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

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

SAN FRANCISCO REGIONAL CENTER 

LLC, et al.,

Defendants.

Case No. 17-cv-00223-RS 

ORDER AWARDING FEES

I. INTRODUCTION

The Securities and Exchange Commission filed this civil enforcement action in January of 

2017. In some respects, however, its roots go back to a 2015 state court action filed by a private 

plaintiff, Allan Young, who initially brought claims only in his individual capacity, but later 

pursued derivative claims on behalf of some of the entities eventually named as defendants in this 

action. Young’s amended state court complaint also asserted adversarial claims against some of 

the other entities named as defendants or relief defendants here. Young was represented in the 

state court proceedings by Pritzker Levine LLP.

Pritzker obtained appointment of a receiver in the Young action. When the SEC 

subsequently filed this action and moved for appointment of a receiver and a stay of all other 

pending litigation, Pritzker opposed the motion, asserting that the SEC sought to “steal away 

proceeds obtained by [a] separately-appointed state court receiver, and to add those proceeds to its 

own federal receivership estate.” The firm argued against a stay of the state court action, and 

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 1 of 9
CASE NO. 17-cv-00223-RS

2

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

28

United States District Court

Northern District of California

suggested that, if a federal receivership were necessary, there be two receiverships, one in federal 

court, and a continuation of the state court receivership.

The motion to appoint a receiver in this case was granted. Young’s proposal for a “dual 

receivership” was rejected. Susan L. Uecker, the state court receiver was named as the federal 

receiver, all state court litigation was stayed. Approximately $25.2 million was transferred from 

the state receivership to the federal receivership. The federal receivership also later received 

approximately $1.55 million from sale of a commercial property that had been initiated during the 

state court proceedings.

Now, nearly six years later, after many complex transactions, extensive contested and 

uncontested motion practice, settlements, and appeals, the receivership is on the verge of 

completion. The only substantial issue remaining is the amount of fees to be awarded to Pritzker 

for its efforts in the Young matter. The Ninth Circuit has ruled that Pritzker is entitled to a 

“reasonable award of attorney fees under the “common fund” doctrine “in light of [its] 

contributions.” The award is to be treated as an administrative claim.

Pritzker requests an award of $2,669,449.00, which represents 10% of the amount it 

contends is the “common fund.” Alternatively, Pritzker suggests that applying a multiplier of 1.98 

to its “lodestar” would be reasonable and would result in the same award.

Under all the circumstances present here, the lodestar approach is the best method for 

ensuring Pritzker receives a reasonable fee award for its contributions to the ultimate recovery by 

the injured investors. Furthermore, the SEC’s proposal to disallow recovery for certain aspects of 

Pritzker’s work is foreclosed by the Ninth Circuit’s prior ruling. No multiplier, however, is 

warranted. As Pritzker has adequately shown that its hourly rates and time expended were 

reasonable, it will be awarded its full lodestar of $1,346,204.75, together with reimbursement of 

$30,800.54 in litigation expenses.

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 2 of 9
CASE NO. 17-cv-00223-RS

3

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

28

United States District Court

Northern District of California

II. DISCUSSION

A. Preferability of lodestar approach

When Pritzker first sought a fee award in 2020, the parties all agreed this was a unique fact 

situation and that there was no law directly on point. The Ninth Circuit has now held that 

“Pritzker’s efforts in the state court litigation—which included filing the case, obtaining the 

appointment of a receiver, working closely with the receiver in amassing the receivership fund, 

and defending the fund against various claims— undeniably caused the creation, discovery, 

increase, or preservation of a common fund that benefited investors at the conclusion of the federal 

action” and that it is therefore entitled to recover fees under the common fund doctrine. 

Nevertheless, this remains a highly unusual fact situation. Pritzker obtained the prejudgment 

remedy of a receivership in a separate litigation where it was first acting on behalf of a single 

client. Then, even after it brought derivative claims that would inure to the benefit of some of the 

investors who shared in the recovery achieved in this action, it had also named as adversarial 

defendants a number of entities associated with others of the investors.

As the prior order denying fees recognized, and the Ninth Circuit held, the mere fact that 

Pritzker did not obtain a judgment that benefited the investors does mean it failed to “create, 

discover, increase or preserve a fund to which others also have a claim.” Vincent v. Hughes Air W., 

Inc., 557 F.2d 759, 769 (9th Cir. 1977). Quoting Vincent, the Ninth Circuit observed, “the 

common fund doctrine requires that the work of the attorney seeking an extra fee be a cause-infact of any claimed benefit to the fund, but not the only cause-in-fact.” 

Here, Pritzker’s work was only one part of a multi-year and complex effort by numerous 

parties, including the SEC and its counsel, and the receiver and her counsel, to marshal and 

preserve the assets and to obtain the settlements and liability determinations necessary to allow the 

fund to be distributed to the investors. Thus, while Pritzker’s efforts were a cause-in-fact of the 

investors’ recovery, it would be wholly inappropriate to start the calculation of a reasonable fee 

from the ordinary 25% of the common fund “benchmark.”

