2001 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-21-2001

In Re: Cendant Corp Prides Litigation

Precedential or Non-Precedential:

Docket 99-5555

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Recommended Citation

"In Re: Cendant Corp Prides Litigation" (2001). 2001 Decisions. Paper 55.

http://digitalcommons.law.villanova.edu/thirdcircuit_2001/55
Filed March 21, 2001 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 99-5555 

IN RE: CENDANT CORPORATION PRIDES LITIGA TION 

WELCH & FORBES, INC., an institutional investment 

manager, individually and on behalf of all others 

similarly situated, 

v. 

CENDANT CORPORATION, MERRILL LYNCH & CO.; 

CHASE SECURITIES, INC.; HENRY R. SILVERMAN; 

WALTER A. FORBES; COSMO CORIGLIANO 

JOANNE A. ABOFF FAMILY TRUST, 

 Appellant 

Pursuant to Rule 12a 

On Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Civ. No. 98-02819) 

District Judge: Honorable William H. W alls 

Argued: Friday, December 15, 2000 

BEFORE: SCIRICA, FUENTES 

and GARTH, Circuit Judges 

(Opinion Filed: March 21, 2001) 
 Howard B. Sirota (argued) 

 Sirota & Sirota LLP 

 110 Wall Street, 21st Floor 

 New York, New York 10005 

 Counsel for Appellant 

 Roger Kirby (argued) 

 Kirby McInerney & Squire LLP 

 830 Third Avenue, 10th Floor 

 New York, New York 10022 

 Counsel for Plaintiffs-Appellees 

 Samuel Kadet (argued) 

 Skadden, Arps, Slate, Meagher & 

 Flom LLP 

 Four Times Square 

 New York, New York 10036 

 Counsel for Defendants-Appellees 

OPINION OF THE COURT 

GARTH, Circuit Judge: 

This appeal arises out of a class action filed on behalf of 

investors in Cendant Corporation ("Cendant") after Cendant 

disclosed prior "accounting irregularities" on April 15, 1998.1 

Several actions were filed as a result of this disclosure, 

including an action commenced on June 15, 1998 on 

behalf of purchasers of Cendant's Feline PRIDES shares. 

The PRIDES litigation was subsequently consolidated with 

the other pending Cendant actions. However, on August 4, 

1998, the District Court ruled that separate lead plaintiffs 

and lead counsel were to represent the interests of the 

PRIDES shareholders, as distinct from the rest of the 

Cendant class. (JA1300-01.) 

The firm of Kirby, McInerney & Squir e, formerly 

Kaufman, Malchman, Kirby & Squire, ("Kirby") was 

_________________________________________________________________ 

1. Although there are other defendants, we refer to all the defendants as 

Cendant. 

 2 
appointed as lead counsel of the Cendant PRIDES class. On 

November 12, 1998, Kirby filed a motion for class 

certification, for summary judgment on the claims under 

S 11 of the Securities Act, and for injunctive relief. On 

behalf of the PRIDES class, Kirby entered into a proposed 

settlement agreement with Cendant on Mar ch 17, 1999-- 

three and a half months after Kirby's motions were filed 

and no more than nine months after the action had been 

started. 

Under the settlement agreement, Cendant agr eed to issue 

Rights to new PRIDES, with a stated value of $11.71. 

(JA576-79.) Those rights were in trade for existing PRIDES. 

The total possible number and amount of Rights to be 

distributed pursuant to the agreement was 29,161,474, 

with an approximate stated value of $341,500,000. (JA590.) 

Regarding Kirby's attorneys' fees, the settlement agreement 

provided: "Cendant . . . will take no position on an 

application by Lead Counsel for an award of fees and 

expenses provided that such application shall not request 

fees in excess of 10% percent [sic] of the aggregate Stated 

Value of 29,161,474 Rights, which is appr oximately

$341,500,000, plus reasonable expenses incurr ed by Lead 

Counsel in connection with this Action." (JA590.) 

The Notice of Pendency of Class Action summarized the 

proposed settlement of the PRIDES litigation. (JA239-52.) 

In connection with "Lead Counsel's fees and expenses," the 

Notice stated: "Lead Counsel has notified the other

signatories hereto that it intends to apply to the Court for 

an award of fees, in an amount not to exceed 10% of the 

aggregate Stated Value of 29,161,474 Rights, or 

approximately $34.1 million, plus reasonable expenses." 

(JA247.) The Notice went on to explain how the attor neys' 

fees would be paid, first out of "Unclaimed Rights,"2 then 

_________________________________________________________________ 

2. "Unclaimed Rights" are defined in the Stipulation and Agreement of 

Compromise and Settlement as "Rights as to which a timely and valid 

Proof of Claim has not been filed by a Holder ." (JA576.) All Unclaimed 

Rights "shall be cancelled and Cendant shall not issue, sell, or 

distribute 

any further Rights to any other person." (Notice of Proposed Settlement, 

JA248.) In addition, the Settlement provided that, though "Merrill Lynch 

beneficially owned 738,526 PRIDES as of the close of business on April 

15, 1998, Merrill Lynch nevertheless is not a class member and cannot 

recover new PRIDES in connection with the Settlement." (JA577.) 

 3 
out of "Opt Out Rights," then out of the rights of class 

members with claims.3 

The Notice also asserted: 

 You also should know that the lead counsel

 appointment process included a court-mandated 

 bidding process. This was intend to assur e that the 

 largest possible portion of any recovery remained with 

 participating class members, or conversely that 

 qualified lead counsel took the least possible sums 

 from the benefits to be obtained by participating class 

 members. In Lead Counsel's view, under the fee 

 mechanism proposed by Lead Counsel and described 

 herein, there is a substantial likelihood that a 

 substantial part, if not all, of the fees sought will be 

 obtained from Unclaimed Rights and Opt Out Rights. 

 As a consequence, in Lead Counsel's view, those Class 

 Members who become Authorized Claimants will not 

 have to pay any of Lead Counsel's fees, or if they do, 

 there is a substantial likelihood that it will be less than 

 the amount otherwise payable under the bids appr oved 

 by the Court in the process of appointing lead counsel. 

(JA247.) 

On May 4, 1999, the Joanne A. Aboff Trust ("Trust") filed 

several objections to the notice of settlement, all of which 

pertained to Kirby's representation and fee request,4 as well 

_________________________________________________________________ 

3. The settlement consisted of 29,161,474 Rights. After subtracting the 

attorneys' fees and expenses for Lead Counsel, 27,308,617 Rights 

remained. Proofs of Claim were filed with respect to 26,606,422 Rights, 

of which 22,502,782 Rights were validated by the claims administrator 

as of August 18, 1999. (Kirby Aff., Ex. L, atP 2.) Pursuant to the 

settlement agreement, the unclaimed Rights that were not used to pay 

Kirby for its fees and expenses were to be canceled by Cendant. Because 

the total amount of Rights requested in the Pr oofs of Claim (26,606,422 

Rights) was less than the amount of the settlement, after subtracting the 

amount to be given to Kirby (1,650,680 Rights, valued at $19,329,463), 

no claiming class members have had or will have their recovery reduced 

by the fees and expenses taken by Kirby. 

4. The Trust's objections concerned: 1) a "confidential Supplemental 

Agreement" between lead plaintiff and Cendant which was included in 

 4 
as a notice of its intention to appear at the settlement 

hearing. (JA38-78.) At the settlement hearing on May 18, 

1999, lead counsel stated that "[t]her e is no objection to the 

settlement," (JA736), and the Trust's attor neys objected 

only to selection of class counsel and Kirby's r equest for 

attorneys' fees. 

On June 15, 1999, the District Court signed an Opinion 

and Order approving the settlement, stating: "The Court 

considers the settlement to be eminently fair and 

reasonable. The class is made completely whole by such 

compensation. There are no objections voiced to the

settlement--only to the request for attor ney fees. The 

proposed settlement is approved subject to the following 

modifications to the attorneys' fees." In re Cendant Corp. 

PRIDES Litig., 51 F.Supp.2d 537, 541 (D.N.J. 1999).

The District Court granted Kirby's request for expenses, 

finding that the requested expenses of $2,367,493 were 

"reasonable and necessary to the prosecution of this 

litigation." 51 F.Supp.2d at 542. Then the Court found that, 

for attorneys' fees, Kirby should receive a number of Rights 

equivalent to 5.7% of the balance of Rights r eceived by the 

Class. That percentage amounts to 1,650,680 Rights,

valued at approximately $19,329,463. The District Court 

directed "Lead Counsel to seek to satisfy payment of these 

awards of expenses and fees from any unclaimed Rights. 

Then, and only then, to the extent that such fees and 

expenses have not been satisfied by unclaimed Rights, shall 

any deficiency be assessed against and bor ne by the class." 

51 F.Supp.2d at 542. The Court went on to instruct that 

"[a]ny rights unclaimed after authorized class claimants 

_________________________________________________________________ 

the Settlement but not published and apparently contained information 

about Cendant's and Lead Plaintiff 's obligations under the Settlement; 

and 2) "lead counsel's excessive fee request." (JA39-40.) The Trust 

argued, inter alia, that "[t]he combination of this unusual confidential 

agreement with Lead Counsel's excessive fee r equest . . . multiplies the 

potential that the class and the public will suspect that the settlement 

contains a collusive or improper provision by which Lead Plaintiff, Lead 

Counsel, and/or Cendant will benefit at the expense of the class." 

(JA46.) The text of this "Supplemental Agr eement" does not appear in the 

record, nor can we tell if it was discussed in the Notice. 

