Court Opinion

ID: 867931
Source: CourtListenerOpinion
Date Created: 2013-05-15 20:05:48.508089+00
Date Added: 2024-06-11T12:04:35.037885
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                MAY 15 2013

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                           FOR THE NINTH CIRCUIT

SECURITIES AND EXCHANGE                          No. 11-35788
COMMISSION,
                                                 D.C. No. 6:09-cv-06056-HO
              Plaintiff,

  v.                                             MEMORANDUM*

SUNWEST MANAGEMENT, INC.;
CANYON CREEK DEVELOPMENT,
INC.; CANYON CREEK FINANCIAL,
LLC; JON M. HARDER; DARRYL E.
FISHER; J. WALLACE GUTZLER;
KRISTIN HARDER; ENCORE
INDEMNITY MANAGEMENT LLC;
SENENET LEASING COMPANY; FUSE
ADVERTISING, INC.; KDA
CONSTRUCTION, INC.; CLYDE
HAMSTREET; CLYDE A. HAMSTREET
& ASSOCIATES, LLC,

              Defendants - Appellees,

  v.

COHEN MILSTEIN SELLERS & TOLL,
PLLC; KIT A. PIERSON; JUSTINE

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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FISCHER; HERBERT E. ADELMAN,

             Movants - Appellants,

MICHAEL GRASSMUECK,

             Receiver.

ROBERT T. DEVANEY; NANCY L.                 No. 11-35789
DEVANEY; R. DEVANEY’S
CHESTNUT HILL, LLC; N. DE                   D
VANEY’S CHESTNUT HILL, LLC; R.              .C. No. 6:10-cv-06134-HO
DE VANEY NIELSEN COMPLEX, LLC;
N. DE VANEY NIELSEN COMPLEX,
LLC; R. DE VANEY’S VILLAGE AT
LAKE NORMAN, LLC; N. DE
VANEY’S VILLAGE AT LAKE
NORMAN, LLC; MIKE DUNN; MRD
PROPERTIES, LLC; DUNN’S
WATERFORD, LLC; JOHN E.
SEMASKO; MARY JANE SEMASKO;
SEMASKO’S ENGLEWOOD HEIGHTS,
LLC; SEMASKO’S CHESTNUT HILL,
LLC; SEMASKO’S CORINTHIANS,
LLC; SEMASKO’S CARNEGIE
VILLAGE, LLC,

             Plaintiffs,

 v.

DAVIS WRIGHT TREMAINE LLP, a
Washington limited liability partnership,

                                        2
              Defendant - Appellee,

  v.

COHEN MILSTEIN SELLERS & TOLL,
PLLC; KIT A. PIERSON; JUSTINE
FISCHER; HERBERT E. ADELMAN,

              Movants - Appellants,

MICHAEL GRASSMUECK,

              Receiver.

                    Appeal from the United States District Court
                             for the District of Oregon
                    Michael R. Hogan, District Judge, Presiding

                              Submitted May 8, 2013**
                                 Portland, Oregon

Before: GOODWIN, REINHARDT, and HURWITZ, Circuit Judges.

       Cohen, Milstein, Sellers & Toll, PLLC, Kit A. Pierson, Herbert E. Adelman,

and Justine Fischer (collectively “counsel” or “movants-appellants”) appeal their

award of attorney’s fees in a class action settlement of a securities fraud case

against the law firm of Davis Wright Tremaine LLP (“DWT”). Counsel were one

        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

                                          3
set of lawyers among many representing investors before the district court. This

appeal was unopposed until April 24, 2013, when the Receiver moved for a

continuance and to file an answering brief. Because we remand to the district court

to reconsider the award, we deny the Receiver’s tardy request. Our decision shall

not, however, preclude the district judge from determining the extent to which the

Receiver may participate in the remand proceedings.

      We would normally review a district court’s award of attorney’s fees and

expenses for abuse of discretion. Lobatz v. U.S. W. Cellular of Cal., Inc., 222 F.3d
1142, 1148-49 (9th Cir. 2000). We cannot do so here, however, because the

district court did not provide sufficient analysis or calculations supporting its

decision to award attorney’s fees in the amount of $231,000 out of a claimed

lodestar of $1,009,22.50. District courts must “show their work” in fee cases.

