Edward O'bannon, Jr. v. Ncaa

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 29, 2018
• Docket: 16-15803
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JUN 29 2018 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

EDWARD C. O’BANNON, Jr., On Behalf No. 16-15803 of Himself and All Others Similarly Situated, D.C. No. 4:09-cv-03329-CW

Plaintiff-Appellee, MEMORANDUM* v.

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, AKA The NCAA,

Defendant-Appellant,

and

ELECTRONIC ARTS, INC.; COLLEGIATE LICENSING COMPANY, AKA CLC,

Defendants.

Appeal from the United States District Court for the Northern District of California Claudia Wilken, District Judge, Presiding

Argued and Submitted February 15, 2018 Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: THOMAS, Chief Judge, BYBEE, Circuit Judge, and QUIST,** District Judge.

Defendant-appellant the National Collegiate Athletic Association (NCAA)

appeals the district court’s award of attorneys’ fees to the plaintiffs-appellees, a

class of former and current college football and men’s basketball players, under the

Clayton Act. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

The parties are familiar with the facts and proceedings, and we will not state

them except as necessary to explain our decision. The district court entered

judgment for the plaintiffs after a fourteen-day bench trial, holding that the

NCAA’s rules prohibiting student-athletes from receiving compensation for the use

of their names, images, and likenesses (NILs) were an unlawful restraint of trade

under Section 1 of the Sherman Act, 15 U.S.C. § 1. O’Bannon v. Nat’l Collegiate

Athletic Ass’n, 7 F. Supp. 3d 955 (N.D. Cal. 2014). We affirmed in part and

vacated in part. O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th

Cir. 2015).

While the appeal was pending, the plaintiffs moved for fees and costs under

the Clayton Act, 15 U.S.C. § 26, ultimately requesting $44,755,500.23 in fees and

** The Honorable Gordon J. Quist, United States District Judge for the Western District of Michigan, sitting by designation. 2 $5,201,566.97 in costs.1 The request was approved by a magistrate judge with

relatively minor reductions. After the issuance of this panel’s opinion and

supplementary briefing, the district court adopted the magistrate judge’s

recommendation in part and awarded the plaintiffs $40,794,245.89 as reasonable

attorneys’ fees and $1,540,195.58 in costs.2 The NCAA timely appealed.

We review for abuse of discretion, and “[w]e generally give broad deference

to the district court’s determinations on fee awards because of its ‘superior

understanding of the litigation and the desirability of avoiding frequent appellate

review of what essentially are factual matters.’” Rodriguez v. Disner, 688 F.3d

645, 653 (9th Cir. 2012) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)).

I

Under the Clayton Act, a court “shall award the cost of suit, including a

reasonable attorney’s fee” to any plaintiff who “substantially prevails” in an

antitrust action seeking injunctive relief. 15 U.S.C. § 26; Costco Wholesale Corp.

v. Hoen, 538 F.3d 1128, 1136 (9th Cir. 2008) (noting that “fee shifting under § 26

is mandatory”). The threshold determination of eligibility for attorneys’ fees “is a

1 The request excluded, to the extent possible, attorney work done solely for individual damages claims, a proposed former athlete damages sub-class, the drafting of jury instructions and preparation for voir dire, the settlement of the claims against other defendants, and the preparation of the fee application. 2 The NCAA raised no arguments regarding the award of costs on appeal. 3 generous formulation”; to be a prevailing party, a plaintiff must only “succeed on

any significant issue in litigation which achieves some of the benefit the parties

sought in bringing suit.” Hensley, 461 U.S. at 433; see also Texas State Teachers

Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792–93 (1989) (“The touchstone

of the prevailing party inquiry must be the material alteration of the legal

relationship of the parties in a manner which Congress sought to promote in the fee

statute.”); Park ex rel. Park v. Anaheim Union High Sch. Dist., 464 F.3d 1025,

1036 (9th Cir. 2006) (explaining that “the general rule” is “that the degree of

success does not bear on the threshold question of eligibility for an attorney’s fees

award”). An enforceable judgment on the merits “create[s] the ‘material alteration

of the legal relationship of the parties’ necessary to permit an award of attorney’s

fees.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human

Servs., 532 U.S. 598, 604 (2001) (quoting Tex. State Teachers Ass’n, 489 U.S. at

792–93). A plaintiff “substantially prevails” under § 26 by achieving injunctive

relief. 15 U.S.C. § 26; see also Hensley, 461 U.S. at 435 n.11.