In recognition of that fact, Pritzker instead proposes it be awarded 10% of the amount that 

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 3 of 9
CASE NO. 17-cv-00223-RS

4

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

28

United States District Court

Northern District of California

was transferred from the state court receivership to the federal receivership, inclusive of sales 

proceeds that came in shortly thereafter. While abundant caselaw has established the 25% 

benchmark in typical cases, there is no precedent establishing a presumptively reasonable 

percentage in circumstances like these. 

“Where a settlement produces a common fund for the benefit of the entire class, courts 

have discretion to employ either the lodestar method or the percentage-of-recovery method.” In re 

Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 942 (9th Cir. 2011). The Bluetooth court 

explained, “[b]ecause the benefit to the class is easily quantified in common-fund settlements, we 

have allowed courts to award attorneys a percentage of the common fund in lieu of the often more 

time-consuming task of calculating the lodestar.” Id.

Here, the SEC vigorously disputes that the size of the “common fund” for which Pritzker 

can take credit is even quantifiable. Although the SEC’s points have considerable merit, even 

assuming Pritzker is responsible for the “creation, discovery, increase, or preservation of a 

common fund” in the amount it claims, it does not follow that the “benefit to the class” can be 

easily quantified as that same number. Just as the SEC’s efforts to recover for investors might 

have gone for naught had Henderson and his associates stripped away all of the value in the 

companies prior to appointment of the state receiver, the mere marshalling of assets by the 

receiver would have done the investors no good had the SEC not worked to establish liability and 

obtain the settlements and judgments necessary to distribute the funds to the investors. Without 

liability determinations against defendants, the assets in the hands of the receiver would have 

eventually been returned to them, not to the investors.

Bluetooth cautions that although courts have discretion to choose between a percentage-offund calculation or the lodestar method, “their discretion must be exercised so as to achieve a 

reasonable result.” 654 F.3d at 942. As an example, the court suggests that where awarding 25% 

of a “megafund” settlement “would yield windfall profits for class counsel in light of the hours 

spent on the case” either the benchmark must be adjusted or the lodestar approach should be 

applied.” Id. While the issue here is not a “megafund” settlement, awarding an arbitrary 10% of 

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 4 of 9
CASE NO. 17-cv-00223-RS

5

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

28

United States District Court

Northern District of California

the amount of the funds in the hands of the receiver at the time of the transfer and the subsequent 

sales proceeds is not a reasonable result.

Finally, although the receiver now supports an award to Pritzker in the amount it requests, 

her original position was that it should only receive the lodestar, with no multiplier. See Dkt. No. 

758. Pointing to the Ninth Circuit’s conclusion that the fee award should be allowed as an 

administrative claim, the receiver suggests the court “appears to have rejected” her position. The 

receiver concedes, however, that the Ninth Circuit “did not specifically address this point,” and it 

is unclear why she believes the ruling that fees be allowed as an administrative claim has any 

bearing on the amount that is appropriate to award. Indeed, the Ninth Circuit expressly remanded 

“for a determination of a reasonable award in light of Pritzker’s contributions.” (Emphasis added.)

The receiver candidly acknowledges she is supporting the fee claim now in large part 

because of the value to all involved, especially the investors, of having a final resolution in this 

case. Even assuming the SEC is less likely to appeal an award in the full amount requested than 

Pritzker is to appeal a smaller award, the expediency of simply granting the motion in full is not a 

factor that bears on whether the fee is reasonable.1 

B. Lodestar calculation

1. Hours expended

Pritzker has submitted 109 pages of detailed time entries demonstrating the work its 

attorneys and paralegals performed in connection with the Young case. Pritzker declares that it has 

excised from its fee request (1) all time spent solely in connection with Young’s individual claims, 

1 As noted in a prior order, all the relevant actors remaining in this litigation have at least some 

duty to see this matter brought to a final conclusion as expeditiously and economically as possible 

and it plainly would not be in the interest of the receivership estate or the individual investors to 

face the expense and delay of another appeal. For that reason, the parties were ordered to engage 

in additional meet and confer negotiations. On their own initiative, the parties requested the 

assistance of a magistrate judge. Although those efforts proved unsuccessful, they were 

appreciated.

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 5 of 9
CASE NO. 17-cv-00223-RS

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

26

27

28

United States District Court

Northern District of California

(2) all time monitoring this action after the stay of the state court action was entered, (3) all time 

preparing the firm’s fee claim and negotiating it with the receiver, (4) all time expended on the fee 

motions, and (5) all time incurred in the appeal of the first fee order.

The SEC does not take issue with the reasonableness of the hours Pritzker expended on 

any of the various tasks reflected in the time entries. Review of those records reveals occasional 

time entries that might be questioned were it appropriate to nit-pick, but overall the firm has 

shown it carried out the tasks with reasonable efficiency, and in a manner that was consistent with 

the complexity of the litigation and what was at stake.2

The SEC does argue, however, that certain blocks of time should be excluded completely. 

