Opinion ID: 7015796
Heading Depth: 4
Heading Rank: 3

Heading: Attorneys’Fees

Text: a. Necessity of Scrutiny: Attorneys’ fees provisions included in proposed class action settlement agreements are, like every other aspect of such agreements, subject to the determination whether the settlement is “fundamentally fair, adequate, and reasonable.” Fed.R.Civ.P. 23(e). There is no exception in Rule 23(e) for fee provisions contained in proposed class action settlement agreements. Thus, to avoid abdicating its responsibility to review the agreement for the protection of the class, a district court must carefully assess the reasonableness of a fee amount spelled out in a class action settlement agreement. See, e.g., Piambino v. Bailey, 610 F.2d 1306, 1328 (5th Cir.1980) (“the District Court abdicated its responsibility to assess the reasonableness of attorneys’ fees proposed under a settlement of a class action, and its approval of the settlement must be reversed on this ground alone”); Strong, 137 F.3d at 848-50; In re GMC, 55 F.3d at 819-20; Jones v. Amalgamated Warbasse Houses, Inc., 721 F.2d 881, 884 (2d Cir.1988) (holding with regard to attorneys’ fees that “[t]he presence of an arms’ length negotiated agreement among the parties weighs strongly in favor of approval, but such an agreement is not binding on the court.”). 16 That the defendant in form agrees to pay the fees independently of any monetary award or injunctive relief provided to the class in the agreement does not detract from the need carefully to scrutinize the fee award. Ordinarily, “a defendant is interested only in disposing of the total claim asserted against it ... the allocation between the class payment and the attorneys’ fees is of little or no interest to the defense....” In re CMC, 55 F.3d at 819-20 (internal quotation marks and citation omitted); see also Evans v. Jeff D., 475 U.S. 717, 732, 734, 106 S.Ct. 1531, 89 L.Ed.2d 747 (1986) (recognizing that “the possibility of a tradeoff between merits relief and attorney’s fees” is often implicit in class action settlement negotiations, because “[m]ost defendants are unlikely to settle unless the cost of the predicted judgment, discounted by its probability, plus the transaction costs of further litigation, are greater than the cost of the settlement package.”) (Emphasis added). Given these economic realities, the assumption in scrutinizing a class action settlement agreement must be, and has always been, that the members of the class retain an interest in assuring that the fees to be paid class counsel are not unreasonably high. If fees are unreasonably high, the likelihood is that the defendant obtained an economically beneficial concession with regard to the merits provisions, in the form of lower monetary payments to class members or less injunctive relief for the class than could otherwise have obtained. See Court Awarded Attorney Fees, Report of the Third Circuit Task Force, 108 F.R.D. 237, 266 (1985) (“When a large attorney’s fee means a smaller recovery to plaintiff, a significant conflict of interest between client and attorney is created. Even if the plaintiffs attorney does not consciously or explicitly bargain for a higher fee at the expense of the beneficiaries, it is very likely that this situation has indirect or subliminal effects on the negotiations.”). In other words, the negotiation of class counsel’s attorneys’ fees is not exempt from the truism that there is no such thing as a free lunch. We have, in closely analogous contexts, recently so recognized. See Zucker v. Occidental Petroleum Corp., 192 F.3d 1323 (9th Cir.1999); Lobatz v. U.S. West Cellular, 222 F.3d 1142 (9th Cir.2000). In Zucker, for example, we stated that “[i]n 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 attorneys’ fees are fair and proper,” 192 F.3d at 1328 (emphasis added); see also id. at 1327 (“In a class action ... [t]he absence of individual clients controlling the litigation for their own benefit creates opportunities for collusive arrangements in which defendants can pay the attorneys for the plaintiff class enough money to induce them to settle the class action for too little benefit to the class (or too much benefit to the attorneys, if the claim is weak but the risks to the defendants high).”)- Similarly, in Lobatz, where the defendant had agreed that it would not contest a fee request of $1 million that was apart from the settlement fund, we noted that “[s]uch an agreement has the potential of enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel accepting an unfair settlement on behalf of the class.” 