Opinion ID: 779517
Heading Depth: 4
Heading Rank: 1

Heading: Unreasonably Low Fee Award

Text: 32 When counsel recover a common fund which confers a substantial benefit upon a class of beneficiaries, they are entitled to recover their attorney's fees from the fund. Lewis v. Anderson, 692 F.2d 1267, 1270 (9th Cir.1982). This is a well-recognized exception to the general rule that parties are responsible for their own attorney's fees. Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980). Because the attorneys seek fees on their own behalf, which may be contrary to their clients' interests, the district court must look out for the interests of the beneficiaries, to make sure that they obtain sufficient financial benefit after the lawyers are paid. Florida ex rel. Butterworth v. Exxon Corp. (In re Coordinated Pre-trial Proceedings in Petroleum Prods. Antitrust Litig.), 109 F.3d 602, 608 (9th Cir.1997) ( Coordinated Pretrial ). 33 In a common fund case, the district court has discretion to apply either the lodestar method or the percentage-of-the-fund method in calculating a fee award. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir.2002), petition for cert. filed, 71 U.S.L.W 3154 (U.S. Aug. 13, 2002) (No. 02-252); Coordinated Pretrial, 109 F.3d at 607. We have established a 25 percent benchmark in percentage-of-the-fund cases that can be adjusted upward or downward to account for any unusual circumstances involved in [the] case. Paul, Johnson, Alston & Hunt, 886 F.2d at 272. Under the lodestar method, the court multiplies a reasonable number of hours by a reasonable hourly rate. Class Plaintiffs v. City of Seattle (In re Wash. Pub. Power Supply Sys. Sec. Litig.), 19 F.3d 1291, 1294 n. 2 (9th Cir.1994) ( Washington Public ). 7 There is a strong presumption that the lodestar figure represents a reasonable fee. D'Emanuele v. Montgomery Ward & Co., 904 F.2d 1379, 1384 (9th Cir.1990), overruled on other grounds by Burlington v. Dague, 505 U.S. 557, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992). Thus, although a court can adjust the lodestar upward or downward based on certain factors, adjustments are the exception rather than the rule. Id. at 1383-84. 34 Reasonableness is the goal, and mechanical or formulaic application of either method, where it yields an unreasonable result, can be an abuse of discretion. Coordinated Pretrial, 109 F.3d at 607; see also Paul, Johnson, Alston & Hunt, 886 F.2d at 271 (holding that attorney's fee award in a common fund case must be `reasonable' under the circumstances). When using the percentage-of-the-fund approach, although there is a 25 percent benchmark, that rate may be unreasonable in some cases. Vizcaino, 290 F.3d at 1047-48; see also Washington Public, 19 F.3d at 1297-98. Courts may compare the two methods of calculating attorney's fees in determining whether fees are reasonable. See Coordinated Pretrial, 109 F.3d at 607. 35 Because district courts have the discretion to calculate attorney's fees by either the lodestar or percentage-of-the-fund approach, the district court here did not abuse its discretion by using the lodestar method to calculate fees. The fact that the case was settled early in the litigation supports the district court's ruling; the 25 percent benchmark of the percentage-of-the-fund approach might very well have been a windfall. Nor did the district court err by failing to compare the lodestar result to the 25 percent benchmark. Additionally, despite Plaintiffs' counsel's assertion that they should have been compensated for the size of the fund they obtained, the district court compensated counsel for this achievement when the district court applied a 1.5 multiplier for their 100 percent success rate. 36 Further, we are not persuaded that the district court abused its discretion by failing to award 10 percent of the fund when no class member objected to that percentage. Plaintiffs' counsel cite Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3rd Cir.2000), for the proposition that the district court should have considered this fact. See id. at 195 n. 1; id. at 199 ([N]o one in the class objected to Counsel's request for fees. Yet, a client's views regarding her attorneys' performance and their request for fees should be considered when determining a fee award.). A district court should consider the presence or absence of substantial objections by members of the class to the ... fees requested by counsel, id. at 195 n. 1, but this factor is not outcome determinative; it must be considered in light of all of the other factors. Here, the district court did not abuse its discretion by failing to increase the attorney's fee award to account for the class members' view of the requested fee award because (1) there was an early settlement, (2) the district court used the lodestar rather than the percentage-of-the-fund approach to calculate fees, and (3) the district court applied a 1.5 multiplier for counsel's 100 percent success rate.