Opinion ID: 779517
Heading Depth: 3
Heading Rank: 3

Heading: The June 10, 1997 Order

Text: 14 In response to Equitable's announcement, Plaintiffs filed a motion for a preliminary injunction to compel Equitable to withhold 25 percent of the settlement fund for attorney's fees. Concluding that a 10 percent withholding would be sufficient, the district court granted the preliminary injunction in part on June 10, 1997. In making this preliminary determination, the district court explained that it was exercising its discretion to apply the lodestar method, rather than the percentage-of-the-fund method, to calculate attorney's fees. The court emphasized that the early settlement... renders a twenty-five percent recovery for the attorneys unreasonable in light of the circumstances and that the lodestar approach would avoid a windfall to the attorneys at the expense of their clients. The court further explained that [t]here has been no discovery, no lengthy settlement negotiations, no protracted litigation of any kind. The district court then determined that when it ultimately ruled on counsel's fee application, it would use a generous combined hourly rate for partners, associates, and paralegals of $300 per hour. 15 In discussing whether it would enhance the lodestar amount with a multiplier, the district court stated that it would consider a multiplier of up to 1.5 if Plaintiffs' counsel secured a 100 percent recovery for the class. The court also explained that it had discretion to apply a risk multiplier, because the attorneys took the case on a contingent basis, and would do so if Plaintiffs' counsel were to show that (1) without an adjustment for risk they would have had substantial difficulties finding counsel, and (2) the difficulty of finding counsel exists for the entire class of contingency fee cases and not just for this particular case. See Fadhl v. City & County of San Francisco, 859 F.2d 649, 650 (9th Cir.1988) (per curiam) (setting forth the two-pronged standard for enhancing a fee award to account for risk). The district court then tentatively ruled that Plaintiffs' counsel had failed to make the requisite showing to support application of a risk enhancement. Citing the briefs filed in support of the motion for a preliminary injunction, the district court noted that Plaintiffs' counsel concede[d] that success on count one of the complaint was likely and that the most substantial risk they faced was that they would only obtain a partial recovery. 3 Nonetheless, the court did not rule out the possibility that Plaintiffs' counsel could demonstrate that they were entitled to a fee enhancement on the basis of risk or undesirability. The court stated, however, that the multiplier would be no greater than two. 16 Turning to Plaintiffs' counsel's request for an enhancement due to the potential delay in payment of their fee award, the district court concluded that no increase would be necessary. First, the court reasoned that there would be no delay in payment because fees derived from retroactive commission payments were immediately deductible once the court determined the amount of the fee award. Second, Equitable agents would be required to pay a prime rate enhancement to compensate counsel for the delay in payment for attorney's fees derived from future payments to Equitable agents. 17 Plaintiffs filed an interlocutory appeal of the district court ruling on the preliminary injunction motion, which we affirmed. Fischel v. Equitable Life Assurance Soc'y, 127 F.3d 1104, 1997 WL 664934 (9th Cir. 1997) (table). We held that the district court did not abuse its discretion by denying the preliminary injunction in part.