222 F.3d at 1148. The district court was therefore obligated to assure itself that the fees awarded in the agreement were not unreasonably high, so as to ensure that the class members’ interests were not compromised in favor of those of class counsel. b. Substantive Scrutiny of Statutory Fees: Generally, litigants in the United States pay their own attorneys’ fees, regardless of the outcome of the proceedings. In order to encourage private enforcement of the law, however, Congress has legislated that in certain cases prevailing parties may recover their attorneys’ fees from the opposing side. When a statute provides for such fees, it is termed a “fee-shifting” statute. Under a fee-shifting statute, the court “must calculate awards for attorneys’ fees using the ‘lodestar’ method,” Ferland v. Conrad Credit Corp., 244 F.3d 1145, 1149 n. 4 (9th Cir.2001), which involves “multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonably hourly rate,” Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir.1996) and, “if circumstances warrant, adjusting] the lodestar to account for other factors which are not subsumed within it,” Ferland, 244 F.3d at 1149 n. 4; see also Caudle v. Bristow Optical Co., 224 F.3d 1014, 1029 (9th Cir.2000). The rules governing both reduction and enhancement have become increasingly refined over time, and we have therefore required careful explanations by district courts of statutory fee determinations. 17 Both Title VII, § 2000e, et seq., and § 1981 — the two federal statutes under which this suit was brought — have fee-shifting provisions. See § 2000e-5 (k) (“In any action or proceeding under this sub-chapter the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee _”); 42 U.S.C. § 1988 (“In any action or proceeding to enforce a provision of section[ ] 1981 ... the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee.... ”). The parties therefore could have negotiated an award of fees under § 2000e-5(k) and § 1988. Had they done so, the district court’s review would have focused on the reasonableness of the fee request under the lodestar calculation method. Were the amount of fees Boeing agreed to pay in the settlement agreement distinctly higher than the fees class counsel could have been awarded by the district court using the lodestar method, the court would almost surely have had to find the fees unreasonable. Absent some unusual explanation, a defendant would not agree in a class action settlement to pay out of its own pocket fees measurably higher than it could conceivably have to pay were the fee amount litigated, unless there was some non-fee benefit the defendant received thereby. In fact, no lodestar-based scrutiny of the fees awarded class counsel in the settlement agreement ever took place. Boeing and class counsel did not attempt to explain the award of fees provided in the consent decree as negotiated under the applicable fee-shifting statutes. Further, the record as it stands would not have been sufficient for such an inquiry, as it contains only the barest estimate of hours expended, with no detail. Not even a summary of the billing records was submitted. Of course, in the context of a settlement, the fees provided for in the agreement are as subject to compromise as are the merits provisions. Consequently, as Evans, 475 U.S. at 734-35, 106 S.Ct. 1531, made clear, the fee amount in a class action settlement agreement can be less than would be awarded by a court. And, since the proper amount of fees is often open to dispute and the parties are compromising precisely to avoid litigation, the court need not inquire into the reasonableness of the fees even at the high end with precisely the same level of scrutiny as when the fee amount is litigated. But here, there was no such inquiry at all. Nor is the record adequate for an inquiry, even one employing a less-than-stringent standard that recognizes the settlement context. We are therefore in no position to determine whether the fees Boeing agreed to pay are reasonable lodestar fees under the applicable fee-shifting statutes and do not do so. On remand, the parties are free to attempt such justification, based on the principles outlined in this opinion and in the extensive lodestar fees case law. c. The Common Fund Justification: Rather than justifying the attorneys’ fees provisions of the settlement agreement on the statutory fee-shifting basis that would properly have applied, the parties sought to justify the fee amount according to the principles applicable to common funds. They did so by constructing a hypothetical “fund” by adding together the amount of money Boeing would pay in damages to members of the class under the agreement, the amount of fees provided to various counsel, the cost of the class action notices paid for by Boeing, and a gross amount of money ascribed to all the in-junctive relief contained in the agreement. For clarity, we will call the total of all those monetary amounts the “putative fund,” for, as we shall see, it is not properly viewed as a common fund as that term is used in attorneys’ fees law. (We will continue, also for clarity, to call the doctrine by its usual name, “common fund.”) The parties portrayed the total fee award as 28% of the putative fund, and maintained that such a percentage is well within the percentage permitted under our common fund fee cases. The district court viewed the fee award as the parties requested and approved it, and the consent decree as a whole, on that basis. For several reasons, that approval was not appropriate.
