In Re New Mexico Indirect Purchasers Microsoft Corp.

(noting police encounter is a non- that he had a to announce believed would person warrant to wait for admission “if a reasonable search consensual seizure futile. been felt free to decline offi [the would not have requests open the door or to other cers’] court noted that “[i]t Id. at 748. The (altera suspect] suppose ignore presence”) [the [officers’] stretches belief wise pushing (internal immediately stopped would have original) quotation marks tions added, if had after [the officer] the door omitted), granted, citation cert. 2006- officer, that he identifying police himself as a NMCERT-001, 139 N.M. 131 P.3d 660. possessed a search warrant.” Id. But the encounter was non-consensual here (alterations (internal original) quotation from the moment the officers told Defendant omitted). marks and citation above, I close the door. As I conclude Davis, executing a search In officers engaged in the officers were lawful believe approaching a house when a warrant were of a warrant and did not violate execution Davis, inside. man saw them and fled II, Amendment or Article Section 10. Fourth police knocked and an- A.2d at 1041. engaged in But even if the officers were presence, their but did not inform nounced conduct, I police unlawful believe that Defen they occupants of the house that had right disregard dant did not have the their more than ten warrant and did not wait commands. Nor did Defendant have forcing entry. Id. The defen- seconds before Elrick’s right to close his door on Officer argued violated the knock- dant that officers foot, doorway even if it was violation by failing to state and-announce rule both rights. of Defendant’s New Mexico the they by failing a warrant and had remedy for an unlawful arrest or search is amount of time before wait a reasonable Chamberlain, 112 civil. State v. See disagreed. In- forcing entry. Id. The court (1991) (“If stead, long the court noted that has been “[i]t illegal, [police had been there are conduct] police ... that where the are reason- the rule appellant’s protect within the law to remedies ably occupants that the are aware of certain rights. Those remedies do not include resort presence purpose, police need their measures.”). of a self-help The victim announce,” and held that not knock and illegal, right to peaceable, but arrest has no occupant police and sees the “[w]here resist commit assault or to otherwise premises, immediately retreats into the back here, arresting duty police commands of the officers. as is the case announce, knock, and wait is obviated.” Id. reasons, I re- For the above-stated at 1042. spectfully dissent. I that further com- Because conclude pliance knock-and-announee rule with the legitimate protected

would have no interest pur- served no

of Defendant and could have allowing to arm himself pose but Defendant 2007-NMCA-007 I Amendment escape, believe the Fourth II, 10 were not violated and Article Section 149 P.3d 976 entry in I by the officers’ this case. do In re MEXICO INDIRECT PUR- NEW require it is reasonable to offi- believe that MICROSOFT CORPO- CHASERS I procedures. therefore cers to follow futile Litigation Antitrust RATION that, under the agree with the district ease, 25,789. officers’ conduct limited facts of this No. justified. Appeals of New Mexico. Court majority’s disagree I with the also Defendant’s actions re- characterization of Nov. “an of consti- sisting the officers as assertion Denied, 30,135, No. Certiorari Certainly shutting a door rights.” tutional 5, 2007. Jan. en- successfully terminate a consensual can Scott, 2006- police. State counter Cf. ¶ NMCA-003, 25, 751, 126 P.3d

OPINION CASTILLO, Judge. case, In this we examine the reason-

ableness of fees that awarded were doctrine, on the basis of the common fund pursuant in a terms class action settle- agreement. ment We that under conclude the circumstances of this the settlement provisions regarding the common fund doc- dispositive trine are awarding court did not abuse its discretion by using the percentage-of-recovery application method in its of the method. Relying evidentiary on our review of the Rule 16-105 NMRA factors used the dis- trict court to evaluate reasonableness of fee, we also that the conclude fee award- Accordingly, ed in this case was reasonable. we affirm.

