Court Opinion

ID: 9785362
Source: CourtListenerOpinion
Date Created: 2023-08-30 21:36:40.624299+00
Date Added: 2024-06-11T07:36:20.904645
License: Public Domain

SUTIN, Judge (specially concurring). {91} I concur in the majority opinion’s analyses and results. I write separately only to emphasize a few points in regard to Microsoft’s shortcomings in this case, shortcomings that have made it easier for me to concur as I have in the majority’s analyses and results. 1. Microsoft’s Positions on the Common Fund Doctrine and Use of the Percentage Method {92} A district court invokes the common fund doctrine in order to supervise the fund and to place the burden of class counsel’s fees on the class. In doing so, the court has a choice of employing either the percentage method or the lodestar method to determine fees. Where the fee burden is placed on the class, it does not follow that either method must necessarily or logically be the primary determinant of fees. The common fund doctrine appears to have little significance except where equity demands that the class is to bear the burden of attorney fees. {93} Where, by agreement of the parties, the burden of attorney fees is placed on the defendant and not the class, why would the parties agree, as they did in the present case, that the common fund doctrine would be used to determine fees? And why, after agreeing that the fees it would have to pay were to be determined based on the common fund doctrine, would Microsoft state that (1) because it contractually agreed to pay the fees, “the Settlement Agreement’s reference to the common fund doctrine is superfluous,” (2) there “is no common fund,” and (3) “there is no ‘true’ common fund belonging to the class that could have allowed the district court to spread the burden of paying attorney[ ] fees to all class members by awarding a percentage of the fund to counsel for their fees?” {94} Microsoft and its trial attorneys, sophisticated and experienced in class actions, appear to have intentionally agreed to language that is vague, or worse, arguably meaningless or subject to attack. How Microsoft can agree to the wording “based on the common fund doctrine” and agree to ranges of valuation of the common fund, yet later essentially argue that the agreement language is meaningless in addressing the issue of the method of determining fees, is difficult to comprehend. The reasonable and logical view of the language used is that the parties intended there to be a valuation of a “common fund,” giving the court discretion to use the percentage method as the primary method of determining fees, but nevertheless did not intend to rule out the use of the lodestar method as the primary method, leaving open the right of the parties to argue value and which method the court should use as a primary determiner of fees. 2. Valuation of the Fund {95} The valuation issue concerns the elements that can be included in the valuation of the common fund. Microsoft wants to include only the in-hand amounts received by Class members pursuant to the voucher claims they exercised. Yet (1) Microsoft agreed to the court ascertaining a fund value for attorney fee determination purposes well before the voucher claims were exercised and the in-hand amounts were known and before the court, and (2) Microsoft presented quite different values to the court for its consideration in ascertaining a fund value for attorney fee determination purposes. Again, Microsoft appears to have taken one avenue only to switch and attempt another avenue when it appeared later on to be advantageous to do so. It is difficult to side with Microsoft under these circumstances. {96} Further, there is adequate, if not plentiful, authority for the court’s inclusion of the cy pres amount, as well as attorney fees and expenses, in the valuation of the benefit to the Class. Based on the abuse of discretion standard of review we employ, I cannot say that the court abused its discretion in including those items in the valuation. 3. Reasonableness of the Fee {97} The majority is correct in stating that “[a]n appropriate fee is determined by reasonableness.” Majority Opinion ¶ 58. Reasonableness is judged by whether there is a rational connection between the amount of the fee and the benefit to the class. {98} Settlement amounts (1) to be paid by a class action defendant to the class (e.g., the value of vouchers expected to be redeemed), (2) to satisfy a financial burden of the class (e.g., attorney fees), and (3) to benefit the public (e.g., cy pres vouchers), should all be considered a benefit to the class. If other than this broad and accepted view of benefit is intended by the parties, the intent should be made clear in the settlement agreement. Again, Microsoft must take the consequences of a vague settlement agreement. Thus, as in the present case, where there is an agreed-to cy pres voucher availability, and an agreed-to shifting of the attorney fee burden from the Class to the defendant, without a clearly expressed intent to the contrary each can and should be considered a benefit to the Class for the purposes of determining whether the fee award, based on a valuation of the fund, is reasonable. {99} Again, I cannot say that the court abused its discretion in awarding the fee, nor can I say that the majority’s analysis of the reasonableness of the fee is defective. The award is neither irrational nor arbitrary. Microsoft has not shown how the law was incorrectly applied to the facts. The valuations of the cy pres and class voucher amounts are essentially based on Microsoft’s own estimated figures presented to the court. Microsoft has not attacked the 25% figure as arbitrary. And Microsoft does not contest the district court’s methodology by which it first implanted the fee into the common fund only to afterwards derive that fee from the common fund. Nor does Microsoft persuade me that the multiplier of three was irrational or arbitrary in this case. {100} Because of the broad discretion given to a trial court in measuring the reasonableness of an award of fees based on the benefit to the class, from both the circumstances in this case and fees awarded in similar cases, I am unable to say that the court in the present case abused its discretion. I agree that appellate courts must be vigilant in their oversight role to assure that the fees awarded are reasonable. Majority Opinion ¶¶ 12-13. On the flip-side, however, we must be careful not to substitute our judgment for that of its district court, and we are to reverse the district court only if the court’s ruling “exceeds the bounds of all reason,” is arbitrary or capricious, or is an erroneous application of law. Majority Opinion ¶ 14. 4.Other Microsoft Contract Language Arguments {101} In its reply brief, Microsoft argues that “under the settlement agreement, if all of the class vouchers had been claimed, class counsel could not have argued that the common fund included its attorney[ ] fees.” Microsoft bases this belated argument on the following language in the agreement: “[P]laintiffs are free to argue that the value of the ‘common fund’ created by the litigation is any amount up to (but in no case exceeding) Face Value, plus notice and administrative expenses and costs.” In Microsoft’s view, it follows that “there is no basis for including attorneyf ] fees in the value of the recovery simply because fewer than all of the vouchers were claimed.” By footnote, Microsoft indicates that class counsel switched positions between trial and appeal on the issue of whether attorney fees were to be included in the class “recovery.” {102} Microsoft is in no position to isolate wording in the agreement that might be beneficial to Microsoft after the fact. Microsoft cannot show that the wording on which it relies was intended by the parties to bring about the result Microsoft asserts. The wording of the Settlement Agreement in regard to awarding fees is sufficiently unclear to hold against Microsoft’s interpretations. It was Microsoft’s burden to assure that the language in the agreement was clear.