 5 
and Lead Counsel have been issued their entitled Rights 

shall be canceled by Cendant Corporation." 51 F .Supp.2d 

at 542. 

On June 15, 1999, the District Court entered an Order 

and Judgment5 certifying the PRIDES class for settlement, 

approving the settlement "and the distribution of Rights 

and New PRIDES to Authorized Claimants set forth 

therein," dismissing with prejudice all settled claims, and 

awarding Lead Counsel 1,650,680 Rights as r easonable 

attorneys' fees and 202,177 Rights as r eimbursement of 

Lead Counsel's reasonable expenses. (JA728-30.) On the 

same date and as part of its opinion, the District Court 

denied the Trust's application for attor neys' fees. On July 

22, 1999, the Trust timely appealed the District Court's 

June 15 Orders and Judgment. 

We have jurisdiction over this appeal pursuant to the 

final order doctrine of 28 U.S.C. S 1291, and we review the 

District Court's award of attorneys' fees for an abuse of 

discretion, "which can occur `if the judge fails to apply the 

proper legal standard or to follow pr oper procedures in 

making the determination, or bases an awar d upon findings 

of fact that are clearly erroneous.' " Zolfo, Cooper & Co. v. 

Sunbeam-Oster Co., 50 F.3d 253, 257 (3d Cir. 1995) 

(quoting Electro-Wire Prods., Inc. v. Sirote & Permutt, P.C. (In 

re Prince), 40 F.3d 356, 359 (11th Cir. 1994)). 

On August 27, 1999, Kirby filed a Motion in this court to 

dismiss the Trust's appeal for lack of standing, as well as 

presenting the standing issue in its appellate brief. 

I. 

Before we consider the merits of the Trust's appeal, a 

threshold question must be answered: does the Trust have 

standing to challenge the District Court's awar d of 

attorneys' fees to Kirby? See Steel Co. v. Citizens for a 

Better Env't, 523 U.S. 83, 94-95 (1998) (stating that "[t]he 

requirement that jurisdiction be established as a threshold 

_________________________________________________________________ 

5. The District Court judge signed both the Opinion and the Order and 

Judgment on June 15, 1999, but the Opinion was filed on June 16, 

1999 and the Order and Judgment was filed on June 24, 1999. 

 6 
matter `spring[s] from the natur e and limits of the judicial 

power of the United States' and `is inflexible and without 

exception' "). Because "the core component of standing is an 

essential and unchanging part of the case-or -controversy 

requirement of Article III," Lujan v. Defenders of Wildlife, 

504 U.S. 555, 560 (1992), we may not hear this appeal if 

the Trust does not have standing. 

"Ordinarily, only a party aggrieved by a judgment or 

order of a district court may exercise the statutory right to 

appeal therefrom. A party who receives all that he has 

sought generally is not aggrieved by the judgment af fording 

the relief and cannot appeal from it." Deposit Guar. Nat'l 

Bank v. Roper, 445 U.S. 326, 333 (1980) (emphasis added). 

In Ace Heating & Plumbing Co. v. Crane Co., the Third 

Circuit explicated the application of this principle to class 

actions, holding: "aggrieved class members may appeal any 

final order of a district court in pr oceedings held pursuant 

to Rule 23. This general proposition holds true even though 

such class members have the right to exclude themselves 

from the class." 453 F.2d 30, 32 (3d Cir. 1971) (emphasis 

added). 

The standing question in this case is troublesome, 

because it appears as if the PRIDES settlement has 

provided the class members with full recovery and because 

any reduction in the amount of attorneys' fees to Kirby will 

not be distributed among the class members, but instead 

those rights will be returned to and canceled by Cendant. 

Therefore, Kirby argues, the T rust is not aggrieved by the 

award of attorneys' fees and has no standing to appeal. 

While this argument admittedly has a superficial 

attraction because the PRIDES class members will 

seemingly recover a "dollar-for -dollar" return for their 

claims and Kirby's fees will not reduce their r ecovery, we 

nevertheless hold that the Trust does have standing to 

appeal the award of attorneys' fees. 6 We base this holding 

on two related concepts: 1) the nature of the relationship 

between class plaintiffs, class counsel, and defendants in 

_________________________________________________________________ 

6. Our holding that the Trust has standing to appeal disposes of the 

motion made by Kirby on August 27, 1999 to dismiss the Trust's appeal. 

We will deny that motion. 

 7 
class actions requires that the "aggrieved" requirement be 

construed broadly in class action cases; and 2) the

judiciary's independent authority over the appointment of 

class counsel, the grant of attorneys' fees, and the review of 

attorneys' fee awards in class actions. In connection with 

these two principles, we require that district courts conduct 

an extensive analysis and inquiry before deter mining the 

amount of fees, because we have an independent inter est in 

monitoring district courts' fee awards, particularly those 

awards stemming from Rule 23 class actions. See, e.g., 

Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1328 

(9th Cir. 1999); see generally Advisory Committee's Notes 

on Fed. R. Civ. P. 23, 28 U.S.C., Notes following Rule 23 

(addressing, inter alia, "the question of the measures that 

might be taken during the course of the action to assure 

procedural fairness"). Indeed, we ar e in effect third parties 

to the fee award process, albeit silent parties for the most 

part until the award is finalized and r eviewed. 

A. 

Ostensibly, lead class counsel represents all class

plaintiffs. However, in attempting to settle a large class 

action, class counsel must often spend more time 

negotiating with and interacting with the defendants than 

with their own clients. This situation presents several 

dangers. First, as we observed in Prandini v. National Tea 

Co., "a defendant is interested only in disposing of the total 

claims asserted against it[, and] the allocation between the 

class payment and the attorneys' fees is of little or no 

interest to the defense." 557 F.2d 1015, 1020 (3d Cir. 

1977). Moreover, the "divergence in [class members' and 

class counsel's] financial incentives . . . cr eates the `danger 

. . . that the lawyers might urge a class settlement at a low 

figure or on a less-than-optimal basis in exchange for redcarpet treatment for fees.' " In r e General Motors Corp. PickUp Truck Fuel Tank Prod. Liab. Litig. (hereinafter "In re GM 

Trucks"), 55 F.3d 768, 820 (3d Cir. 1995) (quoting 

Weinberger v. Great Norther n Nekoosa Corp., 925 F.2d 518, 

524 (1st Cir. 1991). 

This unique relationship among plaintif fs' counsel, 

plaintiffs, and defendants in class actions imposes a special 

 8 
responsibility upon appellate courts to hear challenges to 

fee awards by class members whose claims may have been 

reduced or in some way affected in exchange for large fee 

awards. See In re GM Trucks , 55 F.3d at 819-21. This is so 

even in this case, where the Trust pr esumably will not 

benefit from a reduction in Kirby's attorneys' fees, because 

the PRIDES settlement was structured so that any 

remaining Rights will be returned to Cendant. 

The Ninth Circuit addressed a similar situation in Zucker 

v. Occidental Petroleum Corp., 192 F .3d 1323 (9th Cir. 

1999), pointing out in its discussion that, even where the 

plaintiff "gets the same money whether the fee is cut or not, 

. . . a client whose attorney accepts payment, without his 

consent, from the defendants he is suing, may have a 

remedy, and this remedy may extend to a plaintiff class 

whose class attorneys accept payment fr om the defendants 

the class is suing." 192 F.3d at 1326. 

The Ninth Circuit took this reasoning a step further in 

Lobatz v. U.S. West Cellular of Calif., in which the court, 

holding that a class member had standing to appeal an 

attorneys' fee award "even though that award was payable 

independent of the class settlement," stated: 

 If . . . class counsel agreed to accept excessive fees and 

 costs to the detriment of class plaintiffs, then class 

 counsel breached their fiduciary duty to the class[, 

 and] any excessive award could be consider ed property 

 of the class plaintiffs, and any injury they suffered 

 could be at least partially redressed by allocating to 

 them a portion of that award. 

Lobatz, 222 F.3d 1142, 1147 (9th Cir . 2000). 

Under the Ninth Circuit's analysis, ther efore, the Trust 

need not benefit from a reduction in Kirby's fee to have 

standing to appeal. Moreover, the Ninth Circuit suggested 

in Zucker that the requirement that class plaintiffs be 

aggrieved should be construed broadly, citing Judge

Sneed's observation in his dissent in In r e First Capital 

Holdings "that `[a]rguably, a class member always retains 

an interest in attorney fees, even when her claims have 

been met in full.' " Zucker, 192 F .3d at 1328 (quoting In re 

 9 
First Capital Holdings Corp. Fin. Prods. Sec. Litig., 33 F.3d 

29, 31 (9th Cir. 1994) (Sneed, J., dissenting). 

As a class member, the Trust was eligible to receive "one 

Right, a marketable security freely tradeable until February 

14, 2001, having the terms described her ein for each 

Income PRIDES and Growth PRIDES ($50.00 face amount) 

beneficially owned by Class members at the close of

business on April 15, 1998 if such Class member submits 

a valid and timely proof of claim form." (JA239.) The Notice 

of the Proposed Settlement stated that "[e]ach Right will be 

designed to have a stated or theoretical value of $11.71," 

but acknowledged that "the Rights may trade in the market 

at a price below their theoretical value." (JA239.) Moreover, 

the Notice stated that "Cendant believes that r ecoverable 

damages (if any) per share could be lower or higher than 

the per PRIDES damages estimated by lead counsel for the 

Class." (JA239.)7 

Though Kirby asserts that each class member r eceived 

full recovery from this settlement, in which case, it is 

contended, the Trust would not be aggrieved by the fee 

award, the description of the settlement in the Notice and 

its ultimate implementation by class members is uncertain 

as to class members' actual recovery. Because class

members received rights which must be traded on the

market to be liquidated, a number of factors could 

contribute to class members not receiving the theoretical 

$11.71 per Right. It is noteworthy that the settlement 

provided class members with no immediate cash payment, 

but rather left class members in the position of r elying on 

the marketability of their new Rights for reimbursement of 

their claims. That reliance, apart from any other market 

risks, might itself be chancy in light of Cendant's history of 

"accounting irregularities" and in light of the recent market 

and economy slow down. 

