ber 8 and 10, 2008, approving a class settlement between Plaintiffs, other class members, Defendant-Appellee World Airw ays, Inc. (“World Airways”), and Amicus Curiae Capitol Indemnity Corporation, and granting a ttorneys’ fees and expenses to lead counsel only. Plaintiffs argue that the distribution of unpaid settlement funds confers an undue benefit upon World Airways and that members of the plai ntiff class from Nige ria will be unable to receive payment. They also argue that the district court’s awards of attorneys’ fees were abuses of discretion. For th e reasons stated herein, we affir m th e district court’s order approving the settlement but vacate its orde rs granting class counsel Thache r Proffitt & Wood LLP (“Thacher”) $1,355,265.94 in fees and $109,734.06 in costs and Eche ruo, Counsel, Attorneys at Law, LLP (“Echeruo”) $600,000 in fees and denying fees and co sts to O. Benja min Okeke (“Okeke”). We assume the parties’ familiarity with the underlying facts, procedur al history, and specification of the issues on appeal. We review approval of class action settlem ents for abuse of discretion. See Cent. States Se. & Sw. Areas Health & Welfare F und v. Merck-Medco Managed Care, L.L.C. , 504 F.3d 229, 246 (2d Cir. 2007). The district court’s factual c onclusions related to a settlem ent agreement are reviewed for clear error; its lega l conclusions we examine de novo

. Id. at 247. Similarly, with regard to attorneys’ fees, this Court “will not overturn a di strict court’s awar d of attorneys’ fees3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ‘absent an abuse of discretion, such as a mistake of law or a clearly erro neous factual finding.’” In re Nortel Networks Corp. Sec. Litig. , 539 F.3d 129, 134 (2d Cir. 2008) (quoting G oldberger v. Integrated Res., Inc. , 209 F.3d 43, 47 (2d Cir. 2000)). Abuse of discretion is interpreted in a particularly deferential fashion fo r fee decisions, given that the dist r ict court is in a far better position than this Court to ma ke these determ inations. Id. A district court may approve a proposal th at binds class mem bers only “after a hearing and on finding that it is fair, reas onable, and adequate.” Fed. R. Civ. P. 23(e)(2). It m ust also determine that the settlement is not the product of collusion. Grant v. Bethlehem Steel Corp. , 823 F.2d 20, 22-23 (2d Cir. 1987). In order to determin e whether a settlem ent is fair, the district court must look at both the settlement’s term s and the negotiating pro cess leading up to the settlement. D’Amato v. Deutsche Bank , 236 F.3d 78, 85 (2d Cir. 2001). Moreover, a presumption of fairness, adequacy, and reasonabl eness m ay attach as long as there were arm’slength negotiations between experienced counsel after m eaningful discovery. See Wal-Mart Stores, Inc. v. Visa U.S.A., Inc. , 396 F.3d 96, 116 (2d Cir. 2005). To e valuate the substantive reasonableness of a settlement, we apply the Grinnell facto rs: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to th e settlem ent; (3) the stage of the proceedings and the amount of disc overy com pleted; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class a ction through the trial; (7) the ability of the defenda nts to withstand a gr eater judgm ent; (8) the range of reasonableness of the set tlem ent fund in light of the best possible recovery; [and] (9) the range of reasonableness of the settlement fund to a possible recove ry in light of all the attendant risks of litigation. City of Detroit v. Grinnell Corp. , 4 95 F.2d 448, 463 (2d Cir. 1974) (internal citations omitted), abrogated on other grounds by Goldberger , 209 F.3d 43.4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Plaintiffs object to the substance of th e settlement on the ground that World Airways need not pay out the entire co mmon fund a mount if the number of claimants is fewer than 2,050, suggesting that this renders the settlem ent unreasonable and that the district court abused its discretion in approving it. We c onclude otherwise. This Court has held that unclaimed portions of a class action fund in a private action may properly be returned to the defendant. See Van Gemert v. Boeing Co. , 739 F.2d 730, 733, 737 (2d Cir. 1984). Th e history of this case provides no indication that the defendants behaved in a m anner that would make reversion of the unpaid funds to World Airways so inappropr iate as to be an a buse of discretion. Mo reover, to the extent that Plaintiffs requested that the lower court rest r ucture the terms of the settlement agreement to avoid the reversion, we find that the court’s refu sal to do so was not an abuse of discretion. “[T]he district judge generally s hou ld not dictate the terms of a settlement agreement in a class action. Rather, ‘he should approve or disapprove a proposed agreement as it is placed before him and should not take it upon himself to modify its terms[]’ . . . .” In re Agent Orange Prod. Liab. Litig. , 821 F.2d 139, 144 (2d Cir. 1987) (quoting In re War ner Commc’ns Sec. Litig. , 798 F.2d 35, 37 (2d Cir. 1986)). We also find that Plaintiffs’ concerns a bout paym ent to Nigerian class members do not render the settlement unreasonable. Counsel for World Airways indicated at the Fairness Hearing that there were many ways for Nigerian class members to be paid, including payment in dollars and conversion to local cu rrency, and stated that they w ould work to ensure paym ent to those class members if problems arose with payment in dollars. The district court accepted those statements. Plaintiffs have proffered no evid ence oth er than conclusory statements about Nigerian law that would cause this C ourt to disturb that determ ination.5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 We agree with Plaintiffs, however, that th e district court inade quately explained its determinations regarding attorneys’ fees and costs in connection with this settlem ent. In granting attorneys’ fees to the class counsel in this case, Thacher and Echer uo, the district court noted that “[t]he sole opposition is voiced by [Plaintiffs’ counsel] Benjam in Okeke. The stated opposition, however, does not cast any doubt upon the appropriat eness and reasonableness of the fee request. Largely for the reasons stated in the subm ission of Class Counsel, therefore, the Court