Before we can decide whether the attempted common fund justification in this case was adequate, we must resolve whether the existence of potentially applicable fee-shifting statutory provisions precludes class counsel from recovering attorneys’ fees under the common fund doctrine. We conclude, as have the two other circuits that have addressed the issue, 18 that there is no preclusion on recovery of common fund fees where a fee-shifting statute applies. Under the “common fund” doctrine, “a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980). The Supreme Court explained: The doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant’s expense. Jurisdiction over the fund involved in the litigation allows a court to prevent this inequity by assessing attorney’s fees against the entire fund, thus spreading fees proportionately among those benefited by the suit. Id. (citation omitted). Thus, the common fund doctrine ensures that each member of the winning party contributes proportionately to the payment of attorneys’ fees. In contrast to fee-shifting statutes, which enable a prevailing party to recover attorneys’ fees from the vanquished party, the common fund doctrine permits the court to award attorneys’ fees from monetary payments that the prevailing party recovered in the lawsuit. Put another way, in common fund cases, a variant of the usual rule applies and the winning party pays his or her own attorneys’ fees; in fee-shifting cases, the usual rule is rejected and the losing party covers the bill. See generally Wininger v. SI Mgmt. L.P., 301 F.3d 1115 (9th Cir.2002). The procedures used to determine the amount of reasonable attorneys’ fees differ concomitantly in cases involving a common fund from those in which attorneys’ fees are sought under a fee-shifting statute. As in a statutory fee-shifting case, a district court in a common fund case can apply the lodestar method to determine the amount of attorneys’ fees. In common fund cases, however, the court can apply a risk multiplier when using the lodestar approach. See In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1299 (9th Cir.1994) (“WPPSS”) (“[The City of Burlington v. Dague, 505 U.S. 557, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992)] rationale for barring risk multipliers in statutory fee cases does not operate to bar risk multipliers in common fund cases.”). A “multiplier” is a number, such as 1.5 or 2, by which the base lodestar figure is multiplied in order to increase (or decrease) the award of attorneys’ fees on the basis of such factors as the risk involved and the length of the proceedings. Alternatively, in a common fund case, the district court can determine the amount of attorneys’ fees to be drawn from the fund by employing a “percentage” method. See Hanlon, 150 F.3d at 1029 (“In ‘common fund’ cases where the settlement or award creates a large fund for distribution to the class, the district court has discretion to use either a percentage or lodestar method.”). As its name suggests, under the percentage method, “the court simply awards the attorneys a percentage of the fund....” Id. “This circuit has established 25% of the common fund as a benchmark award for attorney fees.” Id. That common fund fees can be awarded where statutory fees are available follows from the equitable nature of common fund fees. In Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), the Court explained that 28 U.S.C. § 1923, a version of which was first enacted in 1853, limits the amount of attorneys’ fees that a prevailing party may recover from the loser, but does not prohibit the award of fees under the common fund doctrine. The Court stated: In Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157 (1882), the 1853 Act was read as not interfering with the historic power of equity to permit the trustee of a fund or property, or a party preserving or recovering a fund for the benefit of others in addition to himself, to recover his costs, including his attorneys’ fees, from the fund or property itself or directly from the other parties enjoying the benefit. That rule has been consistently followed.... These exceptions are unquestionably assertions of inherent power in the courts to allow attorneys’ fees in particular situations, unless forbidden by Congress.... Alyeska Pipeline, 421 U.S. at 257-59, 95 S.Ct. 1612. Thus, unless Congress has forbidden the application of the common fund doctrine in cases in which attorneys could potentially recover fees under the type of fee-shifting statutes at issue here, the courts retain their equitable power to award common fund attorneys’ fees. Congress did not explicitly forbid the use of the common fund doctrine in cases potentially involving § 2000e-5 and § 1988, and we see no reason to infer that it did so implicitly. The intent of the fee-shifting provisions at issue here is not countered by the application of common fund principles. The fees available under a fee-shifting statute are part of the plaintiffs recovery and are not dependent upon any explicit fee arrangements between the