_________________________________________________________________ 

7. The settlement, as noted above, provides for Rights which are "freely 

tradeable until February 14, 2001," which date has passed. The record 

does not disclose whether all the claimed Rights have been traded or the 

actual value of those Rights. Hence, because the r ecord is silent and the 

settlement itself has not been challenged on this appeal, we do no more 

than call attention to that aspect of the settlement. 

 10 
Nor does even a "dollar-for-dollar" recovery in cash 

undermine our power and jurisdiction and our special 

responsibility to review fee awards. Indeed, though the fact 

of market fluctuation and its effect on the value of class 

members' recovery influences our decision that the Trust 

has standing, we are equally convinced of our appellate 

jurisdiction over class settlements in which plaintiffs 

received a "dollar-for-dollar" recovery in cash. Indeed, it 

would be preposterous to hold that, even where a district 

court awarded a fee of 75% of the recovery to class counsel, 

we would have no power to review such an inappr opriate 

and outrageous award in the absence of an objector whose 

claims had been directly reduced as a r esult of the award. 

Our oversight and supervisory function would necessarily 

come into play to correct such a decree. This duty of review 

with which we are vested will be discussed in more detail 

in the next section. 

B. 

As indicated above, we are convinced of our obligation to 

vacate the District Court's order awarding fees by the 

special position of the courts in connection with class 

action settlements and attorneys' fee awar ds. As we 

observed in In re GM Trucks,"a thorough review of fee 

applications is required in all class action settlements." 55 

F.3d at 819. Specifically, the danger inher ent in the 

relationship among the class, class counsel, and 

defendants "generates an especially acute need for close 

judicial scrutiny of fee arrangements" in class action 

settlements.8 55 F.3d at 820. In discussing this duty of 

_________________________________________________________________ 

8. We should make clear that we do not attribute any motives or designs 

to Kirby that would indicate any conflict by Kirby with its responsibility 

to the class, nor do we mean to intimate that Kirby acted improperly. 

Indeed, as the District Court found and we have no r eason to dispute, 

Kirby discharged its function as lead counsel in exemplary fashion. The 

cautions we express, which are present in the unique context of class 

actions and the fee awards which arise in this context, pertain solely to 

the issue of whether, where class members have apparently received 

dollar-for-dollar recovery, standing is available for an objector to a fee 

award. For all the reasons we express here, we are satisfied that it is. 

 11 
district courts to oversee class settlements in In re GM 

Trucks, we explained: 

 the court's oversight task is considerably complicated 

 by the fact that these attorney-class conflicts are often 

 difficult to discern in the class action context, "where 

 full disclosure and consent are many times difficult 

 and frequently impractical to obtain." Finally, we 

 emphasize that the court's oversight function serves 

 not only to detect instances of "the actual abuse[that 

 potential attorney-class conflicts] may cause, but also 

 [the] potential public misunderstandings they may 

 cultivate in regard to the interests of class counsel." 

55 F.3d at 820 (quoting In re Agent Orange Prod. Liab. 

Litig., 818 F.2d 216, 224, 225 (2d Cir . 1987)). In other 

words, we indicated in In re GM T rucks the importance of 

the judicial role in finalizing class action settlements, and 

we suggested that this importance derived fr om general 

concerns about "potential public misunderstandings" as 

much as from a desire to protect the plaintiffs in the 

particular class. 

In Zucker, in asserting that the district court was

required to review the award of attorneys' fees regardless of 

whether anyone had standing to challenge the awar d, the 

Ninth Circuit stated: 

 In a class action, whether the attorneys' fees come 

 from a common fund or are otherwise paid, the district 

 court must exercise its inherent authority to assure 

 that the amount and mode of payment of attor neys' 

 fees are fair and proper. This duty of the court exists 

 independently of any objection. Therefor e it exists, a 

 fortiori, regardless of whether an objector has a 

 remediable economic stake in the court's decision. 

 Because the district court had the authority and duty 

 to pass upon the fairness of the attor neys' fees 

 settlement independently of whether there was 

 objection, we need not decide whether the objector had 

 standing. 

192 F.3d at 1328-29. 

The court in Zucker further explained that"[n]o Article III 

case or controversy is needed with regar d to attorneys' fees 

 12 
as such, because they are but an ancillary matter over 

which the district court retains equitable jurisdiction." 192 

F.3d at 1329. The Ninth Circuit found support for this 

proposition in the reasoning of the Eighth Circuit that 

"because `the reasonableness of attor neys' fees is within the 

overall supervisory authority' of the court in a class action, 

the court did not need to reach the question of whether an 

objector has standing." Zucker, 192 F .3d at 1329 (quoting 

Grunin v. Int'l House of Pancakes, 513 F .2d 114, 127 n.13 

(8th Cir. 1975)). 

While the statements in In re GM T rucks and Zucker refer 

to the authority of district, not appellate, courts in 

connection with class action settlements, the cases make 

clear that reviewing courts retain an interest--a most 

special and predominant interest--in the fairness of class 

action settlements and attorneys' fee awar ds. Accordingly, 

our interest as a reviewing court in ensuring that district 

courts fulfill their obligations and comply with the 

instructions and guidelines in this area bolsters our 

determination that the Trust has standing to challenge 

Kirby's fee award. 

Nor is our responsibility in connection with class action 

matters restricted to reviewing the final fee determination 

made by the District Court. Our interest and supervisory 

role is pervasive and extends not only to thefinal fee award 

but also to the manner by which class counsel is selected 

and the manner by which attorneys' fee conditions are 

established. 

Here, the District Court employed a sealed-bid auction to 

select class counsel. That process, which occurred virtually 

at the inception of the instant class action, is itself feedriven. As such, it invites, indeed requir es, judicial 

examination and, hence, our jurisdiction. This is so both 

because of the unique relationship between class members, 

class counsel, and the defendants in class actions and 

because of our strong interest in the fair ness of class 

settlements and the cost of achieving such settlements. 

See, e.g., John C. Coffee, Jr., National Law Journal, Sept. 

14, 1998, at B6 (discussing selection of lead counsel 

through auctions and "bidding rules"). 

 13 
Because it is the district court's function to participate in 

the litigation process in this way, as the District Court did 

here, and because, as noted, our judicial scrutiny reaches 

to all corners of the class action process including the 

selection of class counsel--a selection which impacts on the 

final fee award and fairness of the settlement--we would be 

remiss if we failed to exercise our jurisdiction in this area. 

An analogy, albeit one that is far afield fr om class action 

fees, is helpful to illustrate and emphasize the court's 

interest and the role that our inter est plays in our decision 

to hear this appeal. In Powers v. Ohio, a post-Batson case,9 

the Supreme Court held that a white criminal defendant 

had standing to object to and appeal the exclusion of black 

jurors through peremptory challenges, even though the 

defendant and the potential jurors were of different races. 

499 U.S. 400 (1991). In its discussion of standing, the 

Court stated: 

 The discriminatory use of peremptory challenges by the 

 prosecution causes a criminal defendant cognizable 

 injury, and the defendant has a concrete inter est in 

 challenging the practice. This is not because the 

 individual jurors dismissed by the prosecution may 

 have been predisposed to favor the defendant; if that 

 were true, the jurors might have been excused for 

 cause. Rather, it is because racial discrimination in the 

 selection of jurors "casts doubt on the integrity of the 

 judicial process," and places the fair ness of a criminal 

 proceeding in doubt. 

Powers, 499 U.S. at 411 (internal citations omitted). 

Likewise, just as discriminatory selection of jur ors "casts 

doubt on the integrity of the judicial process" such that the 

defendant in Powers had standing to appeal, the integrity 

and fairness of class settlements is thr eatened by excessive 

attorneys' fee awards such that class plaintiffs have 

_________________________________________________________________ 

9. In Batson v. Kentucky, 476 U.S. 79 (1986), the Supreme Court "held 

that a [black] defendant can raise an equal pr otection challenge to the 

use of peremptories at his own trial by showing that the prosecutor used 

them for the purpose of excluding members of the defendant's race." 

Powers v. Ohio, 499 U.S. at 405 (citing Batson, 476 U.S. at 96). 

 14 
standing to challenge excessive fee awards, even when they 

have received dollar-for-dollar r ecovery in the class 

settlement. 

Because of the possible injury to the Trust as well as 

other class members from the fee award in this case and, 

more importantly, because of our overar ching interest in 

class fee awards, we therefore hold that the Trust has 

standing to appeal the fee award. Accor dingly, we now turn 

to the fee award that the District Court granted to Kirby 

and review that award for an abuse of discretion. See In re 

GM Trucks, 55 F.3d 768, 782 (3d Cir . 1995). 

II. 

