*2 BYBEE, Circuit Judges. TASHIMA;
Opinion Judge Dissent BYBEE. Judge OPINION TASHIMA, Judge: Circuit against This is securities class action Mercury (“Mercury”), Interactive Corp. directors, significantly in dropped some of its former officers and reaction to these and its auditor. The action was settled announcements. on, certified, class was early settlement *3 followed, In the class actions that approved, the settlement was and attor- court, customary, as is appointed nеys’ per fees were awarded the settle- lead counsel for the class. Lead counsel agreement. The New York State ment investigation Mercury’s conducted an into (“Teachers”) System Teachers’ Retirement backdating practices and filed consolidat- from the order appeals district court’s complaint ed class action under the Securi- awarding attorneys’ twenty-five fees of 1934, Exchange ties Act of 15 U.S.C. percent of the million settlement $117.5 78a-78oo, §§ as amended the Private fund class counsel. We hold Litigation Securities Reform Act of 1995 erred under Federal Rule (“PSLRA”), § codified in 15 U.S.C. 78u-4. 23(h) in setting Civil Procedure the sched- opposed It motions to dismiss the com- objecting request; ule for to counsel’s fee plaints, granted. which the district court
we therefore vacate the award and remand Lead counsel conducted further investiga- proceedings. for further began drafting tion and com- amended Background plaint.
I. 2005, Beginning in the summer of Mer- parties The possibility broached the cury made a public series of disclosures settlement in the spring of after the revealing inquiry” that an “informal was motions to dismiss were argued being possible unreported conducted into district court. After the district court backdating options compa- of stock at thе dismiss, granted the motions to ny. Backdating options represented stock held two mediation par- sessions and the having to the market as granted been at ties subsequently agreed on a settlement price the current market of the company’s part million cash. As $117.5 stock, they being granted when fact settlement, lead counsel conducted confir- previous at a date’s lower price stock and matory discоvery, which included docu- already are therefore “in money,” re- review, ment depositions two additional in companies’ sults reporting under their interview, and an additional in order to compensation expenses overstating ensure that there was a factual basis for income, leading their to inflated stock settling stipulated. case for the amount prices. See Charles Forelle & James Ban- The district cоurt certified a settlement dler, Payday: Some CEOs Perfect class, preliminarily approved the settle- Reap by Landing Options Millions Stock ment, and ordered notice to the class. They When Are Most Valuable. Luck—or preliminary The notice of the Else?, settlement J., Something Mar. Wall St. general informed the class of the terms of 2006 at Al. potential These disclosures of proposed settlement. It also informed wrongdoing Mеrcury at became more seri- class members that counsel would “re- throughout eventually ous the fall of quest attorneys’ ... CEO, fees the amount of leading to announcement that the (29.375 million).” Further, CFO, and 25% the class General Counsel would be re- of, members were signing they they because informed been aware in, participated and benefitted from to the settlement or re- peated illegal options attorneys’ by “appearing] instances of stock ... at the backdating, among Hearing” other instances of Settlement Fairness if wrongdoing. Mercury’s price objection, stock a written notice of “submitted] postmarked Sep- received or on or before case. declarations requests broadly No were only tember 2008.” these fee summa- itself, firm, ob- rized made the settlement but two the work done each includ- Teachers’, jections, ing such including descriptions were made “prepared me- diation,” fees. proposed “negotiating finalizing global settlement with all Defendants for objected timely to “counsel’s million,” and “prepared and filed $117.5 proposed request for 25% of the $117.5 discovery motions.” fund,” million settlement noted that early, “case was settled the motion later, 25, 2008, One September week *4 and made ar- stage,” generalized dismiss the district court hearing held a on the guments court any that awarded the attorneys’ fairness of settlement and should than higher percent be no 18 fees. Neither Teachers nor the other ob- that argued settlement fund. Teachers jector to the fee award attend- court, serving fiduciary for the ed. The court approved the re- class, critically absent “must examine fee, quested ruling from the bench: counsel’s and award no more [Essentially, objectors both of these absolutely than required provide what is to claim that fee award can be no high- reasonable compensation class counsel.” percent. They er than 18 not do that, It the passage noted after of the any done, line item of work that was PSLRA, courts today “federal are award- but rather simply believe that the ing fees which far less than are 25% the contingency amount of fee should be amount,” yet reasonably settlement com- percent rather percent. 18 than 25 pensate Finally, class counsel. Teachers The court has read and considered argued outstanding that results can be objections those and it not aware is class at achieved for the lower market objections any other matter. rates, citing the fact that “class counsel court litigat- *5 422, F.3d Corp., See Brоad v. Sealaska 85 Cir.2002) (9th Paul, Johnson, (quoting Al (9th Cir.1996). exercise 430 We will our 268, Graulty, Hunt v. 886 F.2d 270 ston & reach only discretion to waived issues Cir.1989)). (9th The district court ‘exceptional’ “in three circumstances: the its discretion to choose between exercise necessary case in review to pre which is percentage lodestar and method cal the miscarriage of justice preserve vent a or to Powers, 229 at culating fees. See F.3d judicial process,” the of integrity the court, however, A 1256. district abuses appeal “when a new issue arises while is a that “discretion when it uses mechanical law,” of in the pending change because a that in an approach or formulaic results purely the issue presented “when unreasonable reward.” Id. depend one law and either not of does on underly- review the district court’s We below, developеd the factual record or the factual for ing determinations clear error. pertinent fully has developed.” record been “Any legal analysis element Id. of which Comm’r, (9th 1039, 1042 v. F.2d Bolker 760 in the court’s figures district decision Cir.1985). SJB-P.D., de novo.” Fischer v. reviewed Lead counsel contends Teachers (9th Cir.2000). Inc., 1115, 214 F.3d 1118 presents has all of the that it waived issues failing by adequately on raise appeal
III. Waiver them court. before ‘general apply “We a rule’ appeal, including three issues raises against entertaining arguments appeal by setting whether the district court erred not or be developed that were the filing deadline for of class mem High v. fore court.” Peterson objections request bers’ on a (9th Music, Inc., land 140 F.3d 1321 filing date before the deadline for the fee Cir.1998). ‘bright itself, Although partially basing “no line rule’ then deci as to “any exists determine whether matter siоn on Teachers’ failure to below,” properly will line of work” lead counsel perf been raised issue item be waived on if ormed.1 generally appeal deemed issue, light attorneys' disposition we fees in common our this benchmark cases, Paul, Johnson, Hunt, remaining & need not reach the two waiver fund see Alston applied 25-percent issues—whether this circuit's should be PSLRA
993 practice We our discretion reach examine this and to construe exercise 23(h). apply requirements whether Rule of of Rule question Federal 23(h) requires district Procedure Civil objections deadline for
courts to set the IV. Discussion attorneys’ on a date after the fee Although district court has broad filed, pure it is a motion has been because fees, discretion to determine it Bolker, See 760 F.2d at question of law. abuses that discretion if it makes error sufficiеntly has been The issue States, of law. See Koon United 518 record sufficient briefed has been 81, 100, S.Ct. U.S. 116 135 L.Ed.2d that our ly developed such “consideration (1996) (“A by 392 district court definition prejudice [lead issue would abuses its discretion when it makes an ability present facts counsel’s] relevant law.”). error We hold that the district our decision.” Kimes v. affect court abused its discretion it when erred Cir.1996). Stone, F.3d as matter of law misapplying Rule Moreover, below, outlined this is re 23(h) in setting objection deadline for curring litigation. issue in class action a date members on before the dead line lead counsel to file their fee mo yet We have not to con\ occasion Moreover, practice tion. on a borders 23(h), strue Rule and the schedule set of due process deprives denial because it requiring objecting class members of a full and fair filing filed before opportunity to contest class counsel’s fee *6 supporting the fee motion itself and its motion. appears commonly employed to be papers, plain The of requires text the rule by throughout the Ninth courts objec- district court to set the deadline See, country. in the Circuit elsewhere tions to fee request counsel’s on a date Tech, e.g., Litig., In re Leadis Inc. Sec. the motion and documents after (N.D.Cal. 4, No. C CRB Feb. 05-0882 portions it have been filed. The relevant 2009) (objections days due thirteen before 23(h) Rule provide: of fee); motions in of re support Brocade (1) A an claim for award must made (N.D.Cal. Litig., No. C 05-02042 Sec. CRB 54(d)(2), by motion subject under Rule 18.2008) (objections days Nov. due seven (h), to provisions of this subdivision fee); in support In re before motions at a time court sets. Notice of the Sys., Litig., Sec. C Cisco Inc. No. 01-20418 motion must be served on all (N.D.Cal. 2006) 12, Seрt. (objections JW and, counsel, for motions class direct- days support 28 in due before motions ed to in class members a reasonable fee); Charge In re Crossing Global Access manner. (S.D.N.Y. 04-1630, Litig., slip op. May No. (2) member, A class or a party from 2006) (objections days due eight before payment sought, object whom fee); Tyco motions in In re support the motion. Int’l, Ltd., Litig., No. MDL 02-1335 Sec. (D.N.H. 2007) 23(h). July (objections
PB due plain Fed.R.Civ.P. The text of the fee). days 24 in support before motions requires any rule class member be We, thus, take opportunity object now to allowed an to the opportunity cases, by failing required an to raise lion consider the issue Teachers is free factors remand, approving by inadequately
before the award district court on explaining whether court its discre- abused basis its award.
994 quately-tested, information evaluate itself, merely prelimi- to the “motion” fee. proposed of a reasonableness a motion filed. that such will be nary notice case, although notice of the In this was denied such In this Teachers class, members to the class provided was the time that its ob- opportunity. an At adequate opportunity deprived of were due, request were jections to the fee because, by motion itself to the only ar- generalized makе motion, they were served with the time of the total fee be- guments about the size they within which were only provided gener- with they cause were expired. already to file their alized Teachers could not information. critiques court with provide the Advisory to the Committee Notes counsel when specific work done 23(h) Rule further 2003 amendments were with no information of furnished They reading of the rule. support this was, how much time it what thаt work setting objec- the date “[i]n elaborate consumed, and how it con- and whether due, should tions are of the class. tributed to the benefit full after the fee motion sufficient time fee-setting stage of During the common potential objectors on file to enable one, fund action suits such this motion.” examine the Fed.R.Civ.P. counsel, fiduciary “[plaintiffs’ otherwise ¶ Notes, Advisory Committee class, for the ... claimant become[s] Advisory Notes further Committee for the against the fund created benefit that, cases, appropriate contemplate City Se class.” Class Plaintiffs “objector discovery permit court will (In Supply Sys. Pub. Power attle re Wash. ¶ objections.” to the Id. relevant Cir. Litig.), Sec. Clearly, the rule’s drafters envisioned 1994) (internal omitted). marks quotation than what process thorough much more puts plaintiffs’ This shift counsel’s under- case. occurred this getting pаid the most standable interest agree logi- also Commentators with representing for its the class at odds work *7 the exam- interpretation cal of rule. For in securing with the interest the class’ ple, Moore’s Federal Practice counsels possible recovery for its largest members. objection by the “[a]ny that deadline set relationship plain- Because between “the eligible court should attorneys tiffs and their turns adversarial all adequate opportunity with an to review stage, the fee-setting at courts have that sub- the materials have been awarding attorneys’ stressed that when and, an support of the motion in mitted fund, fees from a common district case, discovery conduct con- appropriate fiduciary the role of for must assume request.” fees 5 Moore’s Fed- cerning the fiduciary class Id. As a for plaintiffs.” (Matthew § eral Prаctice Bender 23.124[4] class, court must “act with ed.2009). Allowing 3d members jealous rights ‘a to the of those who regard to opportunity thoroughly examine coun- in determining in the fund’ interested motion, inquire into for sel’s fee the bases Id. what a fee award is.” Included proper they are charges duty and ensure that is the to fiduciary obligation various in that and is supported oppor- documented afforded the adequately ensure that the class is protection rights tunity for the of the its own best interests. represent essential It court sets a also ensures that When the district schedule class members. court, adequate opportu- that acting fiduciary denies the class district objections to class, adequate, nity prepare and ade- to review and presented with motion, it eration with completed opinion.3 fee consistent Each class cоunsel’s party shall its own fiduciary appeal. its bear costs on responsibilities to fulfill fails to the class.2 VACATED REMANDED.
V. Conclusion BYBEE, Judge, dissenting: Circuit stake, and the million is When $29.375 I agree majority with that the dis- conflict class counsel are in interests trict court under erred Federal Rule class, with interests of the it is the 23(h) in setting Civil Procedure the sched- of the district ensure obligation court to objecting ule for request. counsel’s fee adequate has an оpportunity that the class However, respectfully I dissent I because to review its counsel’s believe that New York State Teachers’ and, potentially, to discov- motion conduct (“the Teachers”) System Retirement if ery to the fee motion on its argument. waived this court, discretion, it deems Although we have discretion to reach bright- adopt We do not appropriate. waived issues where “the issue period thаt meet line rule of would law,” purely one Bolker v. Comm’r of 23(h)’s requirement that the class Rule Revenue, 1039, 1042 Internal adequate opportunity oppose have an Cir.1985), I would decline to that exercise Obviously, fee motion. that class counsel’s discretion in this majority case. As the vary from and the period will case to recognizes, objec- the Teachers raised no positioned is better to make district court tiоn in the court to the schedule for of all that after consideration decision objecting being fees despite But a the circumstances the case. given of the briefing notice schedule requires objections schedule July 2008, and despite filing general the fee motion is filed filed before itself objection to counsel’s fee application full opportuni- denies the class the and fair August Although the Teachеrs ty oppose examine complain reasonably could not 23(h) contemplates. Rule objected to application have counsel’s fee The district court’s order approving sup- until filed a counsel memorandum fee request class counsel’s is vacated and port attorney’s 18, 2008, the matter is remanded for consid- on September further the Teachers eer- *8 request opposition. 2. note that the failed prepare We also district court See Local Rules, comply with its own Local which ordi- Rule Local state 7-3. The Rules themselves length narily govern the of notice periods,” that these "are minimum time fees, attorneys' setting filing for motions "complex oppositions when motions” and for schedule to lead counsel's filed, being longer may periods them are request. attorneys’ fee Those rules Thus, necessary. although compliance papers "must be motion with the Local Rules is not at issue in this filed, writing served noticed in on the periods appeal, ordinary the time motions Judge assigned calendar of the in the Northern District's own Local Rules hearing days less than not after service of support inadequacy proce- further the motion.” N.D.Cal. Civ. R. 7-2. Local case. dures in this that even This means in the most routine of motions, perhaps fee in which thousand a few We, course, express opinion 3. no stake, attorneys' dollars of fees be at merits of the motion. party opposing such fees would have fourteen days papers supporting the fee to examine
tainly objected to the schedule could have KHADKA, Petitioner, Khagendra Moreover, the Teachers’
before date. objection actual to counsel’s fee entirely of boiler- composed was almost Jr., Attorney Eric H. HOLDER allegations and contained almost no plate General, Respondent. Although at hand. discussion of the case No. 05-75726. yet been the Teachers had coun- with details on the ins and outs of Appeals, United States Court of work, why they could sel’s I see no reason Ninth Circuit. specifically why more not have described Argued and Submitted March 2010. percent counsel’s services did not merit 25 Filed Aug. Finally, of the settlement fund. even after detailing counsel filed a memorandum firm,
hours worked on each case each any papers did not file ad-
the Teachers memorandum,
dressing this and did not up
even show to the district court’s settle- hearing September
ment fairness short, at all Teachers were not
diligent in presenting arguments their judge. given And that district
judges, familiarity due to their with coun- work, position
sel’s a far better than
appellate adjudicate attorney’s courts to disputes,
fees I believe it important
encourage position Teachers’ attorney’s
raise issues with respect to Thus,
with the district court. this seems prototypical
to me the context for enforce-
ment of our waiver doctrine. respectfully
I dissent. notes this matter was by public employee retained retirement extensively, ed that it novel involves is- systems serving plaintiffs pursuant as lead sues, it certainly that was anot situation accepted the PSLRA have fees which required where counsel were not to ex- are than significantly lower 25%.” fact, effort; significant tend the con- Thereafter, counsel, September lead on trary standard, true. accepted is 18, 2008, filed its motion for award which sort of a starting point for the counsel’s fees and ex- reimbursemеnt of Circuit, analysis appears in the Ninth penses and supporting memorandum be a 25 percent award. filing law and declarations. This two was Certainly, case, in this the court does objections weeks after the deadline for not believe that the efforts counsel passed. The memorandum and decla- fell below such that below the stan- rations the motion state fact, be appropriate; dard would lead сounsel and other law firms worked argued higher it could be that a award 17,001.06 total of hours on the valued justified might very given benefi- $8,396,593.20. Counsel did not cial outcome. detailing many sheets how hours event, spent by attorney were specific any each doesn’t see Instead, provided listing tasks. any depart it tables reason to from the standard rate, lawyer, hourly his or her that’s in the percentage awarded Ninth expended number of hours he or she I’m prepared Circuit. So overrule 992 “ sufficiently was ‘raised argument fee as not approve ” court to on it.’ Whittak for the trial rule well. F.2d Corp., 953 Corp. er v. Execuair timely the fee award. appealed Cir.1992) (9th v. (quoting 515 O’Rourke (In Fegert, re E.R. Sur. Co. Seaboard II. Standard of Review (9th Cir.1989)). Inc.), 887 F.2d 957 the district court’s We review the district court principle “This accords to in class attorneys’ fees actions award of rulings its oppоrtunity reconsider v. See Powers an abuse discretion. and correct its errors.” Id. Cir.2000). Eichen, 1249, 1256 discretionary, waiver Such if “‘A court abuses its discretion jurisdictional, not See determination. Unit con decision is based on erroneous Northrop F.3d Corp., ed States record no of law or if the contains clusion (9th Cir.1995). 957 n. 2 consider We rationally have on which it evidence ” court, issues not v. Equitable its decision.’ Fischel based to do so. although we Soc’y, 307 F.3d Assurance Life