plaintiffs and their counsel. For that reason, contingent fee agreements between counsel and client are valid in cases where statutory fees are available. See Venegas v. Mitchell, 495 U.S. 82, 86-89, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990). Common fund fees are essentially an equitable substitute for private fee agreements where a class benefits from an attorney’s work, so the same general principles outlined in Venegas should apply. Application of the common fund doctrine to class action settlements does not compromise the purposes underlying fee-shifting statutes. In settlement negotiations, the defendant’s determination of the amount it will pay into a common fund will necessarily be informed by the magnitude of its potential liability for fees under the fee-shifting statute, as those fees will have to be paid after successful litigation and could be treated at that point as part of a common fund against which the attorneys’ fees are measured. Conversely, the prevailing party will expect that part of any aggregate fund will go toward attorneys’ fees and so can insist as a condition of settlement that the defendants contribute a higher amount to the settlement than if the defendants were to pay the fees separately under a fee-shifting statute. 19 The district court did not, therefore, err in treating this case as one that could fall under the common fund doctrine rather than under the potentially applicable fee-shifting provisions, if the parties properly so agreed, the resulting fee was reasonable, and other requisites applicable to common fund fees were met. The possibility that a prevailing party could recover fees either under the court’s equitable powers or under its statutory authority does not, however, give the parties or the court free rein once either the common fund or the statutory rubric is selected. Fees sought or awarded under a fee-shifting statute require the application of the standards and procedures crafted for such statutes, discussed above. Similarly, if the parties invoke common fund principles, they must follow common fund procedures and standards, designed to protect class members when common fund fees are awarded. We turn next to the specific procedure employed in the negotiation and award of the attorneys’ fees in this case.
The parties negotiated the amount of attorneys’ fees awarded class counsel as a term of the settlement agreement and thus conditioned the merits settlement upon judicial approval of the agreed-upon fees. See Hanlon, 150 F.3d at 1026 (“Neither the district court nor this court ha[s] the ability to ‘delete, modify or substitute certain provisions.’ The settlement must stand or fall in its entirety.”) (citations omitted). By proceeding in this fashion with respect to attorneys’ fees and then attempting to justify the fees not as statutory fees but as common fund fees, the parties followed an irregular and, as we hold below, improper procedure. Under regular common fund procedure, the parties settle for the total amount of the common fund and shift the fund to the court’s supervision. The plaintiffs’ lawyers then apply to the court for a fee award from the fund. See Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 271 (9th Cir.1989) (in a common fund ease, “a court has control over the fund — even one created pursuant to a settlement, as here ... and assesses the litigation expenses against the entire fund so that the burden is spread proportionally among those who have benefited.”) (citing Van Gemert, 444 U.S. at 478, 100 S.Ct. 745); see also Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1046 (9th Cir.2002) (after approval of the settlement, class counsel applied to the district court for an award of attorneys’ fees); Cook, 142 F.3d at 1011 (“In common fund cases, after attorneys obtain a settlement for the class, they petition the court for compensation from the fund.... ”); Florin, 34 F.3d at 563 (in a common fund case, “the defendant typically pays a specific sum into the court, in exchange for a release of its liability. The court then determines the amount of attorney’s fees that plaintiffs’ counsel may recover from this fund, thereby diminishing the amount of money that ultimately will be distributed to the plaintiff class.”). 20 In setting the amount of common fund fees, the district court has a special duty to protect the interests of the class. On this issue, the class’s lawyers occupy a position adversarial to the interests of their clients. The reason for the usual insistence upon judge-conferred common fund fees is that, as we have explained, “Because in common fund cases the relationship between plaintiffs and their attorneys turns adversarial at the fee-setting stage, courts have stressed that when awarding attorneys’ fees from a common fund, the district court must assume the role of fiduciary for the class plaintiffs.” WPPSS, 19 F.3d at 1302. Accordingly, fee applications must be closely scrutinized. Rubber-stamp approval, even in the absence of objections, is improper. Vizcaino, 290 F.3d at 1052. See also In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 109 F.3d 602, 608 (9th Cir.1997) (“In a common fund case, the judge must look out for the interests of the beneficiaries, to make sure that they obtain sufficient financial benefit after the lawyers are paid. Their interests are not represented in the fee award proceedings by the lawyers seeking fees from the common fund.”). 