There are two primary methods for calculating attorneys' 

fees: the percentage-of-recovery method 10 and the lodestar 

method.11 "The per centage-of-recovery method is generally 

favored in cases involving a common fund,12 and is 

designed to allow courts to award fees fr om the fund `in a 

manner that rewards counsel for success and penalizes it 

for failure.' " In re Prudential, 148 F.3d at 333. "The lodestar 

method is more commonly applied in statutory fee-shifting 

cases, and is designed to reward counsel for undertaking 

_________________________________________________________________ 

10. This method has been described as follows:"The percentage of 

recovery method resembles a contingent fee in that it awards counsel a 

variable percentage of the amount recover ed for the class." In re GM 

Trucks, 55 F.3d 768, 819 n.38 (3d Cir. 1995). 

11. The lodestar method was initially set forth in Lindy Bros. Builder, 

Inc. 

of Philadelphia v. American Radiator & Standar d Sanitary Corp., 487 

F.2d 161 (3d Cir. 1973), appeal following remand, 540 F.2d 102 (3d Cir. 

1976). As this court explained in Gunter v. Ridgewood Energy Corp., "[a] 

court determines an attorney's lodestar by multiplying the number of 

hours he or she reasonably worked on a client's case by a reasonable 

hourly billing rate for such services given the geographical area, the 

nature of the services provided, and the experience of the lawyer." 223 

F.3d 190, 195 n.1 (3d Cir. 2000). 

12. "[T]he common-fund doctrine . . . allows a person who maintains a 

lawsuit that results in the creation, pr eservation, or increase of a fund 

in which others have a common interest, to be r eimbursed from that 

fund for litigation expenses incurred." Court Awarded Attorney Fees, 

Report of the Third Circuit Task Force, 108 F.R.D. 237, 241 (1985) 

(hereinafter "Task Force Report"). 

 15 
socially beneficial litigation in cases wher e the expected 

relief has a small enough monetary value that a 

percentage-of-recovery method would pr ovide inadequate 

compensation." 148 F.3d at 333. 

The total settlement in this case was valued at 

$341,500,000, and the District Court granted attor neys' 

fees in the amount of $19,329,463.13 As the District Court 

noted, this amount constitutes 5.7% of the class's total 

recovery. In connection with the lodestar calculation, the 

District Court observed that "Lead Counsel, thr ough its 

principal partners, associates, and paralegals expended 

approximately 5,600 hours, and its senior partners have a 

regular hourly rate of $495." 51 F.Supp.2d at 542. Using 

the $495 hourly rate, the lodestar multiplier14 for the 

District Court's fee award is 7.15 

Two primary principles govern our review of the District 

Court's fee award to Kirby: 1) did the District Court provide 

sufficient explanation for granting the fee awar d of $19.3 

million?; and 2) was the award so unreasonably high that 

the District Court abused its discretion in granting that 

amount in attorneys' fees? 

_________________________________________________________________ 

13. Kirby's ceiling for fees, as explained in the Notice of Settlement, 

was 

ten percent of the total settlement. The settlement was calculated at 

$341.5 million, ten percent of which would be $34,150,000. That figure 

was reduced by the District Court to $19,329,463. 

14. The Task Force Report explained that, after the lodestar is 

calculated, "[t]he `lodestar' then could be increased or decreased based 

upon the contingent nature or risk in the particular case involved and 

the quality of the attorney's work. An incr ease or decrease of the 

lodestar 

amount is referred to as a `multiplier.' " Task Force Report, 108 F.R.D. 

237, 243. 

15. 5,600 hours x $495 = 2,772,000. $19,329,463 divided by 2,772,000 

= 6.97. This multiplier of 7 essentially comports with the information 

provided by Kirby after oral argument. In that letter, Kirby stated that 

"the blended hourly compensation to ourselves and those law firms who 

were working with us was approximately $3,300." (Dec. 19, 2000 Kirby 

Letter, at 2.) $3,300 divided by $495 = 6.67, only slightly less than the 

6.97 multiplier calculated from the figur es provided by the District 

Court. 

 16 
A. 

In Gunter v. Ridgewood Energy Corp., we considered a 

district court's award of attorneys' fees in a class action 

settlement. 223 F.3d 190 (3d Cir. 2000). That case involved 

a $9.5 million settlement, out of which the district court 

allowed attorneys' fees amounting to 18% of the settlement 

fund, significantly less than the one-thir d requested by the 

attorneys. 223 F.3d at 191. The district court in Gunter 

explained its decision as follows: "The natur e of this 

litigation, its resolution at this stage without the necessity 

of trial, the nature of the settlement, and its value, convince 

the court that it would place a reasonable bur den on the 

class to award attorneys' fees of 18% of the Settlement 

Fund, or $1,700,000." 223 F.3d at 192 (citing Gunter v. 

Ridgewood Energy Corp., Civ. No. 95-438 (WHW), at 3

(D.N.J. Nov. 16, 1999)). The attorneys appealed the district 

court's reduction of their fee request. 

In reviewing the district court's fee awar d in Gunter, we 

stated that "[w]e give [a] great deal of deference to a district 

court's decision to set fees." 223 F.3d at 195. However, we 

noted, "[n]otwithstanding our deferential standard of 

review, it is incumbent upon a district court to make its 

reasoning and application of the fee-awar ds jurisprudence 

clear, so that we, as a reviewing court, have a sufficient 

basis to review for abuse of discretion." 223 F.3d at 196. 

Therefore, "if the district court's fee-award opinion is so 

terse, vague, or conclusory that we have no basis to review 

it, we must vacate the fee-award order and remand for 

further proceedings." 223 F.3d at 196. In addition, "if a 

district court does not fulfill its duty to apply the relevant 

legal precepts to a fee application, it abuses its discretion 

by not exercising it." 223 F.3d at 196. 

In Gunter, we vacated the district court's fee award 

because the district court "dealt with the fee-award issue in 

a cursory and conclusory fashion" and did not employ the 

factors which this Court has stated that district courts 

should consider in awarding fees using the per centage-ofrecovery method in common-fund class actions. See Gunter, 

223 F.3d at 196-97. These factors wer e set forth in Gunter 

in a footnote: 

 17 
 Among other things, these factors include: (1) the size 

 of the fund created and the number of persons 

 benefitted; (2) the presence or absence of substantial 

 objections by members of the class to the settlement 

 terms and/or fees requested by counsel; (3) the skill 

 and efficiency of the attorneys involved; (4) the 

 complexity and duration of the litigation; (5) the risk of 

 nonpayment; (6) the amount of time devoted to the 

 case by plaintiffs' counsel; and (7) the awar ds in 

 similar cases. 

Gunter, 223 F.3d at 195 n.1 (citing In re Prudential, 148 

F.3d 283, 336-40 (3d Cir. 1998); In re GM Trucks, 55 F.3d 

768, 819-22 (3d Cir. 1995)). 

As in Gunter, the District Court's fee opinion in this case 

was too cursory for us to "have a sufficient basis to review 

for abuse of discretion." Gunter, 223 F.3d at 196. The 

District Court did not even specify whether it was using the 

percentage-of-recovery method or the lodestar method to 

set attorneys' fees. Nor, if the District Court intended to 

utilize the lodestar method, did it calculate the lodestar 

multiplier. Rather, the District Court, in a conclusory 

paragraph bereft of analysis, stated: 

 This Court has examined the time expended by Lead 

 Counsel and the regular hourly rates of its services. 

 Lead Counsel, through its principal partners, 

 associates, and paralegals expended approximately 

 5,600 hours, and its senior partners have a r egular 

 hourly rate of $495. This represents significant effort. 

 But the Court is more impressed by the quality of 

 result than the quantity of effort. The class will receive 

 its full entitlement. And resolution of this matter was 

 greatly accelerated by the creative dynamism of 

 counsel. For this, counsel should not be penalized by 

 a slavish application of the lodestar. W e have seen the 

 gifted execution of responsibilities by a lead counsel. 

51 F.Supp.2d at 542. Despite the District Court's obvious 

dissatisfaction with the lodestar method, the court did not 

even address the percentage-of-recovery method, except to 

the extent that it calculated that the fee awar d constituted 

5.7% of the total class recovery. 

 18 
The percentage-of-recovery method has long been used in 

this Circuit in common-fund cases. Indeed, in the 1985 

Third Circuit Task Force r eport entitled Court Awarded 

Attorney Fees, the Task Force discussed the problems with 

the lodestar method in detail. "Accordingly, the Task Force 

recommend[ed] that in the traditional common-fund 

situation . . . , the district court . . . should attempt to 

establish a percentage fee arrangement." Task Force Report, 

108 F.R.D. 237, 255 (1985). Since that time, we have 

several times reaffirmed that application of a percentage-ofrecovery method is appropriate in common-fund cases. See, 

e.g., Gunter v. Ridgewood Energy Corp. , 223 F.3d 190, 195 

n.1 (3d Cir. 2000); Brytus v. Spang & Co. , 203 F.3d 238, 

243 (3d Cir. 2000); In re Prudential, 148 F.3d 283, 333-34 

(3d Cir. 1998); In re GM Trucks, 55 F.3d 768, 821 (3d Cir. 

1995). 

Though this is not a traditional common-fund case, 

because the unclaimed portion of the settlement fund is 

returned to Cendant and because the plaintiffs who recover 

may not be affected by the attorneys' fee award (depending 

on the number of plaintiffs who recover rights from the 

fund), use of the percentage-of-recovery method is 

appropriate in this case. Since the District Court 

highlighted the inadequacy of the lodestar method, it can 

be assumed that that court also perceived that the 

percentage method was a better method of calculating 

attorneys' fees in this case. This is consistent with the 

District Court's opinion awarding attor neys' fees in the 

larger and separate Cendant settlement, in which it did 

declare, "[f]ollowing established Thir d Circuit law . . . , the 

Court will award fees by a percentage-of-r ecovery method." 