I. BACKGROUND many This class action is relat one of against Appellant ed suits filed Microsoft (Microsoft) Corporation in federal and statе throughout country. courts Numerous complaints were filed after the United States District Court the District Columbia in July issued findings of 1999 fact estab lishing that had engaged Microsoft in con indicating improper duct use of market advantage to stifle innovation. See United Corp., F.Supp.2d States (D.D.C.1999); see also v. Mi United States McCracken, Montgomery, Walker & (D.D.C. Corp., F.Supp.2d crosoft Rhoads, L.L.P., Casper, Charles B. Philadel- 2000) (concluding that Microsoft violated the P.A., phia, Corporation, Richard J. analogous Sherman Antitrust Act and state Wallis, Aeschbacher, Redmond, Steven J. statutes), part part, and rev’d in aff'd WA, Cromwell, L.L.P., & Sullivan David B. 34, (D.C.Cir.2001). Tulchin, Nelles, York, NY, Sharon L. New Mexico, In New three class action Rodey, Dickason, Sloan, Robb, P.A., Akin & complaints were filed before March 2000. Ricco, McCarthy Apodaca, Edward Leslie The three cases were then a consolidated Drennan, Jocelyn NM, Albuquerque, for Ap- writ superintending control pellant Corporation. issued Microsoft Supreme New Mexico Court. The consoli- Hinkle, Martin, L.L.P., Hensley, Shanor & complaint, alleging dated amended Mi- Larson, Hnasko, Gary Thomas M. W. Santa had crosoft violated New Mexico’s Antitrust Fe, NM, Freedman, Daniels, Boyd, Holland- Act, Act and Unfair Practices was filed P.A., Freedman, Goldberg, er & A. David late filed 2000. Microsoft a motion to dis- NM, Lerach, Albuquerque, Stoia, Coughlin, miss, and a Geller, Class Plaintiffs filed motion to Robbins, L.L.P., Rudman & Leonard Class, certify fully Simon, Parker, both which B. were Tay- Pamela M. G. Susan lor, CA, Diego, Appellees argued. San briefed and The motion dismiss Class Plaintiffs. granted part part, was and denied in and a (“[T]he attorney amount of an award of fees complaint was amended second consolidated discovery Extensive be- lies the sound discretion of trial filed and answered. within 28, through 320, 2002. Hertz, 331, June gan court.”); and continued Hertz N.M. (“It (1983) 1169, well[ fet district court had By late attorney’s fees on the tled that an award of Class, granting and the order certified the finding compensation is a basis of reasonable appeal to this Court. certification was on patently erroneous briefed, disturbed unless fully prep- trial appeal That was and (empha reflecting was as an abuse of discretion.” a settlement ne- aration continued while sis, marks, Agreement quotation gotiated. The Settlement and citations internal finally approved omitted)). (Agreement) discretionary was Decem- A decision based on appeal of the class pending and the ber misapprehension a of the law is an abuse of The terms of certification was dismissed. that must be reviewed de novo. discretion catego- into main Agreement fall three 1999-NMSC-028, ¶ 7, NARAL, First, agreed provide Microsoft ries. Thus, question P.2d by a that could be claimed member vouchers applied law has and whether the correct been a cash reim- and redeemed for application of that law to the district court’s any qualified after purchase bursement ¶¶ de Id. 7-8. the facts are reviewed novo. Second, computer hardware or software. After correct law we determine whether the cy pres agreed provide a award Microsoft applied, discretionary review has been we in New eligible of vouchers to schools Mexi- and re decision for abuse discretion cy pres co. The amount of the award logic “only contrary if it and verse [is] percentage of vouchers unclaimed based on ¶ (internal quotation marks reason.” Id. claimed unre- percentage and vouchers omitted). “The test is not what and citation Third, deemed members Class. we had we heard the fee would done pay promised to reasonable attor- Microsoft request, whether the trial court’s deci but ney parties expenses, and and clearly logic against sion effect agreed attorney fees would be deter- facts and circumstances before mined on the basis of the “common fund” Greig, In re Estate court.” doctrine. (Ct.App.1988). P.2d hearing argu- Subsequently, after oral applica- regarding ments Class Counsel’s Arguments B. Microsoft’s tion, million in the district court awarded $6.1 argu- makes three main fees, plus appropriate gross receipts court abused its dis- ments that tax, $525,179 expenses. by awarding attorney fees in an cretion percentage-of-recovery used calculation vastly disproportionate amount that is applied the lodestar method dou- then First, Micro- for the Class. benefit obtained of the fee ble-check the reasonableness erred soft asserts that the district court guidance regarding For award. additional applying percentage-of-recovery method reasonableness, also consid- the court below method) the fee (percentage to calculate factors in Rule 16-105 of New ered the circumstances, in these award Mi- Mexico Rules of Professional