21 When the ordinary procedure is not followed and instead the parties explicitly condition the merits settlement on a fee award justified on a common fund basis, the obvious risk arises that plaintiffs’ lawyers will be induced to forego a fair settlement for their clients in order to gain a higher award of attorneys’ fees. That risk is, if anything, exacerbated where, as here, the agreement provides for payment of fees by the defendant, as in a statutory fee-shifting situation, but the parties choose to justify the fee as coming from a putative common fund. Where that is the case, courts have to be alert to the possibility that the parties have adopted this hybrid course precisely because the fee award is in fact higher than could be supported on a statutory fee-shifting basis, yet the deal is so dependent upon class counsel receiving a greater-than-lodestar amount of fees that the parties were not willing to give the court supervisory discretion to determine the distribution of the total settlement package between counsel and the class. We recognize that in Evans, 475 U.S. at 720, 106 S.Ct. 1531, the Court held that the parties to a class action may simultaneously negotiate merits relief and an award of attorneys’ fees under a fee-shifting statute, and may condition the entire settlement upon a waiver of fees. The Court explained: [A] general proscription against negotiated waiver of attorney’s fees in exchange for a settlement on the merits would itself impede vindication of civil rights, at least in some cases, by reducing the attractiveness of settlement. Id. at 732, 106 S.Ct. 1531; see also id. at 733, 106 S.Ct. 1531 (“If defendants are not allowed to make lump-sum offers that would, if accepted, represent their total liability, they would understandably be reluctant to make settlement offers.”) (quoting Marek v. Chesny, 473 U.S. 1, 6-7, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985)). Thus, to facilitate settlement by providing defendants with assurances as to the limits of their liability exposure, the parties to a lawsuit may, in conjunction with their merits negotiation, properly negotiate statutory fees to be paid by the defendant. The concern motivating the decision in Evans — that prohibiting simultaneous negotiations and agreements as to merits and fees will discourage settlements — simply does not exist, however, in a case, such as this one, in which the parties to the negotiations seek to justify attorneys’ fees as coming from a putative fund and to apply common fund principles. Usually, an agreement that provides lawyers fees on a common fund basis constitutes a “lump-sum” agreement, Evans, 475 U.S. at 733, 106 S.Ct. 1531, one that enables defendants to know the precise extent of their liability regardless of the amount of attorneys’ fees eventually awarded from the fund. Thus, the parties could have simply agreed upon the total amount of the putative fund, as well as the damages and injunctive relief, and left the division of that fund as between the class and counsel to the district court, as is usual in common fund cases. 22 Requiring the parties to so proceed or, in the alternative, to agree to a fee award as part of the settlement agreement in an amount no higher than could be justified by statutory fee-shifting principles, fully serves the defendant’s only legitimate interest in class counsel’s fee award. See In Re GMC, 55 F.3d at 819-820 (“[A] defendant is interested only in disposing of the total claim asserted against it ... the allocation between the class payment and the attorneys’ fees is of little or no interest to the defense.” (internal quotation marks and citations omitted)); Florin, 34 F.3d at 562 n. 1 (“The parties agreed that attorney’s fees were to come out of the settlement fund. Defendants have satisfied their obligation to pay into the settlement fund, and thus have no interest in the amount of fees class counsel want to extract from the fund.”). That requirement thereby provides the requisite impetus to settlement on the defendant’s part while protecting against a maldistri-bution of the total settlement package between the class and its counsel. Further, the effect of conditioning the settlement on a set amount of attorneys’ fees based on an actual or putative common fund can be to inhibit district courts from engaging in independent determinations of reasonable fees, as required by law. The parties’ all-or-nothing approach imposes pressure to approve otherwise acceptable and desirable settlements in spite of built-in attorneys’ fees provisions. While this same dynamic may exist where fees can be justified on a statutory fee basis, the more precise lodestar standards for adjudging the