In re Cendant Corp. Litig., 109 F .Supp.2d 285, 298 (D.N.J. 

2000).16 

_________________________________________________________________ 

16. By referring to the District Court's method of calculating attorneys' 

fees in the separate Cendant case (see text at p. 2, supra, where we 

noted that the PRIDES shareholders were to be represented separately 

from the primary Cendant class), we by no means indicate that the fees 

awarded to the primary Cendant class wer e a proper exercise of the 

District Court's discretion. We leave that determination to the panel of 

this court assigned to review that fee awar d. 

 19 
As discussed above, we have articulated at least seven 

factors to be considered by district courts in setting 

percentage fee awards in common fund cases. See Gunter, 

223 F.3d 190, 195 n.1 (3d Cir. 2000). The District Court, 

however, did not explicitly consider any of these factors.17 In 

addition to rejecting the lodestar method, the District Court 

stated: "The Court appreciates Lead Counsel's verve and 

the eminently satisfactory results it obtained for the class. 

There are no objections to the settlement agreement." 51 

F.Supp.2d at 541. In addition, the District Court mentioned 

the initial sealed bidding process and r eferred to the 

resulting bid to which Kirby agreed "as a benchmark of 

reasonableness." 51 F.Supp.2d at 542 (quoting In re

Cendant Corp., 182 F.R.D. 144, 152 (D.N.J. 1998). 

However, when it came to setting the fee awar d, the District 

Court said simply, "[t]he Court deter mines that counsel fees 

of 5.7% of this net balance [of the total awar d less Lead 

Counsel's expenses of $2,367,493] are r easonable." 51 

F.Supp.2d at 542. 

It could be argued that, in the few terse statements 

quoted above, the District Court took into account three of 

the seven Gunter factors: "the pr esence or absence of 

substantial objections by members of the class to the 

settlement terms and/or fees requested by counsel"; "the 

skill and efficiency of the attorneys involved"; and "the 

amount of time devoted to the case by plaintif fs' counsel." 

Gunter, 223 F.3d at 195 n.1. However , the District Court 

brushed over our required analysis of those factors in 

setting the attorneys' fees. 

Significantly, the District Court did not consider at all the 

other factors which we deem to be more important in this 

case, namely "the complexity and duration of the litigation" 

and "the [range of] awards in similar cases." 223 F.3d at 

_________________________________________________________________ 

17. We recognize that our decision in Gunter was issued after the District 

Court ruled on the settlement and fee application in this case and that, 

therefore, the District Court could not have been informed in its decision 

by our holding in Gunter. However, all of the principles enunciated in 

Gunter have been announced by this court befor e, in cases predating the 

District Court's decision on appeal here. See, e.g., In re Prudential, 148 

F.3d 283, 336-40 (3d Cir. 1998); In re GM Trucks, 55 F.3d 768, 819-22 

(3d Cir. 1995) 

 20 
195 n.1 (emphasis added). Nor does it appear that the 

District Court "cross-check[ed] the percentage award . . . 

against the `lodestar' award method," which is "suggested" 

practice for district courts setting fee awar ds by the 

percentage-of-recovery method. Gunter , 223 F.3d at 195 

n.1. Further, the District Court did not"make its reasoning 

and application of the fee-awards jurisprudence clear." 

Gunter, 223 F.3d at 196.18 

B. 

Because the District Court failed to consider the Gunter 

factors that we deem essential to a proper exer cise of 

discretion and to an appropriate consideration of attorneys' 

fee awards, we will discuss those factors her e. 

1. Complexity and Duration of Litigation 

In April 1998, Cendant announced past accounting 

irregularities and stated that its financial statements for 

certain past years would be restated. 51 F .Supp.2d at 539. 

On behalf of the Cendant PRIDES class, Kirby filed an 

Amended and Consolidated Class Action Complaint on 

November 11, 1998, accompanied by a motion for class 

certification, a motion for summary judgment, and a motion 

for preliminary injunctive relief. Less than two months 

later, on January 7, 1999, the parties announced that they 

had reached "an agreement in principal[sic]," and the 

parties presented a proposed settlement agreement to the 

District Court on March 17, 1999. 51 F.Supp.2d at 540. 

As the District Court observed, "[t]his stage of the 

_________________________________________________________________ 

18. The District Court did indicate in its opinion that it was using the 

bid to which Kirby had agreed "as a benchmark of reasonableness" in 

setting the fee. 51 F.Supp.2d at 541. However , a preliminary bidding 

process cannot replace subsequent analysis of the factors listed in 

Gunter. The circumstances and progression of every case are different, 

and these unique factors must be taken into account by district courts 

awarding attorneys' fees. Therefor e, though the result of a bidding 

process may be of use to a district court in awarding fees at the end of 

the case, it cannot supplant post-settlement analysis to determine a 

reasonable fee. 

 21 
litigation, notwithstanding that Lead Counsel has moved for 

summary judgment, is what would be normally the 

discovery period, very early on in the litigation." 51 

F.Supp.2d at 541. The District Court also noted that Kirby 

spent approximately 5,600 hours on this action. 

In setting Kirby's fee award, the District Court apparently 

turned a blind eye to the following factors: 1) the case was 

relatively simple in terms of proof, in that Cendant had 

conceded liability and no risks pertaining to liability or 

collection were pertinent; 2) the case was settled at a very 

early stage of the litigation, with an agreement being 

announced two months after Kirby filed for class 

certification and a proposed settlement being submitted to 

the District Court two months after that; 3) ther e was a 

minimal amount of motion practice in this case--before 

settlement, Kirby submitted only the Complaint and three 

motions, all on the same day; 4) discovery was virtually 

nonexistent--indeed the District Court did not mention any 

depositions taken or document review conducted by Kirby; 

and 5) Kirby spent a relatively small amount of time on this 

case compared to the amount of time expended in most 

other large class actions. 

2. Range of Awards 

Before reviewing specific awards in other large class 

settlements, we will review generally the range of attorneys' 

fee awards in common fund settlements of class actions. In 

In re GM Trucks, we observed that "[o]ne court has noted 

that the fee awards have ranged from nineteen percent to 

forty-five percent of the settlement fund." 55 F.3d 768, 822 

(3d Cir. 1995) (citing In re Smithkline Beckman Corp. Sec. 

Litig., 751 F. Supp. 525, 533 (E.D. Pa. 1990)). We also 

noted in In re Prudential that "[t]he district court . . . 

examined the fee awards in class actions with r ecoveries 

exceeding $100 million and found the fee per centages 

ranged from 4.1% to 17.92%." 148 F.3d 283, 339 (3d Cir. 

1998). 

However, recently two district courts in this Circuit have 

declined to follow this court's statement of the range in In 

re Prudential, stating that "the cases cited in [In re 

 22 
Prudential] were all decided at least thirteen years ago." In 

re Ikon Office Solutions, Inc. Sec. Litig. , 194 F.R.D. 166, 196 

(E.D. Pa. 2000); In re Orthopedic Bone Screw Prod. Liab. 

Litig., 2000 WL 1622741, at 7 (E.D. Pa. Oct. 23, 2000). 

Indeed, in another Cendant opinion dealing with attorneys' 

fees, this same District Court stated that, in cases surveyed 

by lead counsel, "[a]wards . . . ranged from a low of 20% in 

the case with a $200 million recovery to a high of 33.3% for 

cases with recoveries of $77.5 million and $110 million." In 

re Cendant Corp. Sec. Litig., 109 F .Supp.2d 285, 290 

(D.N.J. 2000). These varying ranges of attor neys' fees 

confirm that a district court may not r ely on a formulaic 

application of the appropriate range in awar ding fees but 

must consider the relevant circumstances of the particular 

case. 

One important consideration is the size of the settlement. 

The Task Force Report stated, with r eference to fee awards 

in common fund cases: "The negotiated fee, and the 

procedure for arriving at it, should be left to the court's 

discretion. In most instances, it will involve a sliding scale 

dependent upon the ultimate recovery, the expectation 

being that, absent unusual circumstances, the percentage 

will decrease as the size of the fund incr eases." 108 F.R.D. 

237, 256 (1985). We called attention to this statement in In 

re Prudential, explaining that "[t]he basis for this inverse 

relationship is the belief that `[i]n many instances the 

increase [in recovery] is mer ely a factor of the size of the 

class and has no direct relationship to the efforts of 

counsel.' " In re Prudential, 148 F.3d at 339 (quoting In re 

First Fidelity Bancorporation Sec. Litig., 750 F . Supp. 160, 

164 n. 1 (D.N.J. 1990)). Accordingly, district courts setting 

attorneys' fees in cases involving lar ge settlements must 

avoid basing their awards on percentages derived from 

cases where the settlement amounts were much smaller. 

3. Other Awards 

The District Court did not undertake to review the fees 

granted in other class action settlement cases, particularly 

in other large settlement cases, i.e., cases in which the 

common fund exceeded $100 million.19 Had it conducted 

_________________________________________________________________ 

19. A district court in this Circuit noted that "[c]ourts have generally 

decreased the percentage awarded as the amount recovered increases, 

 23 
such a review, the District Court should have looked 

specifically at cases in which the percentage-of-recovery 

method, not the lodestar method, was employed to set the 

fee award, and it should have examined the r easoning 

behind the district courts' fee awards in cases of similar 

size. 

