Court Opinion

ID: 4399802
Source: CourtListenerOpinion
Date Created: 2019-05-23 15:00:14.387622+00
Date Added: 2024-06-11T07:49:53.234474
License: Public Domain

17‐2662‐cv
Fresno Cty. Emps.’ Ret. Ass’n v. Isaacson/Weaver Family Tr.

                       UNITED STATES COURT OF APPEALS
                           FOR THE SECOND CIRCUIT
                             ____________________

                                 August Term, 2018

(Argued: November 15, 2018                                    Decided: May 23, 2019)

                                 Docket No. 17‐2662

                                ____________________

FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION,

                                 Plaintiff‐Appellee,

                     v.

ISAACSON/WEAVER FAMILY TRUST,

                           Objector‐Appellant.1

                                ____________________

Before: JACOBS, POOLER, and WESLEY, Circuit Judges.

        The Isaacson/Weaver Family Trust appeals from the July 26, 2017, order of

the United States District Court for the Southern District of New York (Alison J.

1   The Clerk of Court is directed to amend the caption as above.
Nathan, J.) granting Bernstein Litowitz Berger & Grossmann LLP’s request for a

percentage fee awarded from the common settlement fund. The fee award was

compensation for the firm’s representation of a class of plaintiffs that settled

federal securities law claims against BioScrip, Inc. The Isaacson/Weaver Family

Trust, a member of the class, objected to the fee award in the district court,

arguing that the class’s claims were brought pursuant to statutes containing fee‐

shifting provisions and therefore class counsel’s fee award was presumptively

limited to the unenhanced lodestar (counsel’s hourly rate multiplied by the hours

expended on the case). The district court found this objection unavailing and

ruled that, because the parties’ settlement agreement provided for class counsel

to be compensated from a common settlement fund, class counsel was entitled to

fees under the equitable common‐fund doctrine rather than pursuant to a

statutory fee‐shifting provision. Under the common‐fund doctrine, the district

court held that a percentage fee award was appropriate.

      On appeal, we conclude that, regardless of whether the claims settled here

were initiated under fee‐shifting statutes, the common‐fund doctrine properly

controls the district court’s allocation of attorneys’ fees from a common

                                          2
settlement fund. This is because class plaintiffs have received the benefit of

counsel’s representation and assumption of the risk that the lawsuit will not

render a recovery, and thus the class may be fairly charged for counsel’s

assumption of contingent risk. The district court was therefore entitled to

exercise its discretion to award either a percentage‐of‐the‐fund fee or a lodestar

fee to class counsel. We offer no opinion as to whether the claims settled here

were initiated under fee‐shifting statutes. Accordingly, we AFFIRM the order of

the district court.

      Affirmed.

                              ____________________

                          ERIC ALAN ISAACSON, La Jolla, CA, for Objector‐
                          Appellant.

                          HANNAH G. ROSS, Bernstein Litowitz Berger &
                          Grossmann LLP (Jai Chandrasekhar, on the brief), New
                          York, NY, for Plaintiff‐Appellee.

POOLER, Circuit Judge:

      The objection of the Isaacson/Weaver Family Trust (the “Objector”) to

Bernstein Litowitz Berger & Grossmann LLP’s fee award raises a novel issue of

the proper principles for allocating fees awarded from a common‐fund

                                         3
settlement. The Objector argues that, whenever an action is initiated under a

statute with a fee‐shifting provision, an attorney’s fee is presumptively limited to

the unenhanced lodestar fee, even if the action is settled by the creation of a

common fund. Appellee argues that the contrary is true, claiming that, whenever

an action is settled with the creation of a common fund, equitable principles

permit the district court to award a fee that can be calculated using either the

lodestar‐fee method or a percentage‐of‐the‐fund method. As Second Circuit case

law has long implied, we hold that, even if a case is brought pursuant to a fee‐

shifting statute, common‐fund principles control fee awards authorized from a

common fund, and a common‐fund fee award may be calculated as the lodestar

or as a percentage of the common fund. In so holding, we recognize the acute

difference between assessing a fee award against a defendant, who reaps no

benefit from an action brought against him, and requiring class members to

compensate counsel for representation that enriches the class. We AFFIRM the

well‐reasoned order of the district court finding that Bernstein Litowitz Berger &

Grossmann LLP is entitled to its requested fee and expense award.