The district court entered judgment against the NCAA for violating the

Sherman Act and permanently enjoined it from prohibiting its member schools

from compensating the plaintiff class for the use of their NILs by awarding grants-

in-aid up to the full cost of attendance. The plaintiffs did not prevail on every

4 issue, but their enforceable judgment materially altered the legal relationship of the

parties and clearly demonstrates success on a significant issue. The prospective

injunctive relief obtained in this class action directly benefits the certified class and

can be enforced by the class.3 Neither the named plaintiffs nor any other individual

class member must prove they will personally receive a direct or material benefit

for plaintiffs to be entitled to attorneys’ fees.4 The plaintiffs substantially prevailed

in their antitrust action seeking injunctive relief, and accordingly are entitled to

attorneys’ fees under § 26.

II

Where a plaintiff achieves partial or limited success, the reasonableness of a

fee award under Hensley is determined through a two-step process. Webb v. Sloan,

330 F.3d 1158, 1168 (9th Cir. 2003). The court first determines if the successful

claims were related to the unsuccessful claims. Id. at 1168–69. The district court

determined that “[a]lthough Plaintiffs refined their theory of the case over the

course of the litigation, their abandoned claims ‘involve[d] a common core of facts

or [were] based on related legal theories.’” O’Bannon v. Nat’l Collegiate Athletic

3 The NCAA’s argument that the injunctive relief does not benefit the class is foreclosed by our prior opinion. O’Bannon, 802 F.3d at 1070–71, 1074 n.18. 4 There is neither a legal nor a factual basis for the distinction the NCAA attempts to draw between former student-athlete and current student-athlete members of the class. 5 Ass’n, No. C 09-3329 CW, 2016 WL 1255454, at *4 (N.D. Cal. Mar. 31, 2016)

(second and third alterations in original) (quoting Hensley, 461 U.S. at 435). The

plaintiffs represented to the district court that they had, to the extent possible,

excised from their fee request hours spent on unrelated claims, and the district

court reduced additional hours it found were spent solely on claims against the

other defendants. Id. at *8–9. The motion for class certification does not, as the

NCAA contends, provide a clear dividing line between unsuccessful and successful

claims, and the class cannot be retroactively divided into sub-classes. The district

court did not abuse its discretion in determining that the claims for which fees were

sought were not “‘distinctly different’ both legally and factually.” Webb, 330 F.3d

at 1169 (quoting Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895, 901,

902 (9th Cir. 1995)).

The second consideration is whether “the plaintiff achieve[d] a level of

success that makes the hours reasonably expended a satisfactory basis for making a

fee award.” Hensley, 461 U.S. at 434. A plaintiff who did not achieve every goal

yet still “obtained excellent results . . . should recover a fully compensatory fee.”

Id. at 435. “It is an abuse of discretion for the district court to award attorneys’

fees without considering the relationship between the ‘extent of success’ and the

amount of the fee award.” McGinnis v. Kentucky Fried Chicken of Cal., 51 F.3d

6 805, 810 (9th Cir. 1994) (emphasis added) (quoting Farrar v. Hobby, 506 U.S.

103, 116 (1992)).

After supplemental briefing on the impact of our decision “on the overall

scope of Plaintiffs’ success,” the district court agreed with the magistrate judge that

the plaintiffs obtained excellent results in this litigation. The court “considered the

Ninth Circuit’s holding,” but concluded that even after partial vacatur of the

injunctive relief, “the finding of liability and the remaining injunctive relief are

together an excellent result.” O’Bannon, 2016 WL 1255454, at *4. The court

noted that “the decision obtained by Plaintiffs ‘is the first by any federal court to

hold that any aspect of the NCAA’s amateurism rules violate the antitrust laws, let

alone to mandate by injunction that the NCAA change its practices.’” Id. (quoting

O’Bannon, 802 F.3d at 1053).