Below, we have set forth a chart of fee awar ds given in 

federal courts since 198520 in class actions in which the 

settlement fund exceeded $100 million21 and in which the 

percentage of recovery method was used. 22 We have 

_________________________________________________________________ 

and $100 million seems to be the informal marker of a `very large' 

settlement." In re Orthopedic Bone Scr ew Prod. Liab. Litig., 2000 WL 

1622741, at 7 (E.D. Pa. Oct. 23, 2000). 

20. In 1984, the Supreme Court observed in Blum v. Stenson that "[in] 

the calculation of attorney's fees under the`common fund doctrine,' . . . 

a reasonable fee is based on a percentage of the fund bestowed on the 

class." 465 U.S. 886, 900 n.16 (1984). Subsequently, the Third Circuit 

Task Force Report in 1985 outlined the pr oblems with the lodestar 

method and recommended that courts use the per centage-of-recovery 

method instead of the lodestar method in common fund cases. After this 

instruction from the Supreme Court and the release of the Task Force 

Report, courts across the country regularly employed the percentage 

method to set fees in common fund cases. 

21. Although we have emphasized the seven-factor analysis required in 

class action fee cases set forth in Gunter v. Ridgewood Energy Corp., 223 

F.3d 190, 195 n.1 (3d Cir. 2000), Gunter is not listed in this chart 

because the settlement in that case was less than $100 million. 

22. In several cases, the class settlement exceeded $100 million but the 

lodestar method was used to determine attor neys' fees. See, e.g., 

McLendon v. Continental Group, Inc., 872 F. Supp. 142 (D.N.J. 1994) 

(settlement was for more than $400 million, and lodestar multiplier of 

1.5 was used to award attorneys' fees); In re Shell Oil Refinery Litig., 

155 

F.R.D. 552 (E.D. La. 1993) ($170 million settlement and $31.8 million in 

fees, which represented a 3.25 lodestar multiplier and approximately 

18% of the total settlement); In re W ashington Public Power Supply Sys. 

Sec. Litig., 779 F. Supp. 1056 (D. Ariz. 1991) ($687 million settlement, 

$32 million in attorneys' fees, 1.2 lodestar multiplier, and attorneys' 

fees 

were 4.7% of total settlement); In r e Baldwin-United Corp. Litig., 1986 

WL 

12195 (S.D.N.Y. June 27, 1986) ($183.8 million settlement, $7.5 million 

in attorneys' fees, lodestar multiplier of 2, and fees were 4.1% of total 

settlement); In re "Agent Orange" Pr 

 od. Liab. Litig., 611 F. Supp. 1296 
 24 
outlined the amount of settlement, the percentage of the 

settlement that made up the attorneys' fee award and the 

lodestar multiplier. 

Case Settlement Fees as % 

Lodestar 

 of Recovery 

Multiplier 

In re Cendant Corp. PRIDES Litig., $341.5 million 5.7% 

7-10 

51 F. Supp. 2d 537 (D.N.J. 1999) ($19.3 mil.) 

The instant case under review here. 

In re Cendant Corp. Litig., $3.16 billion 8.275% 

32.7 

109 F.Supp.2d 285 (D.N.J. 2000) ($262 mil.) 

In re Auction Houses Antitrust Litig., $512 million 5.2% 

Inf. not 

2001 WL 170792 (S.D.N.Y. Feb. 22, ($27 mil.) 

available 

2001) 

In re Orthopedic Bone Screw $100 million 12% 

Inf. not 

Prod. Liab. Litig., 2000 WL 1622741 

available 

(E.D. Pa. Oct. 23, 2000) 

In re Prudential, $1.8 billion 5% 

2.13 

106 F.Supp.2d 721 (D.N.J. 2000)23 ($90 mil.) 

In re Ikon Office Solutions, Inc. Sec. $111 million 30% 

2.7 

Litig., 194 F.R.D. 166 (E.D. Pa. 2000) 

Shaw v. Toshiba America Inf. Sys., $2.1 billion 7% 

Inf. not 

Inc., 91 F.Supp.2d 942 (E.D. Tex. 2000) ($147 mil.) 

available 

In re Sumitomo Copper Litig., $116 million 27.5% 

2.5 

74 F.Supp.2d 393 (S.D.N.Y. 1999) ($32 mil.) 

_________________________________________________________________ 

(E.D.N.Y. 1985), aff 'd in part 818 F.2d 226 (2d Cir. 1987) ($180 million 

settlement, $10.7 million in attorneys' fees, lodestar multiplier of 1.25 

to 

1.75, and fees were 6% of settlement). 
Additionally, it should be noted that the chart includes a substantial 

number of the post-1985 cases involving large settlements and fees 

granted as a percentage of the total settlement, but the chart is not 

comprehensive. We feel that the selection of cases in the chart are 

representative of the range of cases r elevant to the District Court's 

analysis of Kirby's fee application in this case. 

23. The district court originally awarded attorneys' fees in this case in 

1997, see In re Prudential, 962 F . Supp. 572 (D.N.J. 1997), which 

decision was vacated and remanded by the Thir d Circuit. See In re 

Prudential, 148 F.3d 283 (3d Cir . 1998). Those decisions are discussed 

infra. 

 25 
Case Settlement Fees as % 

Lodestar 

 of Recovery 

Multiplier 

Kurzweil v. Philip Morris Co., 1999 WL $123.8 million 30% 

2.46 

1076105 (S.D.N.Y. Nov. 30, 1999) ($37.1 mil.) 

In re Lease Oil Antitrust Litig., $190 million 25% 

1.35 

186 F.R.D. 403 (S.D. Tex. 1999) 

In re Copley Pharm., Inc., $150 million 13% 

2 

1 F.Supp.2d 1407 (D. Wyo. 1998) ($19.5 mil.) 

In re PaineWebber Ltd. P'ships Litig. , $200 million 13% 

1.4 

999 F. Supp. 719 (S.D.N.Y. 1998) ($25.9 mil.) 

Walco Investments, Inc. v. Thenen, $141 million 15% 

1.8 

975 F. Supp. 1468 (S.D. Fla. 1997) ($21 mil.) 

In re Combustion Inc., $127 million 36% 

2.99 

968 F. Supp. 1116 (W.D. La. 1997) 

Local 56, United Food & Commercial $114.5 million 2.8% 

2.39 

Workers Union v. Campbell Soup Co., ($3 mil.) 

954 F. Supp. 1000 (D.N.J. 1997) 

Bowling v. Pfizer, Inc., 922 F. Supp. $102.5 million 10% 

Inf. not 

1261 (S.D. Ohio 1996), aff 'd ($10.2 mil.) 

available 

102 F.3d 777 (6th Cir. 1996) 

In re Domestic Air Transportation $305 million 5.25% 

Inf. not 

Antitrust Litig., 148 F.R.D. 297 ($14.3 mil.) 

available 

(N.D. Ga. 1993) 

In re MGM Grand Hotel Fire Litig., $205 million 7% 

1-2.95 

660 F. Supp. 522 (D. Nev. 1987) 

In the charted cases, the attorneys' fee awards ranged 

from 2.8% to 36% of the total settlement fund. Looking at 
the percentage of recovery in this case (5.7%), it appears 

that it is in line with the other cases and even at the low 

end of the range. However, a brief review of the facts and 

posture of these other cases makes clear that, when

examined through the seven-factor lens of Gunter, the 

higher fees awarded in the other cases wer e far more 

justified than the high award in this case. Accordingly, the 

District Court should have learned from those cases that 

extensive time and effort exerted by the attorneys and the 

existence of complex legal and factual issues warranted 

higher fee awards than the fee award that would have been 

appropriate for Kirby. 

The district court in In re Auction Houses relied on a presettlement bidding process in awarding attorneys' fees. The 

 26 
bidding process in that case differed from the process 

employed by the District Court in this case, but it raised 

similar problems. However, regar dless of the arguable flaws 

in the method by which the district court awarded fees in 

In re Auction Houses, that case was far more complex than 

the instant case and, as such, is distinguishable. Indeed, 

the comments of interim lead counsel, excerpted in the 

district court's opinion, are telling: 

 Mr. Furth, on behalf of all of the interim lead counsel, 

 said that he "never in [his] fondest dreams . . . believed 

 that these defendants would pay $512 million" and 

 that this settlement "is the most outstanding r esult I 

 have ever heard of in the history of the antitrust laws." 

 Another of the interim lead counsel noted that he and 

 his colleagues had been negotiating with defendants 

 prior to the appointment of plaintiffs' lead counsel, that 

 they "had really good hard solid numbers from 

 [defendants], and we didn't think we could have 

 accomplished what Mr. Boies did." 

In re Auction Houses Antitrust Litig., 2001 WL 170792, at 6 

(S.D.N.Y. Feb. 22, 2001). 

In In re Orthopedic Bone Screw, the district court 

described the case as "nothing less than an uninterrupted, 

hard-fought, `antagonistic' legal battle," in which the 

attorneys seeking fees had "conducted substantial, 

widespread and extensive discovery" including reviewing 

more than 1,500,000 pages of documents, and had 

"defended a variety of pleadings and discovery matters and 

`litigated a plethora of motions,' " which resulted in the 

court issuing nearly 2,000 Pretrial Orders. 2000 WL

1622741, at 6. 

In In re Ikon Office Solutions, the district court granted 

the 30% fee request because, inter alia, "Counsel expended 

more than 45,000 hours on this case and paid out 

expenses of more than $3 million with no guarantee of 

recovery," the case presented "the legal obstacles of 

establishing scienter, damages, causation, and the like," 

and "derivative counsel fees will be taken fr om this 

amount." 194 F.R.D. at 194. 

