959 F.3d 922
9th Cir.2020Background:
- DOJ criminal investigation uncovered price-fixing in the optical disk drive (ODD) industry; Hitachi pleaded guilty and paid fines.
- Multiple putative consumer class actions were consolidated in an MDL; indirect purchaser plaintiffs (IPPs) sought class certification and settlements in multiple rounds, creating a large common fund (totaling ~$180M after rounds one and two).
- The district court required competing counsel to submit sealed fee-and-cost bids; Hagens Berman won appointment as interim class counsel with a sealed sliding-scale grid that folded expenses into a percentage fee.
- Years later, after certification and multiple settlements, Hagens Berman moved for percentage fees (25% then 21%) and separate litigation expenses substantially exceeding amounts suggested by its sealed bid; the district court approved the awards while keeping the bid sealed for the first two rounds.
- Objectors (Erwin, Andrews, Cochran) appealed the fee and expense awards and sought unsealing of the bid; the Ninth Circuit affirmed settlement approvals but vacated the first- and second-round fee and expense awards and remanded for further findings.
Issues:
| Issue | Plaintiff's Argument (Erwin/Obj.) | Defendant's Argument (Hagens Berman/Dist. Ct.) | Held |
|---|---|---|---|
| Whether megafund size required a lower percentage or mandatory sliding-scale | Megafund (> $100M) warrants a lower percentage; sliding-scale should apply | No bright-line rule; percentages may vary based on Vizcaino factors | Court: Fund size is a relevant factor; no mandatory sliding-scale rule but fund size must be considered |
| Whether sealed competitive bid must be considered/unsealed and function as starting point | Bid was critical to appointment and must be considered/unsealed when awarding fees | Bid is not binding; court may deviate and keep bid sealed | Court: Bid is the starting point when it secured appointment; court may adjust but must explain variances; remand and ordered unsealing on remand |
| Whether the sealed bid encompassed litigation expenses (i.e., no separate expense awards) | Bid folded expenses into the percentage; separate expense awards were improper | Bid covered only taxable costs, not all litigation expenses | Court: Bid did cover litigation expenses; district court must address this on remand and reconsider expense awards |
| Whether district court adequately explained large variance between bid and awarded fees | Court failed to explain significant variance between bid and awards and abused discretion | Variance justified by unforeseen litigation events (e.g., re-litigating class certification, appeals) | Court: Explanation was inadequate for the magnitude of upward deviation; vacated and remanded for fuller findings |
Key Cases Cited
- Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (factors for percentage-of-recovery fee awards; caution on megafund benchmark)
- In re Online DVD-Rental Antitrust Litig., 779 F.3d 934 (9th Cir. 2015) (percentage method with lodestar cross-check encouraged)
- In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539 (9th Cir. 2019) (standard of review for fee awards)
- Stanger v. China Elec. Motor, Inc., 812 F.3d 734 (9th Cir. 2016) (district court must provide concise but clear explanation of fee award)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (fee award reasonableness and need for explanation)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (factors for fee method selection; economies of scale issue)
- In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291 (9th Cir. 1994) (megafund caution; 25% benchmark limitations)
- Wenderhold v. Cylink Corp., 188 F.R.D. 577 (N.D. Cal. 1999) (sealed-bid/fee-grid auction procedure)
- Wenderhold v. Cylink Corp., 189 F.R.D. 570 (N.D. Cal. 1999) (rejection of bids that separate fees and costs)