reasonableness of such fees, summarized above, make the influence of such pressure much less forceful. We hold, therefore, that in a class action involving both a statutory fee-shifting provision and an actual or putative common fund, the parties may negotiate and settle the amount of statutory fees along with the merits of the case, as permitted by Evans. In the course of judicial review, the amount of such attorneys’ fees can be approved if they meet the reasonableness standard when measured against statutory fee principles. Alternatively, the parties may negotiate and agree to the value of a common fund (which will ordinarily include an amount representing an estimated hypothetical award of statutory fees) and provide that, subsequently, class counsel will apply to the court for an award from the fund, using common fund fee principles. In those circumstances, the agreement as a whole does not stand or fall on the amount of fees. Instead, after the court determines the reasonable amount of attorneys’ fees, all the remaining value of the fund belongs to the class rather than reverting to the defendant. The parties in this case did not follow either of these procedures, or any other that adequately protected the class from the possibility that class counsel were accepting an excessive fee at the expense of the class. 23 The district court therefore erred in approving the consent decree. in. Injunctive relief as part of the district court’s putative fund Even if the fee award had been determined in a procedurally proper way, approval of the amount of the attorneys’ fees on common fund principles would still have been mistaken as a matter of law, because the actual percentage award was much higher than the 28% the district court recognized. In order for attorneys to obtain an award of fees from a common fund, the court must be able to: (1) sufficiently identify the class of beneficiaries; (2) accurately trace the benefits; and (3) shift the fee to those benefiting with some exactitude. Van Gemert, 444 U.S. at 478-79, 100 S.Ct. 745. “[T]he criteria are satisfied when each member of a certified class has an undisputed and mathematically ascertainable claim to part of a lump-sum judgment recovered on his behalf.” Id. at 479, 100 S.Ct. 745. Under these requirements, the monetary relief for the plaintiff class (including attorneys’ fees) provided for in the consent decree could be converted as described above so as to qualify as a common fund from which class counsel could obtain an award of attorneys’ fees. The class consists of the approximately 15,000 African-American Boeing employees and so is sufficiently identifiable. The benefits from the monetary relief provided for in the decree would be distributed according to its terms and so can be accurately traced. Finally, the fees could be shifted with ex-' actitude to the benefiting class if taken properly from the fund. In approving the award of attorneys’ fees provided for in the consent decree, the district court employed the percentage method to determine that the award was fair. The court found that the fees constituted 28% of the putative fund, just above the 25% benchmark. To make this calculation, however, the court included in the amount of the putative fund an estimated value of $3.65 million for injunctive relief, the amount that the decree required Boeing to spend on approval and implementation of this component. The district court erred by including in the putative fund the parties’ estimated value of the injunctive relief. That relief cannot be translated into anything resembling “an undisputed and mathematically ascertainable” amount for each class member. As noted, much of the injunctive relief included in the consent decree requires Boeing only to “meet and confer” with class counsel or to discuss certain issues. Although Boeing must participate in such conferences and discussions, there is no requirement that Boeing take any action with respect to what the Company learns. The conferences and discussions may not result in tangible dividends to class members. Moreover, a diversity consultant may not benefit the class in monetary terms equivalent to his or her cost. In addition, some of the injunctive relief described in the consent decree consists of steps Boeing had apparently decided to take on its own, even before it entered the settlement. The decree also permits Boeing to credit expenditures toward the in-junctive relief amount without regard to whether such expenditures are in addition to the cost of Boeing’s prior outlays for administering similar programs. Thus, although the injunctive relief (along with the cost of obtaining approval of the decree) is to cost Boeing $3.65 million, that amount of money cannot be accurately traced to the decree, let alone to the individual beneficiaries making up the class. Without the estimated value of the injunctive relief, the fund is reduced to only $10.55 million, and the fee award of $4.05 million constitutes 38% — well above the 25% benchmark — of the putative fund. Indeed, the nature of injunctive