The district court acted well within its discretion in finding that the plaintiffs

achieved excellent results. The district court’s focus on the plaintiffs’ success in

achieving injunctive relief, as opposed to their failure to win damages, was entirely

appropriate, as the basis for the fee request was § 26. Under § 26, attorneys’ fees

are mandatory in antitrust cases achieving injunctive relief under a private attorney

general theory. See Sw. Marine, Inc. v. Campbell Indus., 732 F.2d 744, 746 (9th

Cir. 1984). Moreover, plaintiffs did not request fees for time devoted solely to

7 their damages claims. The district court also specifically acknowledged the

reversal of a portion of the injunctive relief it had ordered before concluding that

the plaintiffs achieved excellent results.

To the extent the district court adopted the magistrate judge’s reasoning, it

did not err despite our intervening opinion. While we emphasized the “limited

scope” of our decision, O’Bannon, 802 F.3d at 1079, the decision did not

undermine the magistrate judge’s findings on the plaintiffs’ success in this

litigation. The plaintiffs prevailed on their “core claim,” as characterized by the

magistrate judge, and won a permanent injunction prohibiting the NCAA from

enforcing a longstanding rule. The NCAA makes much of a supposed “all or

nothing” approach taken by the magistrate judge and the district court. But the

court considered its earlier rulings, its finding of liability, the ordered injunctive

relief, and the Ninth Circuit’s opinion in holding that the plaintiffs’ limited success

did not merit deviating from the lodestar method. It simply reached a conclusion

the NCAA does not like: that the award of injunctive relief against the NCAA in an

antitrust action brought by private parties is an “excellent result.”

Our review is for abuse of discretion, and we give broad deference to the

district court’s superior understanding of the litigation. Rodriguez, 688 F.3d at

653. The plaintiffs are entitled to mandatory attorneys’ fees under § 26. The

8 district court did not abuse its discretion in determining that the plaintiffs’ success

in achieving injunctive relief was an excellent result and therefore that their fee

request was a reasonable basis for the award of those fees.

III

The NCAA’s remaining arguments relate to the district court’s review and

partial adoption of the magistrate judge’s recommendation in determining a

reasonable award amount and its own review of the plaintiffs’ billing records.

The district court should “provide a concise but clear explanation of its

reasons for the fee award,” but the amount of a fee award ultimately is within the

district court’s discretion. Hensley, 461 U.S. at 437. “This is appropriate in view

of the district court’s superior understanding of the litigation and the desirability of

avoiding frequent appellate review of what essentially are factual matters.” Id.

Congress vested trial courts with the discretion to undertake [fee] analyses because they are by their nature inexact. Reasonable people may differ as to what number of hours was reasonable to spend on this case. But once we are satisfied that the district court has considered the appropriate factors for the appropriate reasons, our reviewing function is finished.

Cunningham v. County of Los Angeles, 879 F.2d 481, 486 (9th Cir. 1988). “[I]n

cases where a voluminous fee application is filed in exercising its billing judgment

9 the district court is not required to set forth an hour-by-hour analysis of the fee

request.” Gates v. Deukmejian, 987 F.2d 1392, 1399 (9th Cir. 1992).

The district court’s detailed opinion reflects its thorough de novo review of

the plaintiffs’ attorneys’ billing records and the NCAA’s objections. The district

court provided numerous examples of billing entries to support and explain its

decisions on all of the objections, and its familiarity with the records is apparent.5

It was not required to discuss individually each of the tens of thousands of billing

entries to which the NCAA objected. The district court neither “accepted

uncritically plaintiff’s representations concerning the time expended on this case,

[nor] awarded the entire amount requested by plaintiff.” Sealy, Inc. v. Easy Living,

Inc., 743 F.2d 1378, 1385 (9th Cir. 1984). The district court conducted a careful

review of the records and made numerous deductions, in total reducing the award

recommended by the magistrate judge by an additional $3,628,610.

The district court’s award of reasonable attorneys’ fees and costs under the

Clayton Act was not an abuse of discretion.

AFFIRMED.

5 The district court did not clearly err in overruling or overruling in part the NCAA’s objections to purported block billing, fees related to claims against the other defendants, fees for media-related activities, or fees for soliciting clients. 10