First, the SEC would disallow nearly $285,000 in fees incurred during the first year of the Young

matter on grounds that Pritzker was only representing a single private client (Young) with interests 

and claims distinct from those of the investors, and there was no receivership. Second, the SEC 

would eliminate another approximately $56,000 of entries relating to work that was done later to 

complete tasks begun during the initial period, and which have “no apparent relation to claims that 

might benefit the receivership.” Third, the SEC would exclude approximately $45,000 in time 

related to an attempt to remove the state court action to federal court. Finally, the SEC argues 

Pritzker should not recover for its efforts to oppose the appointment of a federal receiver, another 

approximately $40,000. 

The short answer lies in the Ninth Circuit’s decision: “Pritzker’s efforts in the state court 

litigation—which included filing the case, obtaining the appointment of a receiver, working 

closely with the receiver in amassing the receivership fund, and defending the fund against 

2 As an exemplar of potentially questionable entries, a timekeeper billed a half-hour, at the cost of 

nearly $250, for “Research re: verification for discovery responses.” Without more, it is difficult 

to imagine why it would be necessary to conduct research regarding such a basic and 

commonplace issue. Courts have discretion, of course, to impose a “haircut” of up to 10% on fee 

claims without detailed explanation, for the very reason that billings sometimes include a small 

degree of excess. See Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008). The 

relatively few suspect time entries here do not warrant a “haircut.”

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 6 of 9
CASE NO. 17-cv-00223-RS

7

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

28

United States District Court

Northern District of California

various claims— undeniably caused the creation, discovery, increase, or preservation of a 

common fund . . . .” (Emphasis added.) While Pritzker may have only been representing Young at 

the outset, all those initial efforts were a compensable prelude to the work that ultimately led to the 

common fund.3 Accordingly, Pritzker has adequately shown it reasonably incurred 2056.8 hours 

of attorney and paralegal time in the matter.

2. Hourly rates

Pritzker’s timekeepers billed at hourly rates ranging from $250 to $695. Additionally, 

Pritzker attorneys billed at substantially reduced rates when carrying out administrative tasks that 

otherwise might have been delegated to paralegals. Pritzker has adequately shown that its rates 

were those it customarily charged, that they were in line with rates prevailing in the community 

for similar work, and consistent with rates approved in other cases. The SEC does not contest that 

showing, other than to point out that the state court had indicated it would apply a much lower rate 

cap. The state court’s determination, however, does not compel a conclusion that Pritzker’s 

claimed hourly rates are unreasonable. 

C. Multiplier

As noted, Pritzker’s lodestar, calculated by multiplying the hours expended by the hourly 

rates, is $1,346,204.75. The lodestar figure is “presumptively reasonable.” Cunningham v. Cnty. of 

Los Angeles, 879 F.2d 481, 488 (9th Cir. 1988). A court has discretion to adjust the lodestar 

upward or downward by an appropriate positive or negative multiplier, based on a number of 

“reasonableness” factors, “including the quality of representation, the benefit obtained for the 

class, the complexity and novelty of the issues presented, and the risk of nonpayment.” Bluetooth, 

3 Pritzker explains that opposing the removal to federal court was intended to defend against 

possible termination of the receivership. Likewise, although Pritzker’s advocacy for a dual 

receivership and/or the right to continue litigating in state court was not successful, it represented 

an effort to preserve the fund.

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 7 of 9
CASE NO. 17-cv-00223-RS

8

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

28

United States District Court

Northern District of California

654 F.3d at 942. The foremost consideration, however, is the benefit obtained for the class. Id.; 

see also McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (ultimate 

reasonableness of the fee “is determined primarily by reference to the level of success achieved by 

the plaintiff”). 

Here, Pritzker was highly successful in obtaining appointment of a receiver who then 

appears to have marshalled as much of the remaining assets for eventual distribution to investors 

(upon a liability determination) as was reasonably possible. The fact that Pritzker was unable to 

see the matter through to the end was a result of the SEC’s election to bring a civil enforcement 

action, and no fault of Pritzker.

Nevertheless, for all the reasons discussed above, Pritzker’s contribution to the ultimate 

recovery of the investors, while a cause-in-fact, was only one part of a massive, multi-year effort 

involving the work of many others. To the extent that any of the other factors arguably lean in 

Pritzker’s favor, they do not carry sufficient weight to render an award of the base lodestar amount 

unreasonable or unfair to Pritzker. As such, while there certainly is no reason to apply a negative

multiplier, an upward adjustment of the lodestar is not warranted.4

Finally, Pritzker has adequately shown it incurred $30,800.54 in litigation expenses. The 

SEC has not challenged that figure, and it will be awarded.

III. CONCLUSION

Pritzker is awarded $1,346,204.75, together with reimbursement of $30,800.54 in litigation 

expenses. The sums are allowed as an administrative claim.

4

 As noted, Pritzker’s proposed multiplier would give it effectively the same recovery as its 

proposed 10% of the transferred funds. Such an end run is not tenable. 

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 8 of 9
CASE NO. 17-cv-00223-RS

9

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

28

United States District Court

Northern District of California

IT IS SO ORDERED.

Dated: October 17, 2022

______________________________________

RICHARD SEEBORG

Chief United States District Judge

Case 3:17-cv-00223-RS Document 1020 Filed 10/17/22 Page 9 of 9