Conduct. method should have been used lodestar award. Additional facts appeals crosoft alternatively developed to our discus- calculate fee. will be as relevant if the method sion of the issues. contends that even the district court erred permissible, were II. DISCUSSION recovery this its valuation dispropor- in a fee that was error resulted A. Review of Standard recovery. tionate to the An award of {6} Second, argues that dis- Microsoft {8} of N.M. reviewed for abuse discretion. automatically accepting trict court erred Johnson, v. Right 1999- to Choose/NARAL proffered ¶ lodestar because Class Counsel’s 6, 654, 450; NMSC-028, P.2d 986 N.M. hourly Co., rates Class Counsel’s out-of-state & v. Sw. Distrib. Gavin Co. Maloof (1987) in 415, 541, by market rates New 413, were not defined 744 P.2d man, 292, 298-99, 222, improper- Mexico and because Class Counsel 88 N.M. 540 P.2d 228- ly litiga- (1975) spent submitted hours both on fee (noting that the decisions other tion performed and on work for Microsoft persuasive states similar statutes are eases other states. Microsoft also asserts binding). but provide support- that Class Counsel failed Generally, the determination ing $81,201 documentation “for worth of lode- fee of a award after settlement of a class star.” subsequent action and the review of that Third, argues Microsoft that the dis- determination involve consideration a vari by concluding trict court erred that a multi- ety competing responsibili interests and plier appropriate of three was an enhance- First, judiciary duty, pursu ties. has a ment of the lodestar in these circumstances. 1-023(E) NMRA, ant to Rule to review the tag- Microsoft contends that this case was any reasonableness of award fees in a action, along “piggybacking” actions from the class action. 4 See Alba Conte & Herbert B. courts, federal court and other state and that Newberg, 14:1, § on Newberg Class Actions expended, “[n]either efforts nor the risks (4th 2002) (“To fully dischargе ed. assumed, nor the results obtained ... were duty approve to review and action class set exceptional” enough justify a multiplier of agreements, tlement a district court must three. proper that a asserts lode- attorney’s assess the reasonableness of the $1,509,023 star would be and that this lode- fees.”). fiduciary A court acts as a for class star, by multiplier 1.5, enhanced would and, so, doing weighs members the inter produce $2,263,534, a reasonable fee light ests class class counsel’s reduction of almost million from the $4 on efforts their behalf. re Copley actually amount awarded. Pharm., Inc., 1407, F.Supp.2d arguments regard- In addition to the (D.Wyo.1998) (citing Phillips Brown v. Pe ing fee, disproportionality Micro- Co., (10th troleum 838 F.2d Cir. challenges soft also the district court’s auto- 1988)); see re FPI/Agretech also In Sec. Li acceptance matic of Class Counsel’s claimed (9th Cir.1997) (discuss tig., 105 F.3d expenses. Microsoft contends that the dis- ing the lower protect court’s role to objec- trict court did address Microsoft’s interests). A responsibili court assumes this expenses tions to the claimed “gave no ty because class members often have low reason at all for its finding expenses ... individual stakes in the outcome a case Moreover, were reasonable.” as- object and thus often do not to the settle serts that out-of-state Class Counsel claimed Hosp. ment fee Corp. award. Swedish v. $225,833 expenses a requisite without Shalala, (D.C.Cir.1993). 1 F.3d “showing expenses those were reason- Moreover, the defendant often has no inter ably necessarily incurred New est in division of the fund between class thereby] Mexico case .... [and failed to Thus, members and Id. class counsel. satisfy proving their burden of that the ex- duty has a to establish the reasonable penses provided any ... benefit” to the award, of a ness which out arises of its Class. protect obligation by, class interests inter alia, Preliminary preventing C. conflicts of interest Considerations between class counsel and the class members and The reasonableness of attor preventing collusion between class counsel ney fees awarded after a class action settle Co., Boeing and the defendant. See Staton v. impression ment is аn issue of first (9th Cir.2003) (discuss 959-60 Court. Where New law in Mexico is not ing dangers settlements, the inherent of class structive, guidance jurisdic we find other including the compromising of class mem jurisdictions tions. Law other is not negoti bers’ interests and collusion between us, however, binding may though even ating parties); Corp. In Gen. re Motors Pick persuasive. See Breen Mun. Carlsbad (In up Sch., ¶ 14, Litig. Truck Fuel 2005-NMSC-028, Tank Prods. Liab. (“Federal Trucks), (3d re GM certainly law case Cir.1995) informative, (discussing necessity per but to the extent it is over suasive.”); Chap- prevent Ins. sight may Sec. ‍​​‌​​‌‌‌‌​​​​‌​‌​​​‌​‌​‌‌‌​​‌‌‌​‌​‌​​‌​‌​​‌​‌‌​‌‍Co. v. that abuse arise from Hartford

