Opinion ID: 796443
Heading Depth: 2
Heading Rank: 3

Heading: Of Counsel Fees.

Text: 66 The District Court properly utilized the percentage of the fund method in calculating counsel fees, applying the lodestar method as a `cross check' on the reasonableness of the requested percentage. Goldberger v. Integrated Res., Inc., 209 F.3d 43, 49-50 (2d Cir.2000). Of course, courts may continue to use the lodestar approach alone in calculating attorneys fees in common fund cases. See Wal-Mart Stores, Inc. v. Visa, USA, Inc., 396 F.3d 96, 121 (2d Cir.2005). Whatever method is used, the reasonableness of a common fund fee award is governed by the so-called Goldberger factors: (1) counsel's time and labor; (2) the litigation's complexities and magnitude; (3) the litigation risks; (4) quality of representation; (5) the relationship of the requested fee to the settlement; and (6) considerations of public policy. Id. at 121. We recognize that courts have traditionally awarded fees for common fund cases in the lower range of what is reasonable. Id. at 122. 67 In this case, the District Court calculated the percentage of the Fund on the basis of the claims made against the Fund, rather than on the entire Fund created by the efforts of counsel. We hold that this was error. We also hold, on the record before us, that it was error for the District Court to take into account, in setting the percentage fee, the conduct for which counsel already was sanctioned. The Magistrate Judge assessed a substantial fine and ordered the exclusion of certain time charges from the fee petition, and it would be unfair to double count for the sanctioned conduct. 68 In computing the fees on the basis of claims made against the Fund rather than on the basis of the entire Fund, the District Court recognized a split of authority on the subject. See generally 7B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1803.1 (2d ed.2004). In siding with courts that compute fees as a percentage of claims made, the District Court saw the alternative procedure as creating a windfall for the attorneys. We disagree. The entire Fund, and not some portion thereof, is created through the efforts of counsel at the instigation of the entire class. An allocation of fees by percentage should therefore be awarded on the basis of the total funds made available, whether claimed or not. We side with the circuits that take this approach. See Waters v. Int'l Precious Metals Corp., 190 F.3d 1291, 1295 (11th Cir.1999); Williams v. MGM-Pathe Commc'ns Co., 129 F.3d 1026, 1027 (9th Cir.1997). 69 Our own cases refer to percentage of the fund, Wal-Mart Stores, 396 F.3d at 121 (emphasis supplied), and percentage of the recovery, Goldberger, 209 F.3d at 47 (emphasis supplied). We take these references to be to the whole of the Fund. Use of the entire Fund as a basis for the computation does not necessarily result in a windfall because the court may always adjust the percentage awarded in order to come up with a fee it deems reasonable in light of the Goldberger factors. Accordingly, we have held that a district court did not abuse its discretion in awarding plaintiffs' counsel a generous fee based on a somewhat low percentage of the fund. Wal-Mart Stores, 396 F.3d at 123. 70 In support of its decision that counsel fees should be computed on the basis of funds claimed by class members, the District Court referred to the PSLRA provision entitled Restriction on Payment of Attorneys' Fees and Expenses. Fears, 2005 WL 1041134, at . According to that provision, [t]otal attorneys' fees and expenses awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount of any damages and prejudgment interest actually paid to the class. 15 U.S.C. § 78u-4(a)(6). But the PSLRA is not applicable to antitrust class actions such as the one before us. It was designed to reform abusive securities class action litigation and to exercise supervision and control of the lawyers for the class. H.R. REP. NO. 104-369, at 32 (1995) (Conf.Rep.), as reprinted in 1995 U.S.C.A.A.N. 730, 731 (relating to Private Securities Litigation Reform Act of 1995, Pub.L. No. 104-67). The House of Representatives Conference Report also observed that counsel in securities class actions often receive a disproportionate share of settlement awards and indicated that the PSLRA is intended to limit[] the award of attorney[s'] fees and costs to counsel for a class ... to a reasonable percentage of the amount of recovery awarded to a class. Id. at 736. 71 The fee restrictions described in the PSLRA do not apply in any context other than securities class actions, and, even if they did, it is not clear how they would apply. The statute speaks in terms of a percentage of damages actually paid to the class. But the entire fund created by the efforts of counsel presumably is paid to the class, even if some of the funds are distributed under the Cy Pres Doctrine. The PSLRA would not allow for the computation of fees on the basis of such non-damages items as discounts on coupons received in settlement. A key consideration required by the PSLRA is the result actually achieved for class members, a basic consideration in any case in which fees are sought on the basis of a benefit achieved for class members. Advisory Comm. Notes to Fed.R.Civ.P. 23, 2003 Amendments. Arguably, the entire Settlement Fund is a benefit achieved for class members. 72 The District Court's reliance on the CAFA is also misplaced. The CAFA recites as its purpose the following: To amend the procedures that apply to consideration of interstate class actions to assure fairer outcomes for class members and defendants, and for other purposes. Class Action Fairness Act, Pub.L. No. 109-2, 119 Stat. 4 (2005). However, the only mention of fees to be allowed to class counsel deals with the award of fees in coupon settlement cases. See 28 U.S.C. § 1712(a)-(c). 2 73