E.g., Padgett v. Loventhal, 706 F.3d 1205, 1208 (9th Cir. 2013). The district court

must “explain how it arrived at its determination with sufficient specificity to

permit an appellate court to determine whether the district court abused its

discretion in the way the analysis was undertaken.” McCown v. City of Fontana,

565 F.3d 1097, 1102 (9th Cir. 2009).

      On the record before us, we cannot determine whether the district court

abused its discretion. On three occasions, the district court suggested reasons that

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might justify awarding counsel a reduced fee. First, on March 22, 2011, the district

court ordered counsel to show cause why fees should not be reduced “for paralegal

work performed in excess of $100/hour” and for work “having a marginal

contribution to the estate.” Second, during the telephone hearing on the order to

show cause, the district court told counsel:

      “I’ve been over your billing in detail. Frankly, some of the concerns I
      have about it, it appears that a lot of time was spent in efforts, frankly,
      to disassociate yourself with proceeding under the receiver in this case,
      to split it off.”

Finally, in its September 26, 2011 order on counsel’s expenses (decided after the

order awarding attorney’s fees), the district court reasoned:

      “These actions were not typical class action litigation. Plaintiffs’
      counsel’s role was not instrumental in developing the class action.
      Rather the court proactively created the trust and through settlement
      resolved the issues rather than through protracted motions and
      procedural practice. Given the abbreviated litigation through settlement
      procedures, the requested fee amounts are unreasonable.”

                                          5
Although these statements gave some indication of the district court’s motivation,

they do not constitute sufficient explanation for appellate review.1 We cannot

simply guess as to the calculations the district court engaged in in order to reach

the ordered amount of $231,000.

      Thus, we remand to the district court to reconsider attorney’s fees. The

lodestar figure is a presumptively reasonable amount of attorney’s fees. Perdue v.

Kenny A. ex rel. Winn, 559 U.S. 542 (2010). If the district court departs from this

amount it should explain its decision in light of the relevant factors:

      (1) the time and labor required, (2) the novelty and difficulty of the
      questions involved, (3) the skill requisite to perform the legal service
      properly, (4) the preclusion of other employment by the attorney due to
      acceptance of the case, (5) the customary fee, (6) whether the fee is fixed
      or contingent, (7) time limitations imposed by the client or the
      circumstances, (8) the amount involved and the results obtained, (9) the
      experience, reputation, and ability of the attorneys, (10) the
      ‘undesirability’ of the case, (11) the nature and length of the professional
      relationship with the client, and (12) awards in similar cases.

      1
         The movants-appellants suggest that the district court may have
incorrectly believed that they did not contribute to the ultimate settlement. They
contend that they represented the interests of the class and contributed to the
ultimate result by (1) determining that class relief was available and filing a class
action that tolled the statue of limitations; (2) negotiating with the Receiver to
assure maximum recovery for the class; and (3) negotiating and preparing the class
settlement filings. We need not resolve that issue here.

                                           6
Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975). More than just

reasons, we require the district court to explain how—i.e., what calculations it

employed—it arrived at the award. Padgett, 706 F.3d at 1208.

      Regarding the district court’s reduced award of expenses, we conclude that it

abused its discretion by denying certain expenses. The district court stated that

“expenses for copying, fees for computer assisted legal research and PACER,

internal long distance charges, etc.” were “more appropriately considered overhead

expenses subsumed in the attorney fee hourly rates charged.” The district court

thus correctly identified a principle governing the award of expenses—whether

those expenses are normally charged to paying clients. Harris v. Marhoefer, 24
F.3d 16, 19 (9th Cir. 1994). Nonetheless, the district court awarded these sorts of

expenses to other counsel for plaintiffs in full while denying them to movants-

appellants.

                                  CONCLUSION

      Accordingly, we REVERSE the district court’s fee award and REMAND

with instructions to reconsider counsel’s fees and give a detailed explanation of the

calculation upon which it bases its award. We REVERSE the district court’s

denial of counsel’s expenses and direct the district court to AWARD those

expenses as appropriate. Because this court granted counsel’s partial stay of the

                                          7
distribution of funds from the litigation trust pending this appeal, we vacate the

stay so that the district court may award the expenses.

REVERSED and REMANDED.

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