                                          4
                                    BACKGROUND

      This case is collateral litigation arising from the June 16, 2016, settlement of

a consolidated securities class action brought by shareholders of BioScrip, Inc.

The district court appointed Fresno County Employees’ Retirement Association

as lead plaintiff and Bernstein Litowitz Berger & Grossmann LLP (“Lead

Counsel”) as lead counsel for the action. The class sought to recover for two

allegedly material misrepresentations that BioScrip, Inc. made and brought an

action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934;

Securities and Exchange Commission Rule 10b‐5; and Sections 11, 12(a)(2), and

15 of the Securities Act of 1933.

      After the consolidated class‐action complaint largely survived a motion to

dismiss and the case entered discovery, the parties agreed to settle all of the

aforementioned claims. The settlement called for the class‐action defendants to

pay $10,900,000 into a common fund in exchange for the class releasing all claims

asserted against the defendants in the action. The settlement also provided that

“Lead Counsel will apply to the Court for a collective award of attorneys’ fees to

Plaintiffs’ Counsel to be paid solely from (and out of) the Settlement Fund.”

                                          5
Stipulation & Agreement of Settlement at 20, ¶ 19, Faig v. BioScrip, Inc., No. 13‐cv‐

6922(AJN) (S.D.N.Y. Feb. 4, 2016), ECF No. 104‐5. Thereafter, Lead Counsel

moved for an award of attorneys’ fees of 25% of the settlement fund, totaling

$2,725,000 plus interest, and an expense award of $133,565.28. Lead Counsel’s

requested fee award amounted to a 1.39 multiplier of the lodestar fee.

      The Isaacson/Weaver Family Trust filed an objection to Lead Counsel’s

requested award, arguing that Lead Counsel’s award should be reduced to the

lodestar amount. No other class member objected to the settlement agreement or

the requested fee. The district court subsequently held a settlement fairness

hearing where it heard argument on, among other things, Lead Counsel’s fee

request. In a thorough and discerning opinion, the district court found that Lead

Counsel’s requested fee was reasonable and granted the fee in full.

                                  DISCUSSION

      The parties primarily dispute the method by which a reasonable fee

should be calculated when class counsel settles claims brought pursuant to

statutes with fee‐shifting provisions by establishing a common settlement fund.

The Objector argues that, because the parties created the common fund to resolve

                                         6
claims based on statutes with fee‐shifting provisions, the Supreme Court’s fee‐

shifting jurisprudence applies, and Lead Counsel is presumptively entitled to

only the unenhanced lodestar fee. Lead Counsel disagrees, arguing that the

settlement that created the common fund resolved claims based on statutes that

do not have applicable fee‐shifting provisions, and regardless, the common‐fund

doctrine governs a district court’s award of attorneys’ fees when counsel has

secured a settlement fund for the benefit of the class. We make clear today what

has long been implicit in this Circuit’s jurisprudence: regardless of whether a

case is brought pursuant to a statute with a fee‐shifting provision, if the parties

settle the case by creating a common fund, common‐fund principles control class

counsel’s fee recovery. So concluding, we offer no opinion on whether the

statutes pursuant to which the underlying case arose contain applicable fee‐

shifting provisions.

I.    Standard of Review

      “The Second Circuit reviews a district court’s decision to grant or deny an

award of attorneys’ fees for abuse of discretion, reviewing de novo any rulings of

law.” Flanagan, Lieberman, Hoffman & Swaim v. Ohio Pub. Emps. Ret. Sys., 814 F.3d
7
652, 656 (2d Cir. 2016). Because the Objector has challenged the fee award based

on the district court’s ruling of law that Lead Counsel was entitled to a common‐

fund fee award, our review is de novo.

II.   The American Rule and Its Exceptions

      In the American system of justice, “the prevailing litigant is ordinarily not

entitled to collect a reasonable attorneys’ fee from the loser.” Alyeska Pipeline Serv.

Co. v. Wilderness Soc’y, 421 U.S. 240, 247 (1975). There are two well‐known

exceptions to this “American Rule”: (1) where Congress has specifically

legislated that the prevailing party may recover fees from the losing party, see

Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 550 & n.3 (2010), and (2) where “a

litigant or a lawyer . . . recovers a common fund for the benefit of persons other

than himself or his client,” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).

While in both instances an attorney is entitled to a recovery that is ultimately

financed by the opposing party, the Supreme Court has placed greater

restrictions on attorneys’ fees recovered from statutory fee‐shifting provisions

than on fees recovered from common funds.

                                          8
      When a statute’s fee‐shifting provision authorizes a reasonable attorneys’

fee, the Supreme Court has held that “the lodestar method yields a fee that is

presumptively sufficient.”2 Perdue, 559 U.S. at 552. Fee‐shifting provisions

typically encourage counsel to represent plaintiffs in actions where “Congress

has opted to rely heavily on private enforcement to implement public policy.”

Alyeska Pipeline Serv. Co., 421 U.S. at 263. Where a litigant acts as a private

attorney general, the goal of fee shifting is to provide “a fee that is sufficient to

induce a capable attorney to undertake the representation of a meritorious . . .

case.” Perdue, 559 U.S. at 552. The defendant effectively finances the private

enforcement action against it as a component of its liability. See Alyeska Pipeline

Serv. Co., 421 U.S. at 253‐54 (quoting fee‐shifting provisions that refer to taxing

the opposing party for fees “incident to the judgment” (internal quotation marks

omitted)).

      Notably, an unenhanced lodestar fee does not account for the contingent

risk that a lawyer may assume in taking on a case. See City of Burlington v. Dague,

2The lodestar method calculates a given attorney’s fee by multiplying an
attorney’s reasonable hourly rate by the number of hours that the attorney spent
on the case. Perdue, 559 U.S. at 546.
                                         9
505 U.S. 557, 562‐63 (1992); Pennsylvania v. Del. Valley Citizens’ Council for Clean

Air (Del. Valley II), 483 U.S. 711, 724‐25 (1987). This makes particular sense where

the defendant shoulders the burden of fees because “[a]n attorney operating on a

contingency‐fee basis pools the risks presented by his various cases.” Dague, 505
U.S. at 565. Therefore, “enhancing fees for risk of loss forces losing defendants to

compensate plaintiff’s lawyers for not prevailing against defendants in other

cases.” Del. Valley II, 483 U.S. at 724‐25. The defendant, however, has no

responsibility to compensate an attorney for risk in the attorney’s other cases and

would be unfairly penalized if it were forced to subsidize an attorney’s other

ventures. Thus, where counsel receives a fee award pursuant to a fee‐shifting

statute authorizing a reasonable fee, we presume that the unenhanced lodestar is

a reasonable fee. Perdue, 559 U.S. at 552.

      In contrast to fees awarded pursuant to fee‐shifting provisions, fees

awarded pursuant to the common‐fund doctrine do not extract a tax on the

losing party but instead confer a benefit on the victorious attorney for her

representation of her client and the class members. See Boeing, 444 U.S. at 478.

“The doctrine rests on the perception that persons who obtain the benefit of a

                                          10
lawsuit without contributing to its cost are unjustly enriched at the successful

litigant’s expense.” Id. The common‐fund doctrine is therefore rooted in the

courts’ “historic power of equity to permit” a person who secures a fund for the

benefit of others to collect a fee directly from the fund. Alyeska Pipeline Serv. Co.,
421 U.S. at 257 (citing Trustees v. Greenough, 105 U.S. 527, 531‐33 (1881)). Under

the common‐fund doctrine, a district court may select “either the lodestar or

percentage of the recovery methods” to calculate fees. Goldberger v. Integrated

Res., Inc., 209 F.3d 43, 45 (2d Cir. 2000); see also McDaniel v. County of Schenectady,

595 F.3d 411, 419 (2d Cir. 2010). A common‐fund‐percentage fee must still be

evaluated for reasonableness, see, e.g., McDaniel, 595 F.3d at 423, but may exceed

the lodestar—i.e., it may be less than, equal to, or greater than the lodestar, see,

e.g., Goldberger, 209 F.3d at 47.

      Accordingly, the means by which an attorney becomes entitled to a fee can

affect the method used to calculate what a reasonable fee is. Subject always to the

district court’s discretion, an attorney seeking a fee after establishing statutory

liability will presumptively receive a fee equal to the unenhanced lodestar, and

an attorney seeking a fee after establishing a common fund will receive a fee

                                           11
calculated using either the lodestar method or a percentage‐of‐the‐fund method,

which can yield a fee that is less than, equal to, or greater than the lodestar fee.

III.   Fee‐Shifting Statutes Do Not Circumscribe the Common‐Fund Doctrine

       Fee‐shifting principles and the common‐fund doctrine occupy separate

realms. In Alyeska Pipeline Service Co. v. Wilderness Society, the Court identified a

“consistently followed” rule that fee‐shifting statutes do “not interfer[e] with the

historic power of equity to permit . . . 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 . . . itself or directly from the other parties enjoying

the benefit.” 421 U.S. at 257. The Supreme Court therefore suggested that, even

when statutory fees and the common‐fund doctrine collide, the common‐fund

doctrine operates autonomously from fee‐shifting principles.

       Our Circuit has followed suit. In County of Suffolk v. Long Island Lighting

Co., this Court considered whether class counsel could be awarded fees from a

common fund despite the fact that counsel would be entitled to statutory fees

under the Racketeer Influenced and Corrupt Organizations Act if it prevailed on

appeal. 907 F.2d 1295, 1326‐27 (2d Cir. 1990). En route to deciding that class

                                          12
counsel was entitled to fees for its significant work in bringing about a

settlement, we observed that “fee‐shifting statutes are generally not intended to

circumscribe the operation of the equitable fund doctrine.” Id. at 1327. An

exception to this principle exists only if the equitable‐fund doctrine interferes

with a fee‐shifting statute’s purpose “to encourage the prosecution of certain

favored actions by private parties,” in which case the doctrine yields to the

statute. Id. We determined that, where a common fund results from the

commencement of a favored action, no such interference exists, and class counsel

is entitled to fees under the common‐fund doctrine notwithstanding a statutory

fee‐shifting provision. Id. at 1327‐28.

      In Goldberger v. Integrated Resources, Inc., we again obliquely addressed the

common‐fund doctrine vis‐à‐vis statutory fee‐shifting principles. 209 F.3d 43.

There, we considered whether a securities class‐action settlement—settling

claims brought under Rule 10b‐5, id. at 45, one of the provisions at issue in this

case—could support an award of attorneys’ fees based on a percentage‐of‐the‐

fund approach. Id. at 47. We noted that both the lodestar and the percentage‐of‐

the‐fund methods can yield a “reasonable attorneys’ fee” from a common‐fund

                                          13
settlement. Id. at 47‐50; see also McDaniel, 595 F.3d at 419. The Court’s analysis

foreshadowed our decision today: in rejecting counsel’s claim “that the district

court erroneously relied on the strictures against risk multipliers in statutory fee‐

shifting cases” when it awarded a lodestar fee in a common‐fund case, we noted

that “[c]ourts have held such strictures inapplicable to cases like this, where the

lawyers seek fees from a common fund they won for plaintiffs.” Goldberger, 209
F.3d at 54 n.3.

IV.   Our Sister Circuits Have Articulated Sound Rationale for Precluding the
      Application of Fee‐Shifting Principles to Common‐Fund Awards

      Our sister circuits have persuasively supported Goldberger’s

unceremonious rejection of the suggestion that statutory fee‐shifting principles

curtail a district court’s discretion in common‐fund cases and have offered

compelling reasons why a common‐fund fee may differ from a statutory fee.

      The Ninth Circuit has held that “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.”

Staton v. Boeing Co., 327 F.3d 938, 968 (9th Cir. 2003). The court reasoned that in

                                          14
negotiating a settlement, “a defendant is interested only in disposing of the total

claim asserted against it.” Id. at 964 (internal quotation marks omitted).

Therefore, “the allocation between the class payment and the attorneys’ fees is of

little or no interest to the defense.” Id. (internal quotation marks omitted); see also

Goldberger, 209 F.3d at 52‐53 (noting this principle in the context of parties’

incentives to oppose a fee award).

      The settling defendant’s focus is on its bottom line, and once that bottom

line has been inked, the defendant’s interest in how class members and class

counsel spend the settlement money dwindles. This is in stark contrast to fees

awarded pursuant to a fee‐shifting statute, where as part of its liability and in

addition to any monetary judgment, the defendant is forced to pay for the costs

of the statute’s enforcement against it. Cf. Alyeska Pipeline Serv. Co., 421 U.S. at

247‐54 (tracing the evolution of taxable costs against a defendant as an incident

of the defendant’s liability). Therefore, where a statute shifts fees, we consider a

reasonable fee with the defendant’s perspective in mind. See Del. Valley II, 483 U.S.

at 724‐25 (rejecting contingency enhancement of lodestar fee after discussing the

ramifications of such an enhancement on defendants).

                                          15
      In contrast, where an attorney has settled a case and created a common

fund, we determine what a reasonable fee is from the plaintiff’s perspective.

Critically, a reasonable fee from the plaintiff’s perspective can account for

contingency risk where such risk exists,3 and a common‐fund fee may therefore

exceed what would be a “reasonable fee” in the fee‐shifting context. The Seventh

Circuit has persuasively articulated why accounting for contingency risk can be

appropriate when the plaintiff funds the fee but not when the defendant funds the

fee. Assessing a fee that accounts for contingency risk against a defendant would

require the defendant to “subsidiz[e] plaintiffs’ attorneys for unsuccessful

lawsuits against other defendants.” Florin v. Nationsbank of Ga., N.A., 34 F.3d 560,

565 (7th Cir. 1994). But “[i]n a common fund case, . . . because compensation for

risk is charged against the plaintiff class, defendants would not be forced to

subsidize directly plaintiffs’ attorneys’ losing endeavors.” Id. (emphasis added).

3We note that it will not always be the case that an attorney representing a class
assumes compensable contingency risk. A case may, for example, have such a
high likelihood of being meritorious that compensation for contingency risk is
unnecessary. See, e.g., Goldberger, 209 F.3d at 52 (noting that there is not “a
substantial contingency risk in every common fund case” and cautioning against
calculating contingency risk into every percentage‐fee award).
                                           16
      The plaintiff class is therefore appropriately charged for contingency risk

where such risk is appreciable because the class has benefited from class

counsel’s decision to devote resources to the class’s cause at the expense of

taking other cases. That is, because class counsel has decided to represent the

plaintiff class, class counsel’s ability to freely represent other clients is limited by

the risk she has assumed that the class’s cause will be unsuccessful. The class,

having been enriched by counsel’s acceptance of its cause at the expense of other

clients’ causes, may be charged for counsel’s assumption of risk on its behalf.

Consistent with the reasoning and holding of the Ninth Circuit in Staton, the

Seventh Circuit has therefore held that “common fund principles properly

control a case [that] is initiated under a statute with a fee‐shifting provision, but

is settled with the creation of a common fund.” Id. at 564; see also Staton, 327 F.3d

at 968.

V.    The Common‐Fund Doctrine Does Not Threaten to Misalign Counsel
      and Her Client’s Incentives

      In agreeing with the Seventh and Ninth Circuits, we decline to yield to the

Objector’s contention that applying common‐fund principles to fee recoveries

from cases initiated under fee‐shifting statutes will misalign attorneys’

                                           17
incentives. The Objector argues that allowing counsel to extract a percentage fee

under the common‐fund doctrine encourages counsel to settle cases early—even

when her client’s best interests are served by prosecuting the claim to trial. We

recognize that both the lodestar methodology and the common‐fund

methodology provide imperfect solutions for aligning an attorney’s incentive to

settle with her client’s. McDaniel, 595 F.3d at 419 (“[N]either the lodestar nor the

percentage‐of‐fund approach to awarding attorneys’ fees in common fund cases

is without problems.”). We nonetheless do not share in the Objector’s concern

that the percentage‐fee approach will destroy class representation for two

primary reasons: first, a fee awarded under the common‐fund doctrine provides

class counsel with the incentive to maximize the settlement payout for the class

because a larger settlement yields a proportionally larger fee; second, a district

court is required to review class settlements and class counsel’s fees, providing

an extra layer of security that class counsel will fairly and adequately represent

the class.

      As to the first reason, we have previously noted that “the percentage

method has the advantage of aligning the interests of plaintiffs and their

                                         18
attorneys more fully by allowing the latter to share in both the upside and

downside risk of litigation.” Id. Thus, once the parties have agreed to settle, the

percentage‐of‐the‐fund methodology serves as important motivation for counsel

to maximize the class’s recovery, and, a fortiori, counsel’s fee.

      This incentive structure is critically important because, under the common‐

fund doctrine, class counsel is not entitled to a common‐fund fee or an

unenhanced lodestar fee by force of entering into a settlement agreement on the

class’s behalf. Rather, the district court retains discretion to determine which

methodology it will use to calculate class counsel’s reasonable fee. Goldberger, 209
F.3d at 50 (“[W]e hold that both the lodestar and the percentage of the fund

methods are available to district judges in calculating attorneys’ fees in common

fund cases.”). As such, class counsel cannot enter into a premature settlement

confident that it will receive a percentage‐of‐the‐fund fee that exceeds its lodestar

fee. Since the district court alone makes the decision of how class counsel’s fee

will be calculated, class counsel’s safest bet for securing a large fee award is to

prosecute the action until the point at which settlement is the best available

option and thereafter maximize her client’s returns.

                                          19
         As to the second reason that a percentage‐fee method is workable despite

the Objector’s concerns, we are comforted by the fact that a “court is to act as a

fiduciary who must serve as a guardian of the rights of absent class members” in

reviewing a class‐action settlement and a class fee award. Id. at 52 (internal

quotation marks omitted). The Federal Rules of Civil Procedure require that

“[t]he claims, issues, or defenses of a certified class—or a class proposed to be

certified for purposes of settlement—may be settled, voluntarily dismissed, or

compromised only with the court’s approval.” Fed. R. Civ. P. 23(e) (emphasis

added). Rule 23 requires the district court to hold a hearing and consider a

number of factors to ensure that a proposed settlement “is fair, reasonable, and

adequate,” id. 23(e)(2), and the court must specifically evaluate “the terms of any

proposed award of attorney’s fees,” id. 23(e)(2)(C)(iii). Thus, the district court is

required to review both the terms of the settlement and any fee award

encompassed in a settlement agreement. This review provides a backstop that

prevents unscrupulous counsel from quickly settling a class’s claims to cut a

check.

                                          20
      In addition to ex post facto review of fee awards, some district courts have

elected to exercise their discretion to select and manage class counsel at the

outset of the litigation. See Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 201 n.6

(3d Cir. 2000) (“[D]istrict courts can avoid many of [the] complications associated

with fee awards by setting fee guidelines and ground rules early in the litigation

process.”). One example of such an ex ante approach to selecting class counsel,

popular in securities class actions, is for the district court to request that

prospective class attorneys submit proposals regarding their qualifications,

predictions for expected recovery, and their prospective fees. See In re Synthroid

Mktg. Litig., 264 F.3d 712, 720 (7th Cir. 2001). Thereafter, “[t]he judge in turn acts

as an agent for the class, selecting the firm that seems likely to generate the

highest recovery net of attorneys’ fees.” Id.; see also Gunter, 223 F.3d at 201 n.6.

Placing the district court at the helm of class‐counsel selection allows the district

court to actively consider class counsel’s performance while the litigation

remains pending and is another means of monitoring fee awards.

      Further, if judicial review of class‐action settlements with a “searching

assessment” of counsel’s fee award, McDaniel, 595 F.3d at 419 (internal quotation

                                           21
marks omitted), were not solace enough for the Objector, we have also counseled

that the district court should use the lodestar as a “baseline” against which to

cross‐check a percentage fee: “we encourage the practice of requiring

documentation of hours as a ‘cross check’ on the reasonableness of the requested

percentage,” Goldberger, 209 F.3d at 50. Thereafter, “the reasonableness of the

claimed lodestar can be tested by the court’s familiarity with the case.” Id. Fee

requests that deviate wildly from the unenhanced lodestar fee are unlikely to

pass this cross‐check, and district courts are at liberty to reduce the requested fee

within their discretion.

      We thus have confidence in the district court as fiduciary of the class and

ultimate decisionmaker on a class‐action settlement to substantially alleviate the

Objector’s concerns about class counsel’s incentives. Having obtained such

reassurance, we hold that, where a class action results in a common‐fund

settlement for the benefit of the class, the common‐fund doctrine applies and

permits a district court to use its discretion to award class counsel either an

unenhanced lodestar fee or a fee calculated as a percentage of the settlement

fund. This principle applies even when claims are initiated pursuant to a statute

                                         22
with a fee‐shifting provision. Since the parties do not argue that the district court

abused its discretion in analyzing the propriety of the fee award under the

discretionary factors, we affirm the order of the district court.

                                  CONCLUSION

      The class, including the Objector, has benefited from Lead Counsel’s

negotiation of a common settlement fund. Because Lead Counsel’s fee is

extracted directly from the beneficiaries of its work, Lead Counsel is entitled to

compensation not only for skillfully negotiating that settlement fund but for

bearing the risk that the suit would not generate any recovery. Accordingly, even

if the class’s claims were initiated under fee‐shifting statutes, common‐fund

principles would govern, and the district court had the discretion to award Lead

Counsel a fee equaling either the lodestar fee or a percentage of the fund. The

district court did not abuse its discretion when it determined that a percentage of

the fund reasonably compensated counsel. The district court’s order is hereby

AFFIRMED.

                                         23