Steiner v. American Broadcasting Co.

248 F. App'x 780

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 29, 2007
• Docket: No. 05-55773
• Status: Published

Opinions

MEMORANDUM

**

Class members Universal Music Group and other major affiliated record labels and music publishing companies (“Majors”) appeal the district court’s order awarding attorneys’ fees to class counsel. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

We review a district court’s award of attorneys’ fees for an abuse of discretion. Fischel v. Equitable Life Assurance Soc’y, 307 F.3d 997, 1005 (9th Cir.2002). We review the court’s underlying factual findings for clear error and review de novo any legal analysis relevant to the fee award. Id. Although 25 percent is the benchmark fee award in common fund cases, the “[sjelection of the benchmark or any other rate must be supported by findings that take into account all of the circumstances of the case.” Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047-48 (9th Cir.2002).

The Majors contend that the district court abused its discretion because it committed a number of legal and factual errors in awarding attorneys’ fees to class counsel. The Majors argue that the district court applied incorrect legal standards by finding relevant that class counsel achieved only “excellent results” and only “faced a good deal of risk,” whereas the district court in Vizcaino found relevant that class counsel achieved “exceptional results” and faced “extreme [ ] risk.” See id. (emphases added). This argument is without merit. In Vizcaino, we did not set . forth narrow legal standards cabined by the particular set of circumstances that the district court had found relevant. Rather, we emphasized that in selecting a reasonable percentage fee award in a common fund case the district court must consider all relevant circumstances. Here, the district court considered class counsel’s success and risk, and found that they achieved excellent results and faced a good deal of risk. See Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir.1990) (noting that class counsel “obtained substantial success”); In re Pac. Enter. Sec. Litig., 47 F.3d 373, 379 (9th Cir.1995) (recognizing “the complexity of the issues and the risks”). Under Vizcaino, these were highly relevant circumstances, which the district court properly considered.

The Majors also argue that the district court made erroneous factual findings in assessing class counsel’s success and risk. First, the Majors contend that class counsel did not achieve excellent results, because they negotiated a facially inadequate initial settlement of $25.4 million, as demonstrated by the Majors’ ability to negotiate a final settlement of $65 million. The district court, however, addressed this contention and made findings to the contrary, which were not clearly erroneous. Specifically, the court found that the Majors were able “to extract a much more attractive settlement” because of the “much greater bargaining power” that they brought to the table, not because the original settlement amount was inadequate. The court also found that the Majors chose to build on the initial settlement agreement negotiated by class counsel, instead of opting out of the class and pursuing independent litigation, because the initial settlement amount “obviously had value to the Majors.” ¹

Second, the Majors argue that class counsel did not face significant risk in litigating the case, because they had successfully litigated an earlier case against Defendants involving “identical copyright issues.” The prior litigation, however, involved a single plaintiff and, hence, was not subject to the difficulties of certifying a large class and the possibility of the Majors foreclosing any settlement by opting to independently litigate their claims. Also, the record suggests that Defendants did not keep adequate records of the sound recordings they had used, and that other records important to the litigation had been destroyed in a fire. Consequently, the district court did not clearly err in concluding that class counsel faced a good deal of risk, including the possibility of “protracted litigation against very good litigators” and the risk of “not be[ing] paid at all.”²

The Majors next argue that, contrary to the district court’s finding, class counsel did not procure nonmonetary benefits for the class. Defendants stated in a declaration, however, that they changed their licensing practices after class counsel filed suit. In considering this circumstance, the district court reasonably found that class counsel’s efforts led Defendants to make changes that will prevent future copyright infringement.

The Majors also argue that the district court abused its discretion by awarding a percentage based fee which, when compared to a lodestar multiplier, was excessive. We disagree. Based on class counsel’s total hours, the lodestar multiplier was approximately 6.85.³ Although this multiplier is higher than those in many common fund cases, see Vizcaino, 290 F.3d at 1051 n. 6, it still falls well within the range of multipliers that courts have allowed. See id. at 1052 app. (citing cases with comparable or higher multipliers); see also id. at 1050 & n. 5 (noting that, while “in the case of an early settlement, the lodestar calculation may convince a court that a lower percentage is reasonable,” class counsel should not “necessarily receive a lesser fee for settling a case quickly”).

Lastly, the Majors argue that the district court abused its discretion in awarding attorneys’ fees to class counsel from the Majors’ portion of the settlement fund, because class counsel violated their ethical duty to the Majors by simultaneously representing other parties in unrelated litigation against some of the companies within the Majors. We need not decide whether class counsel violated any ethical duty to the Majors, because the Majors waived any objection they might have had by not raising the alleged ethical violations (in this case or any other case) until the issue of attorneys’ fees arose.

In sum, we hold that the district court did not abuse its discretion in awarding attorneys’ fees to class counsel. The district court did not commit any legal error or make any clearly erroneous factual findings in awarding class counsel 25 percent of the initial $25.4 million settlement, an amount which was reasonable in light of all the relevant circumstances.

AFFIRMED.

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

1 . Similarly, although the Majors argue that class counsel’s legal and factual investigation prior to settlement was inadequate, there was sufficient evidence in the record to support the district court's conclusion to the contrary.

2 . In suggesting that significantly less risk was involved here than in Vizcaino, because "here the risk was mainly of being litigated to death, not of losing," the dissent ignores the district court’s finding that class counsel ran the risk of not being paid at all. In particular, Defendants had alleged defenses that might have made class certification impossible, and the Majors had the capacity to preclude relief for the other class plaintiffs by opting out of any settlement agreement. Consequently, class counsel faced two reasonably possible scenarios in which they would effectively "lose” and not recover any attorneys’ fees.

3 . According to the dissent, the district court should have counted only the hours class counsel spent in reaching the initial settlement agreement, not any subsequent hours, which results in a lodestar multiplier of 11.4. The dissent, however, provides no legal support for this position.