Court Opinion

ID: 8623760
Source: CourtListenerOpinion
Date Created: 2022-11-24 11:53:49.038149+00
Date Added: 2024-06-11T16:55:35.461170
License: Public Domain

KLEINFELD, Circuit Judge,
dissenting:
I respectfully dissent.
We review the attorneys’ fees awarded to class counsel for abuse of discretion.1
Defendants used copyrighted music in television soap operas without permission. After successfully suing on behalf of an individual, class counsel brought a class action on behalf of all the other copyright holders. There was no serious question about liability, and damages were subject to a statutory minimum per use.2 The practical risk, as described by the district *784court, was not losing, but rather “protracted litigation against very good litigators.”
The risk did not materialize. With no depositions, no motions to dismiss or for summary judgment, no opposition to class certification, and no trial, class counsel got defendants’ agreement to a $25.4 million settlement. That is not to say that counsel did not have to do a great deal of very sophisticated, specialized, and difficult legal work to get the settlement. They did. At rates for attorneys ranging from $275 to $600 an hour, and for non-lawyers from $130 to $175 an hour, at that point their time was worth about $554,000.
But the “major” music companies that owned 85% of the music at stake in the litigation were not satisfied with the $25.4 million settlement. They objected to the settlement. With no depositions, contested motions, or trial, they got it more than doubled, to $65 million. They went through a two day mediation with the defendants in which class counsel had no substantial role. Their total billings came to something over $900,000, for obtaining the additional $40 million.3
I cannot agree with the majority that the district court was within its discretion to award class counsel over $6 million, basically for obtaining the rejected $25 million settlement. The majority relies heavily on Vizcaino v. Microsoft, where we held that an award of 28% of the settlement, 3.65 times the “lodestar” amount (hours times rates) was not an abuse of discretion, because class counsel achieved “ ‘exceptional results for the class.’ ”4 By contrast, in this case class counsel left $40 million on the table. In Vizcaino, the case was “extremely risky.”5 By contrast, here the risk was mainly of being litigated to death, not of losing.6 In Vizcaino, the litigation was bitterly contested for eleven years, through dismissal, appeal, en banc, remand, class certification, and mandamus. By contrast, in this case litigation was minimal.
In the case at bar, the fee award is 25% of the $25 million settlement class counsel negotiated before the objectors got it set aside. While 25% of a common fund is a “starting point,” 25% may be “inappropriate,” requiring the court to consider “all the circumstances.”7 A 25% contingent fee is one thing in a $900,000 personal injury case, and quite another when the percentage is applied to $25 million.8 And *785quite another indeed, where the $25 million has been rejected as inadequate. If the district court applied the 3.65 multiplier approved in Vizcaino to class counsel’s time and rates, class counsel would receive 3.65 times the lodestar amount of $554,000, or a fee of about $2 million. That might arguably have been a reasonable approach, but it was not used.
Class counsel suggest the lodestar amount should be $926,000, the total value of all the time they spent on this case. But that is troublesome because they spent $372,000 of that amount defending the inadequate $25 million settlement and supporting their fee application, not on getting the class money. I cannot justify awarding millions of dollars to class counsel for their efforts adverse to the class. The majority itself provides no legal authority to support the argument that class counsel should be awarded a fee for obtaining and defending a low-ball settlement that was rejected and claiming attorneys fees on the much higher settlement obtained by other lawyers.
Even if the appropriate “lodestar” amount were $926,000, the case had been as hotly contested and risky as Vizcaino, and class counsel had produced results as exceptional as those in Vizcaino, the multiplier approved in Vizcaino would yield about $3.4 million, a far cry from the $6.35 million awarded by the district court. To paraphrase Everett Dirksen, $3 million extra here, $4 million there, and pretty soon you’re talking about real money. Class counsel put in around a half million dollars worth of time and settled, leaving $40 million on the table. Giving them six million dollars of the class’s money, as the district court did, strikes me as an abuse of discretion.

. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1046 (9th Cir.2002).

. 17 U.S.C. § 504(c)(1) (establishing statutory minimum of $750 per infringing use).

. "While ‘comparison of the hours spent in particular tasks by the attorney for the party seeking fees and by the attorney for the opposing party ... does not necessarily indicate whether the hours expended by the party seeking fees were excessive’ because numerous factors can cause the prevailing party to have spent more time than the losing party, such a comparison is a useful guide in evaluating the appropriateness of time claimed. If the time claimed by the prevailing party is of a substantially greater magnitude than what the other side spent, that often indicates that too much time is claimed. Litigation has something of the tennis game, something of war, to it; if one side hits the ball, or shoots heavy artillery, the other side necessarily spends time hitting the ball or shooting heavy artillery back.” Democratic Party of Wash. State v. Reed, 388 F.3d 1281, 1287 (9th Cir.2004).

. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir.2002) (quoting Vizcaino v. Microsoft Corp., 142 F.Supp.2d 1299, 1303 (W.D.Wa.2001)).

. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir.2002).

. The majority argues that class counsel faced a significant risk of "not be[ing] paid at all.” By "not being paid at all,” the majority does not mean not being paid at all, it means being paid perhaps a million dollars for representing 15% of the class if the majors opted out.

. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir.2002).

. Chemical Barde v. City of Seattle (In re Washington Pub. Power Supply Sys. Sec. Litig.), 19 F.3d 1291, 1297 (9th Cir.1994) (holding "a court must consider the fund's size in light of *785the circumstances of the particular case” when determining the percentage of the fund awarded as a contingent fee).