grants the application and awards the requested fees and disbursem ents.” The district court also noted that “the benefits enjoyed by Class members likely a nd substantially exceed the level of recovery enjoyed by non-class members who ha ve settled their claim s indepe ndently of this litigation.” Two days later, it i ssued an order specify ing that Thacher woul d receive $1,355,265.94 in fees and $109,734.06 in costs and Echeruo $600,000 in fees , amounts that w ere less than the draft invoices provided to the court but tallying w ith the am ounts requested by class counsel. In response to a submission by Plaintiffs suggesting th at “it m ight have been [a]n oversight on the part of the court to render a decision” on the objections to the cl ass settlem ent without discussing the motion for Plaintiffs’ counsel’s fees and co sts, the court handwrote the following: “Counsel is mistaken. The Court considered al l objections Re fees and costs.” When awarding fees to counsel in common fund cases, the basic touchstone that a district court should consider is “what is reasonable und er the circumstances,” Goldberger , 209 F.3d at 47 (internal quotation marks omitted), in light of the gov erning principles that “the fee awarded must reflect ‘the actual effort made by the attorney to benef it the class’ and that a court is ‘to act as a fiduciary who must serve as a guardian of the rights of absent class m embers,’” Cent. States , 504 F.3d at 249 (quoting City of De troit v. Grinnell Corp. , 560 F.2d 1093, 1099 (2d Cir. 1977),6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 abrogated on other grounds by Goldberger , 209 F.3d 43). Factors co nsidered in determining what is reasonable include: “(1) [T]he time and labor expende d by counsel; (2) the m agnitude and complexities of the litigation; (3) the risk of the litigation . . .; (4) the quality of representation; (5) the requested fee in re lation to the settlement; and (6) public policy considerations.” Goldberger , 209 F.3d at 50 (quoting In re Union Carbide Corp. Consumer Prods. Bus. Sec. Litig. , 724 F . Supp. 160, 163 (S.D.N.Y. 1989)). Although this Court is deferential to the dist rict court’s fam iliarity with the case in the setting of fees, “it is important that we ‘be info rm ed by the record of why the district court acted as it did.’” Orchano v. Advanced Recovery, Inc. , 107 F.3d 94, 99 (2d Cir. 1997) (quoting In r e Bolar Pharm. Co. Sec. Litig. , 966 F .2d 731, 732 (2d Cir. 1992) (per curiam)) (internal citations omitted). Although “[t]he district court is not required to ‘set forth item-by-item findings concerning what may be countless objecti ons to individual billing items,’” Haley v . Pataki, 106 F.3d 478, 484 (2d Cir. 1997) (quoting Lunday v. City of Albany , 42 F.3d 131, 134 (2d Cir. 1994) (per curiam)), fee determinations nonetheless requi re “a conscientious and detailed inquiry into the validity of the representati ons that a certain num ber of hour s were usefully and reasonably expended.” Id. (quoting Lunday , 42 F.3d at 134) (internal qu otation mark omitted). In this case, we cannot say that the reasoning of the district court is sufficiently set forth to permit appropriate appellate review. This Court has prescribed two m ethodologies for calculating attorneys’ fees: the lodestar m ethod and the percentage-of-the-fund method. See Goldberger , 209 F.3d at 47. The district court did not officially use either m ethod, nor did it reference in writing the Goldberger factors to determ in e reasonableness. Ra ther, it only adopted the reasoning of the submissions of class counse l, giving them the entire am ount requested. But7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 that request appears to have b een generated by counsel ’s choice to reduce it s billing invoices by some unspecified amount to meet the parameters of the settlement agreement. Moreover, had the district court examined the ex tensive invoices given to it by Thacher, it would have found, a s Plaintiffs correctly point out, th at T hacher was billing for its wo rk on its fee application. This Court has expressly forbidden such billing in comm on fund cases. See Savoie v. Merchants Bank , 166 F.3d 456, 461 (2d Cir. 1999). Given the incentive structure of comm on fund cases, which provides attorneys with the “tem ptation . . . to agree to a le ss than optimal settlement ‘in exchange for red-carpet treatmen t on fees’” and class m embers with little to gain from objecting, the district court must guard th e rights of the clas s with zeal. Goldberger , 209 F.3d at 53 (quoting Weinberger v. Great N. Nekoosa Corp. , 925 F.2d 518, 524 (1st Cir. 1991 )). Part of that process requires the court explicitly to set forth its reasons for a fee award. Similarly, we find that the district court inad equately explaine d its decision to deny attorneys’ fees to Plaintiffs’ counsel, Okeke. Although a district court may deny an application for a percentage of the recovery, decisions doing so in the past have been based on and upheld due to “extensive findings with re spect to [the attorney’s] time a nd efforts in the case,” findings supporting a conclusion that these efforts “did not ultim ately benefit the settlement fund.” Cent. States , 504 F.3d at 250 (emphasis omitted). Here the record contains no evidence of such findings. In short, because the objections raised by the Plaintif fs to the disposition in the settlement agreement of unclaimed funds and to the arra ngem ents for the payment of Nigerian class members do not render the settlement unreasonable or its approval an abuse of discretion, we affirm the district court’s order approving the settlem ent. Because, however, we find that the8 1 2 3 4 5 6 7 8 9 10 11 12 district court failed to provide sufficient grounds for its orders granting class counsel Thacher $1,355,265.94 in fees and $109,734.06 in costs and Ec heruo $600,000 in fees and denying fees and costs to Okeke, we vacate thos e orders and rem and to the distri ct court for further findings. We have reviewed all arguments not otherwis e discussed in this summ ary order and find them to be moot or without merit. For the foregoi ng reasons, the judgm ent of the district court is hereby affirmed in part and vacated and remanded in part.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk