Reena Frailich v. Sandra Disner
688 F.3d 645
| 9th Cir. | 2012Background
- Class action antitrust suit against BAR/BRI (West Publishing) and Kaplan with incentive agreements from Van Etten to five named plaintiffs, tying potential fees to recovery.
- Settlement provided $49 million into a fund with 25% reserved for attorneys’ fees; five contracting representatives had incentive awards of up to $75,000 each.
- District court approved settlement despite conflicts; denied incentive awards to class representatives for ethics concerns; awarded class counsel over $7 million subject to future adjustments.
- Rodriguez I (earlier appeal) reversed and remanded for the district court to address conflicts created by incentive agreements and potential fee implications.
- On remand, district court held that McGuireWoods’ incentive-conflict warranted forfeiture of all fees and awarded only costs and a post-remand quantum meruit of $500,000; objectors’ fees were denied.
- Schneider Objectors appealed for fees for their role in exposing the conflict; Ninth Circuit vacated and remanded on the Schneider fee issue while affirming other fee orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court properly denied fees due to ethical conflict | McGuireWoods engaged in conflicting representation. | California Pringle standard applies; not automatic fee forfeiture; some fees possible. | Discretionary denial of all fees upheld; conflict justified forfeiture. |
| Whether federal equitable principles govern fee forfeiture over state law | Conflicts and fee issues arise under federal common fund doctrine. | State ethics rules inform, but federal equitable principles control. | Federal equity principles govern; no error in applying nationwide standard. |
| Whether objectors are entitled to fees for challenging the incentive awards | Objectors’ challenges increased fund or benefited class. | Their work did not increase the fund or provide unique benefit. | Objectors denied fees except for the Schneider Objectors on remand. |
| Whether Schneider Objectors warrant fees for prompting forfeiture | Schneider Objectors’ arguments significantly influenced the outcome. | District court relied on its own analysis of Rodriguez I. | District court error; remand to determine proper fee amount for Schneider Objectors. |
Key Cases Cited
- Rodriguez I, 563 F.3d 948 (9th Cir. 2009) (conflicts from incentive agreements and disqualification implications for fees)
- Image Technical Serv., Inc. v. Eastman Kodak Co., 136 F.3d 1354 (9th Cir. 1998) (conflict of interest as grounds for fee disqualification)
- Van Gemert, 444 U.S. 472 (1980) (common fund doctrine and fee awards vested in equity)
- Sprague v. Ticonic Nat'l Bank, 307 U.S. 161 (1939) (foundational common fund authority and fee awards)
- Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (factors for determining fee enhancements and objector fees)
- In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988 (9th Cir. 2010) (fee awards and fiduciary duties in complex securities litigation)
- In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291 (9th Cir. 1994) (fiduciary duty of district court in common fund settlements)