 27 
In Shaw v. Toshiba, the district court noted the 

protracted schedule of the case, because of which "it has 

been necessary to prosecute this action continuously, 

around the clock, seven days a week, workdays and 

holidays alike." 91 F.Supp.2d at 969. Other factors that 

made litigation of Shaw difficult included the two million 

pages of documents reviewed by class counsel, the fact that 

defendant's corporate headquarters were located in Tokyo, 

Japan, as well as the additional burden of having to 

translate many documents and much of the testimony from 

Japanese to English. Even with these numerous procedural 

difficulties, the district court only awarded 7% of the 

settlement in attorneys' fees. 

The attorneys in Sumitomo spent mor e than 43,000 

hours on the case and inspected 11 million pages of

documents, and the case had legal and factual complexities 

including "the existence and analysis of the relationships 

between and among more than thirty Comex futures 

contracts, more than 500 LME contracts, literally hundreds 

of physical contracts, and millions of tons involved in the 

copper futures, the copper options and the copper 

derivative contracts." Sumitomo, 74 F .Supp.2d at 398. 

In Kurzweil, the district court noted that, before the 

settlement, "[t]here had been no lar ge settlements in 

tobacco litigation generally, and no successful action had 

yet been brought against a tobacco company based on

allegations of addictiveness of nicotine." 1999 WL 1076105, 

at 1. In addition, the attorneys encountered several 

obstacles, including that the action was originally

dismissed, and the attorneys reviewed millions of 

documents and tens of thousands of deposition and trial 

transcripts and conducted numerous depositions. 1999 WL 

1076105, at 1. 

In In re Lease Oil, the district court explained: 

 As well as being novel, this litigation was highly 

 complex and thus required a great deal of lawyering 

 skill. As just explained, the task of simply compiling 

 the evidence was an unusually difficult task, r equiring 

 the assistance of experts and the investment of many 

 hours.24 Also, being novel, the legal issues raised in the 

 litigation required skilled attorneys to handle them. 

_________________________________________________________________ 

24. With respect to gathering evidence, the court asserted: 

 Godfrey and others had to create their own databases, compiling 

 28 
186 F.R.D. at 445. 

The district court in Copley, in granting the 13% fee 

award, observed that, "[d]uring expedited discovery, class 

counsel reviewed and analyzed more than 125,000 pages of 

documents and deposed roughly one hundr ed witnesses." 1 

F.Supp.2d at 1408. The case also included 42 days of trial, 

and class counsel spent 48,794 hours on the case. Finally, 

the legal questions involved in Copley wer e both novel and 

complex. As the court explained: "not only was the 

certification of this class a complex question, but this was 

also the first and only mass tort class action to go to trial, 

and the case presented complex medical and scientific 

issues of causation." 1 F.Supp.2d at 1413. 

PaineWebber too had many featur es that would dictate a 

high fee award. Class counsel conducted "extensive,

coordinated discovery," including "coor dinating discovery of 

hundreds of boxes of documents through the use of 

sophisticated computer databases, and deposing many key 

witnesses." 999 F. Supp. at 722. In mor e than two years of 

litigation, counsel spent "approximately 70,000 hours in 

heretofore uncompensated legal work in pursuit of factual 

investigation, drafting of documents, brief writing, 

document analysis, depositions, trial preparation, 

settlement negotiation and other tasks." 999 F . Supp. at 

723. Finally, the legal issues in PaineW ebber were complex, 

and class counsel "faced significant substantive and 

procedural defenses." 999 F. Supp. at 724. 

Walco Investments was described by the district court as 

comprising "four years of bitterly-contested litigation." 975 

F. Supp. at 1470. The case involved multiple defendants, 

and the claims were only loosely related, making class 

litigation exceedingly complicated, because "claims raised 

_________________________________________________________________ 

 posted prices, NYMEX prices, transportation costs, grade and 

weight 

 differentials and so forth simply to determine whether or not a 

 cause of action might exist. And, in order tofirst articulate 

their 

 claims, class counsel had to hire experts to r esearch their 

allegation 

 that the NYMEX trading center method is a reasonable way of 

 determining market price at the lease. 

In re Lease Oil, 186 F.R.D. at 445. 

 29 
against each category of defendants presented separate 

issues of fact and law and involved differing theories of 

recovery." 975 F. Supp. at 1471. These circumstances 

encouraged the court to award 15% in attor neys' fees to 

attorneys from fourteen differ ent firms representing class 

plaintiffs. 

The action in In re Combustion was eleven years old at 

the time of settlement and the attorneys had spent over 

50,000 hours on the case. In the litigation, ther e had been 

"roughly 160 complaints filed, 1140 answers, 1922 

motions, with almost 1000 memoranda in support of or in 

opposition to these motions, 285 depositions . . . , 90 

hearings, at least one oral argument per month since the 

case was removed to federal court, and endless numbers of 

settlement conferences," as well as "thr ee fairness hearings, 

the first one lasting one week, and the other two lasting 

approximately one day each" and "one Daubert hearing 

lasting a total of two weeks." In re Combustion, 968 F. 

Supp. at 1136. 

In Local 56, the court acknowledged "the complexity of 

the issues in this case, the significant attendant risks of 

proceeding with litigation, and the tenacity and vigor with 

which all counsel represented their clients' interests," in 

this class action which lasted for four years. 954 F . Supp. 

at 1005. Even so, class counsel's fees amounted to only 

2.8% of the total settlement, a far smaller per centage than 

the fee awarded to Kirby by the District Court. 

In Bowling, the district court averr ed that "[t]he Court's 

choice of a percentage . . . will be heavily informed by the 

value of the services rendered by Counsel." 922 F. Supp. at 

1280. The court observed that "Counsel wer e confronted 

with myriad complex legal and factual questions in bringing 

this action and in negotiating the settlement." 922 F. Supp. 

at 1280. 

Domestic Air involved a class action against several 

airline companies claiming a conspiracy to fix prices. The 

court observed: 

 Counsel negotiated a significant settlement for the 

 class in light of the precarious financial position of 

 most of the defendants and over defendants' insistence 

 30 
 that they could not provide a larger cash settlement. 

 Were it not for the considerable skill and effort of 

 plaintiffs' counsel, the action would never have been 

 certified as a class action and members of the class 

 would receive nothing in return for their claims against 

 defendants. 

148 F.R.D. 297, 351-52 (N.D. Ga. 1993). In other words, 

the action in Domestic Air involved fundamental procedural 

obstacles that could easily have resulted in no recovery at 

all. Accordingly, class counsel was rewar ded significantly 

for negotiating such a large settlement. 

Finally, in In re MGM Grand Hotel, the court considered 

"the particular and unique circumstances of this case," 

including the fact that the attorneys had r ecovered over 

6,000 objects from the fire site and had conducted over 

1,400 depositions, in granting the 7% fee awar d. 660 F. 

Supp. at 526. 

Indeed, in case after case, the same factors r ecur: 

complex and/or novel legal issues, extensive discovery, 

acrimonious litigation, and tens of thousands of hours 

spent on the case by class counsel. Because none of these 

factors which increase the complexity of class litigation was 

present here, it makes sense that the fee awarded in this 

case should be far lower than those awarded in the charted 

cases, which fees ranged from 2.8% to 36% of the total 

settlement. 

Also relevant to the District Court's analysis in this case 

is our holding in In re Prudential r emanding the case to the 

district court. In that case, we rejected an award of 6.7% of 

the settlement fund in a case with a fund of $1 billion to $2 

billion because the district court had failed to explain 

adequately why it had applied such a high per centage to 

the settlement figure and because the court had not

explained why the 5.1 lodestar multiplier was justified. We 

also warned in In re Prudential against overemphasizing 

counsel's role in recovery, in the context of our criticism of 

the district court's assumption that counsel had been a 

catalyst for a plan authored by the Multi-State Life 

Insurance Task Force, which facilitated the class action 

settlement in that it established Prudential's liability. We 

 31 
explained that "[a]llowing private counsel to receive fees 

based on the benefits created by public agencies would 

undermine the equitable principles which underlie the 

concept of the common fund, and would create an incentive 

for plaintiffs attorneys to `minimize the costs of failure . . . 

by free riding on the monitoring efforts of others.' " In re 

Prudential, 148 F.3d at 337. Similarly, as we have 

consistently observed, Cendant's liability and consequent 

collectability had been conceded at the outset of the 

PRIDES controversy, and that fact should have been given 

major consideration by the District Court when setting 

Kirby's attorneys' fees. 

Our review of the lack of complexity of this case and of 

awards in other large class action settlements, all of which 

involved more complex issues, more time invested by the 

attorneys, and, with only a few exceptions, smaller total 

settlements, leads us to the conclusion that the District 

Court abused its discretion in granting a 5.7% attorneys' 

fee award in this case.25 

4. Checking Against Lodestar 

The District Court's abuse of discretion in this case is 

magnified when one looks at the lodestar multiplier. As we 

stated above, "we have . . . suggested that district courts 

cross-check the percentage award at which they arrive 

against the `lodestar' award method." Gunter v. Ridgewood 

Energy Corp., 223 F.3d 190, 195 n.1 (3d Cir. 2000); see 

also In re Prudential, 148 F.3d at 333 (stating that " `it is 

sensible for a court to use a second method of fee approval 

to cross check' its initial fee calculation"). Even when the 

lodestar method is used only as a cross-check,"courts 

must take care to explain how the application of a 

multiplier is justified by the facts of a particular case."26 In 

re Prudential, 148 F.3d at 340-41. 

