Deborah DUNGEE, on behalf of herself and all others similarly situated v. DAVISON DESIGN & DEVELOPMENT INC, f/k/a Davison & Associates Inc.
No. 16-1486
United States Court of Appeals, Third Circuit
Argued: November 8, 2016; (Filed: January 6, 2017)
674 Fed. Appx. 153
Before: MCKEE, RESTREPO, Circuit Judges. and HORNAK, District Judge
Here, Damascus argues that the District Court “erred” when determining “myriad genuine issues of material fact exist regarding which company employed Wesley Sherwood” because the record evidence “overwhelmingly and indisputably established that Damascus 535 was Mr. Sherwood‘s employer at the time of his death as a matter of law.” Br. Appellant 46-47; Bailey, 2016 WL 1271381, at *6. This is precisely the kind of dispute that we have held Johnson forbids us from reviewing.
We also have no appellate jurisdiction over the equitable estoppel decision.4 Damascus did not argue that we should take jurisdiction over the estoppel decision alone. This makes sense. Because we lack jurisdiction to review the denial of summary judgment regarding immunity, Damascus could only raise its employer-immunity defense at trial. Because Damascus cannot avoid suit, its immunity defense is now functionally a merits defense. Thus, any holding related to it—including the District Court‘s ruling on equitable estoppel—is no more effectively unreviewable than any run-of-the-mill summary judgment order barring any other merits defense. See In re Mushroom Direct Purchaser Antitrust Litig., 655 F.3d 158, 167 (3d Cir. 2011) (holding that, because the defense at issue did not allow the defendant “to avoid entirely the burden of litigation,” there was no collateral order and no jurisdiction); see also Mitchell v. Forsyth, 472 U.S. 511, 525-26, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985) (explaining that qualified-immunity orders were effectively unreviewable because what was at stake was “an entitlement not to stand trial or face the other burdens of litigation” (emphasis added)); cf. United States v. Wright, 776 F.3d 134, 141 (3d Cir. 2015) (adopting the rule of other courts of appeals that, in a criminal case, “the touchstone for interlocutory jurisdiction is a collateral-estoppel claim that, if successful, would require dismissal of, at a minimum, an entire count“).
For the reasons set forth above, we will dismiss the appeal for lack of appellate jurisdiction. Bailey‘s motion for leave to append exhibits to her brief is denied as moot.
Richard H. Cross, Jr. [Argued], Cross & Simon, 1105 North Market Street, Suite 901, P.O. Box 1380, Wilmington, DE 19899-1380, Counsel for Appellees
J. Nicholas Ranjan [Argued], H. Woodruff Turner, David M. Aceto, James P. Angelo, K&L Gates LLP, K&L Gates Center, 210 Sixth Avenue, Pittsburgh, PA 15222
Kathleen F. Mcdonough, John A. Sensing, Potter Anderson & Corroon, 1313 North Market Street 6th Floor, Wilmington, DE 19801, Counsel for Appellant
RESTREPO, Circuit Judge.
In this class action, the parties reached a settlement that did not resolve attorneys’ fees. After the parties briefed and argued the attorneys’ fees issues before the District Court, the Court awarded over $1 million in fees to class counsel, which was more than four times the lodestar calculation. Because the District Court did not provide any findings to support this enhanced award, we will vacate and remand.
I
Named Plaintiff Deborah Dungee filed this class action on behalf of herself and certain other individuals who had entered into contracts with Defendant Davison Design & Development, Inc. for invention promotion services. Dungee‘s suit included class claims against Davison for violations of the American Inventors Protection Act of 1999 (“AIPA“) and for breach of contract. A fee-shifting provision within the AIPA allows customers who are deemed injured under the statute to recover “reasonable costs and attorneys’ fees.”
After the District Court denied Davison‘s motion to dismiss Dungee‘s original complaint, the parties mediated the case and reached a settlement agreement. Although the parties agreed that Davison would pay class counsel‘s fees, they could not agree on the proper amount, so Dungee submitted a motion for attorneys’ fees to the District Court. Dungee sought $2 million in fees under a percentage-of-recovery calculation. Davison argued in response that the lodestar calculation method1 was more appropriate under the circumstances; the parties agreed that the base lodestar calculation amounted to $257,226.76. The District Court held a class action settlement fairness hearing on July 30, 2015, during which the parties argued the attorneys’ fees issues.
On February 16, 2016, the District Court issued an order granting $1,118,936.40 in attorneys’ fees to Dungee‘s counsel. The District Court reached this figure by applying a 4.35 multiplier to enhance the base lodestar calculation. The District Court explained its methodology in one paragraph within a footnote:
Applying the lodestar method, the court first notes that based upon the class attorneys’ hourly rates, the fees amount to $257,226.76. While Davison argues that no multiplier should be used because this is a “tag-along case,” this ignores the substantial case law that applies multipliers.... Dungee asserts that the Third Circuit typically applies multipliers up to 15.6 with an average of 4.35....; Bradburn Parent Teacher Store, Inc. v. 3M, 513 F.Supp.2d 322, 341 (E.D. Pa. 2007). Following Dungee‘s alternative recommendation, the court will adopt the average multiplier within the Third Circuit of 4.35 and impose a fee of $1,118,936.40.
JA5a. On February 24, 2016, the District Court entered an order approving the final settlement between the parties, which included the $1.1 million attorneys’ fees award. Davison timely appealed the District Court‘s attorneys’ fees decision to this Court.
* Honorable Mark R. Hornak, District Judge for the United States District Court for the Western District of Pennsylvania, sitting by designation.
** This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent.
A
“There are two primary methods for calculating attorneys’ fees” awards in the class action context: (1) the percentage-of-recovery method; and (2) the lodestar method. Cendant Corp., 243 F.3d at 732 (footnote omitted). As the District Court noted here, “[t]he percentage-of-recovery method is generally favored in cases involving a common fund,” id. (quoting In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 333 (3d Cir. 1998)), whereas the lodestar method may be more appropriate where the nature of the settlement does not allow the court to determine the value of the settlement, or where there is a statutory fee-shifting provision, Prudential, 148 F.3d at 333.
A district court has discretion to determine which type of case the settlement most closely resembles and which calculation method to apply. In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995). Here, the District Court chose the lodestar method, reasoning that “the nature of the settlement ma[de] it difficult to make a precise calculation using the percentage of recovery method.” JA5a. Indeed, there was no established “common fund” from which a simple percentage could be taken, and the ultimate value of the settlement depended upon the number of claims made by former customers for cash and service vouchers. Accordingly, we see no error in the District Court‘s application of the lodestar method in this context. For the reasons discussed below, however, we must nevertheless vacate the fee award and remand the case to the District Court.
B
When a court applies the lodestar method to award fees in a class action case that involves a fee-shifting statute, there is “a ‘strong presumption’ that the lodestar represents the ‘reasonable’ fee,” for class counsel‘s work. City of Burlington v. Dague, 505 U.S. 557, 562, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992) (quoting Pennsylvania v. Del. Valley Citizens’ Council for Clean Air, 478 U.S. 546, 565, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986)). Any “upward adjustments of the lodestar figure are ... permissible ... only in certain ‘rare’ and ‘exceptional’ circumstances,” Del. Valley, 478 U.S. at 565, typically involving “superior attorney performance,” Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 554, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010); see also William B. Rubenstein, Newberg on Class Actions § 15:50 (5th ed. 2011). These circumstances include: (1) “where the method used in determining the hourly rate employed in the lodestar calculation does not adequately measure the attorney‘s true market value“; (2) “if the attorney‘s performance includes an extraordinary outlay of expenses and the litigation is exceptionally protracted“; or
The party requesting an enhancement to the lodestar carries the burden to show that a multiplier is necessary to reach a fair and reasonable fee award. Id. at 553; City of Burlington, 505 U.S. at 562. That party must produce “specific evidence on the record” supporting the enhancement. Del. Valley, 478 U.S. at 565 (internal quotation marks and citation omitted). Further, to ensure that the calculation “is objective and capable of being reviewed on appeal,” a district court must provide detailed findings justifying any enhancement to the lodestar. Perdue, 559 U.S. at 553, 557-59.
Here, the District Court offered no explanation for why the simple lodestar calculation would not adequately compensate class counsel, or why this case presented “rare” and “exceptional” circumstances needed to enhance the lodestar. We see nothing in the record to suggest that class counsel provided the District Court the “specific evidence” required to justify the enhancement. Rather, it appears that the District Court simply adopted Dungee‘s recommended 4.35 multiplier, understanding it to be the “average” multiplier used in the Third Circuit.4 In the absence of specific evidence from class counsel and detailed findings by the District Court justifying the use of any lodestar multiplier, let alone a multiplier of 4.35, we must vacate the $1,118,936.40 award and remand the case to the District Court. On remand, the District Court should reassess whether an enhancement to the lodestar calculation is appropriate in this case and, if so, it should provide factual findings supporting any multiplier used.
III
For the reasons set forth above, we will vacate the District Court‘s order granting $1,118,936.40 in attorneys’ fees, and the District Court‘s order approving final settlement of this class action, insofar as the final settlement incorporated the $1,118,936.40 fee award, and we will remand this case for further proceedings consistent with this opinion.