relief means that it will rarely be amenable to “undisputed and mathematically ascertainable” evaluation. Precisely because the value of injunctive relief is difficult to quantify, its value is also easily manipulable by overreaching lawyers seeking to increase the value assigned to a common fund. We do not hold that a district court can never consider the value of injunctive relief in determining the reasonableness of a common fund fee. For instance, in Han-lon, 150 F.3d at 1029, we upheld the use of the common fund doctrine to award attorneys’ fees after the parties reached a settlement agreement under which Chrysler would replace defective latches on minivans that it had manufactured. Although the replacement of latches is injunctive in nature, the agreement bestowed upon each beneficiary a material benefit: precisely one replacement latch for each minivan owned. The court could therefore, with some degree of accuracy, value the benefits conferred. Even so, in Hanlon the district court used its valuation of the fund only as a cross-check of the lodestar amount, “reject[ing] the idea of a straight percentage recovery because of its uncertainty as to the valuation of the settlement,” 150 F.3d at 1029, and it was on that basis that we affirmed the fee award. We hold, therefore, that only in the rare instance in which the value of benefits deriving from injunctive relief can be accurately valued and traced to the beneficiaries may courts include such relief as part of the value of a common fund for purposes of applying the percentage method of determining fees. 24 See Van Gemert, 444 U.S. at 478-79, 100 S.Ct. 745. When this is not the case, courts should consider the value of the injunctive relief obtained as a “relevant circumstance” in determining what percentage of the common fund class counsel should receive as attorneys’ fees, rather than as part of the fund itself. See Vizcaino, 290 F.3d at 1049. Alternatively, particularly where obtaining injunc-tive relief likely accounted for a significant part of the fees expended, courts can use the common fund version of the lodestar method either to set the fee award or as a cross-check to assist in the determination of how the “relevant circumstance” of the injunctive relief should affect a percentage award. See id. at 1050 (“Calculation of the lodestar, which measures the lawyers’ investment of time in the litigation, provides a check on the reasonableness of the percentage award.”). 25 The district court did not employ either of these procedures here. Nor can we determine on the record before us that considering the injunctive relief as a “relevant circumstance” or employing the common fund lodestar method would have justified the award of $4.05 million as a reasonable fee. On this ground, also, the district court erred in approving the proposed attorneys’ fees award. iv. Treatment of Costs of Litigation In assessing the reasonableness of the fee award, the parties and the district court (1) included the pre-settlement costs of litigation — fairly low in this case, as the settlement occurred early in the lawsuit— as part of the fees awarded; but (2) included the cost incurred by Boeing for providing notices to the class of the settlement in the value of the injunctive relief, and therefore as part of the putative fund against which the reasonableness of the fees was measured. The parties to the proposed settlement agreed to the inclusion of costs in the amount attributed to fees and the objectors, understandably, have not protested that inclusion. As all of those affected are content with that method of calculation and no class member’s interests are adversely affected, the district court had no cause to disapprove the attribution, nor do we. The district court also did not abuse its discretion by including the cost of providing notice to the class of the proposed consent decree as part of its putative fund valuation, although the cost of providing two notices rather than one should not have been included. We have said that “the choice of whether to base an attorneys’ fee award on either net or gross recovery should not make a difference so long as the end result is reasonable. Our case law teaches that the reasonableness of attorneys’ fees is not measured by the choice of the denominator.” Powers v. Lichen, 229 F.3d 1249, 1258 (9th Cir.2000). The post-settlement cost of providing notice to the class can reasonably be considered a benefit to the class. Also, where, as here, it is the defendant who pays for the notice, we may assume that the inherent incentives to minimize the cost involved are sufficient. Additionally, the court’s supervision of the form of notice and the method of communication assures that the costs expended are contained. We conclude that where the defendant pays the justifiable cost of notice to the class — but not, as here, an excessive cost — it is reasonable (although certainly not required) to include that cost in a putative common fund benefiting the plaintiffs for all purposes, including the calculation of attorneys’ fees.