_________________________________________________________________ 

25. We should note that the award actually amounted to more than 5.7% 

of the total recovery. The fund had a value of $341.5 million, but any 

unclaimed portion of the fund returned to Cendant. As of August 1999, 

only 22,502,782 Rights, with a monetary value of $263.5 million, were 

claimed. Taking this amount as the total r ecovery, Kirby's attorneys' 

fees 

constituted 7.3% of the total fund. 

26. We observed in In re GM Trucks that "[t]he Supreme Court . . . has 

rejected the use of multipliers to enhance the lodestar's hourly rate 

 32 
In this case, the lodestar multiplier is 7 at a minimum 

(using Kirby's senior partner rate as the rate for all hours), 

and the Trust calculates the lodestar multiplier as 10.27 

Either of these multipliers (Kirby's multiplier of 7 or the 

Trust's multiplier of 10) is substantially higher than any of 

the multipliers in the cases charted above, which range 

from 1.35 to 2.99, and is also significantly higher than the 

"large" 5.1 multiplier in In r e Prudential, which we 

questioned because "the court offer[ed] little explanation as 

to why a multiplier was necessary or appropriate." 148 F.3d 

at 340-41. In allowing such a high multiplier in this case 

without even calculating it, much less explaining how it is 

justified, the District Court strayed from all responsible 

discretionary parameters in the awarding of Kirby's

attorneys' fees. 

In all the cases in which high percentages wer e applied 

to arrive at attorneys' fees, the courts explained the 

extensive amount of work that the attorneys had put into 

the case, and appropriately the lodestar multiplier in those 

cases never exceeded 2.99. This range is consistent with 

the principle that " `[m]ultiples ranging from one to four are 

frequently awarded in common fund cases when the 

lodestar method is applied.' " In r e Prudential, 148 F.3d 283, 

341 (3d Cir. 1998) (quoting 3 Herbert Newber g & Alba 

Conte, Newberg on Class Actions, S 14.03 at 14-5 (3d ed. 

1992)). In this case, the District Court judge made clear 

that he wanted to reward Kirby for Kirby's quick and 

beneficial settlement of the case, and that may be a good 

reason for the fee award to exceed the lodestar, but not to 

the exclusion of all other factors. On remand of this case to 

the District Court, we strongly suggest that a lodestar 

multiplier of 3 (the highest multiplier of the cases reviewed 

above) is the appropriate ceiling for a fee award, although 

_________________________________________________________________ 

amount." 55 F.3d 768, 822 (3d Cir. 1995) (citing City of Burlington v. 

Dague, 505 U.S. 557 (1992)). However, as stated above, calculation of 

the lodestar multiplier is still appropriate when used to cross-check the 

reasonableness of a percentage-of-r ecovery fee award. 

27. The Trust calculates the lodestar multiplier as 10 because it assesses 

the appropriate lodestar fee as $1.9 million, 1/10 of the $19.3 million 

awarded. (See Trust's Brief at 25-26.) 

 33 
a lower multiplier may be applied in the District Court's 

discretion. The 3 multiplier would result in an award of no 

more than $8.3 million for Kirby (calculating the lodestar at 

$495/hour). 

5. 

We are seriously troubled by the District Court's award of 

attorneys' fees constituting 5.7% to 7.3% of the total 

settlement. As discussed above, this case was neither 

legally nor factually complex and did not require significant 

motion practice or discovery by Kirby, and the entir e 

duration of the case from the filing of the Amended

Complaint to the submission of a Settlement Agr eement to 

the District Court was only four months. Other cases in 

which higher percentages were awar ded are so dissimilar 

factually and legally from this case that they cannot be 

relied upon to support the 5.7% award made in this case. 

In addition, our discussion and holding in In r e Prudential 

requires a holding here that the District Court's award was 

an abuse of its discretion, particularly wher e the District 

Court appeared to be attributing more r esponsibility to 

Kirby for the quality of the settlement than may legitimately 

be warranted. Accordingly, we will vacate the District 

Court's fee award to Kirby and remand the issue of Kirby's 

attorneys' fees to the District Court for a more thorough 

and thoughtful evaluation, including an analysis of, and 

compliance with, the factors enunciated by us in Gunter 

and in this opinion. 

III. 

Finally, the Trust argues that the District Court erred in 

not granting attorneys' fees to the Trust's attorneys for 

suggesting a bidding process to choose Lead Counsel and 

for objecting to Lead Counsel's fee application. 

The Second Circuit stated in White v. Auerbach: 

 it is well settled that objectors have a valuable and 

 important role to perform in pr eventing collusive or 

 otherwise unfavorable settlements, and that, as the 

 district court recognized, they are entitled to an 

 34 
 allowance as compensation for attorneys' fees and 

 expenses where a proper showing has been made that 

 the settlement was improved as a result of their efforts. 

 Ordinarily the trial judge has broad discr etion in 

 deciding whether, and in what amount, attor neys' fees 

 should be awarded, since he is in the best position to 

 determine whether the participation of objectors 

 assisted the court and enhanced the recovery. 

500 F.2d 822, 828 (2d Cir. 1974). 

In this case, the District Court judge exercised his "broad 

discretion" in finding that the Trust's attorneys had not 

made the "proper showing . . . that the settlement was 

improved as a result of their efforts." The District Court 

judge made clear that he had considered the idea of a 

bidding process before the Trust's attorneys suggested that 

procedure, stating: "Walker's opinions have been out there 

since 1993 at least28 . . . Why do you think that the door 

was only opened by your key?" (JA 766.) He also asserted 

that "my last year's clerk and I actually had br ooded this 

idea of an auction long before you came down the pike." 

(JA767.) 

With respect to the Trust's claim that its attorneys' 

objections to the fee application resulted in a reduction of 

the fee award from $34.15 million to appr oximately $19 

million, the District Court gave no indication that the 

objections were the reason for the r eduction and even 

stated, "if I find that what Mr. Kirby wants is excessive, I'm 

not dependent upon you . . ." (JA765.) Hence, because the 

Trust had not demonstrated that it had been r esponsible 

for the procedure utilized by the District Court or that its 

actions had resulted in a reduction of Kirby's fees from $34 

million to $19 million--findings which are not clearly 

erroneous--we will sustain the District Court in its rulings 

on these points. 

_________________________________________________________________ 

28. Judge Vaughn Walker actually implemented the bidding process in In 

re Oracle Sec. Litig. in 1990. 131 F.R.D. 688 (N.D. Cal. 1990). Judge 

Walker's process differed significantly from the bidding process here in 

that it was not a sealed-bid process. 

 35 
However, our review of the District Court's attorneys' fee 

award to Kirby would not have come about had it not been 

for the Trust's appeal. As the Ninth Cir cuit observed in 

Zucker v. Occidental Petroleum Corp., to which we have 

earlier adverted, "[t]he contribution [a particular class 

member's] attorney made, by providing an adversarial 

context in which the district court could evaluate the 

fairness of attorneys' fees, was substantial." 192 F.3d 1323, 

1329 (9th Cir. 1999). 

Recognizing this fact, that it was the Trust which called 

our attention to the many aspects of Kirby's fee award 

which we have discussed and which we have found 

requires reconsideration by the District Court, we would be 

remiss if we did not acknowledge this benefit 29 and remand 

the Trust's claims for its own attorneys' fees to the District 

Court for reconsideration together with Kirby's fee

application. Of course, this will requir e the necessary 

submissions by the Trust's attorneys to comply with

normal fee procedures. Under these circumstances, we 

think it appropriate for the District Court to evaluate the 

value of the benefit of the Trust's contribution to the 

ultimate fee (to be decided by the District Court on remand) 

and to compensate the Trust to that extent. 30 

In so holding, we are fully aware that Cendant had 

agreed not to contest the award of fees as part of its 

_________________________________________________________________ 

29. It bears mention that the Trust's appellate brief urged that Kirby's 

fees be reduced from $19 million to $7.6 million, (see Appellant's Brief, 

at 30), a similar figure to the one at which we arrived independently. 

30. In its appellate brief, Kirby suggests that the Trust may not have 

standing to appeal the District Court's denial of the fee request because 

it was the Trust's counsel, not the Trust itself, that made that request 

in the District Court. This jurisdictional ar gument, though not without 

merit, need not concern us for two reasons. First, the District Court's 

decision denying fees to the Trust's counsel stands insofar as it related 

to the argument raised by counsel befor e the District Court. We remand 

the issue of the Trust's counsel's fee r equest to the District Court only 

with respect to the Trust's effect on the settlement through this appeal. 

Second, we have repeatedly emphasized in this opinion the importance 

of the court's role in reviewing counsel's fees in class actions, and we 

believe this role extends to the District Court hearing a fee application 

by 

the Trust's counsel at this point. 

 36 
settlement agreement. We also acknowledge that the return 

to Cendant of any unclaimed rights may well enhance the 

value of Cendant's rights to its shareholders and rights 

beneficiaries. 

IV. 

Although we will not disturb the settlement itself which 

has not been challenged on appeal, we will vacate the 

award of attorneys' fees to Kirby and r emand this case to 

the District Court for a reevaluation of the amount of 

attorneys' fees, both because the District Court did not 

adequately explain its reason for the fee awar d and because 

the fee award does not comply with the r equirements of our 

jurisprudence. We will also vacate the District Court's order 

denying attorneys' fees to the Trust and remand for

reconsideration in light of the foregoing discussion and 

opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 37