889 case, position is in to make a far better the class and its the conflict between potential court, counsel, appellate that do not meet is an situations decisions than [such] even fund), of a common the strict definitions which must work from cold record.” Gold- grounds, holding on Amchem Res., Inc., 43, limited other berger Integrated 209 v. F.3d Prods., Windsor, 591, 619-20, Inc. v. U.S. Cir.2000) (2d (internal quotation marks (1997); L.Ed.2d 689 117 S.Ct. omitted); Int’l and accord Waters v. citations Weinberger Corp., 925 v. N. Nekoosa Great Corp., F.3d Precious Metals Cir.1991) (1st (discussing the (11th Cir.1999). class and its potential for conflict between a Fourth, must we conserve {15} attorneys, paid the both when fees are promote judicial judicial and effi resources fees distributed and when are defendant NARAL, 1999-NMSC-028, ciency. See fund, the class counsel because ¶¶ 12, 13, 127 986 P.2d 450. N.M. Gen exchange might for “in urge a settlement less statutory exceptions erally, equitable and fees”). on red-carpet for treatment judi not the American rule are a burden on Second, a court must acknowl ¶¶ (declin 15, 25, cial id. resources. See edge public perception the of windfall fees ing attorney general adopt private doc judicial oversight to and use class actions because, alia, it not further trine inter would that fees awarded to class counsel are ensure resources). conserving judicial goal proportional to the obtained benefit Supreme States Court reminds United Force, Task Third class. See Third Circuit application us a fee “should result Report Force Circuit Task on Selection of major Hensley litigation.” v. Eck a second Counsel, Temp. L.Rev. erhart, 424, 437, 1933, 76 461 U.S. 103 S.Ct. (2001) Report [hereinafter II]. Task Force (1983). L.Ed.2d 40 fees are the criticism of We sеnsitive in some have been awarded class actions. Finally, ap we note that F.Supp.2d Copley, In re We See us; is proval of the settlement not before we aware, however, perception are also this fees, attorney as the award review Report Task be unfounded. Force can See provided by parties’ Agreement. The (“When II, Temp. there is a L.Rev. Agreement controlling, provisions are in a public reaction to an fee award is produce a result unless the terms public usually unaware of given contrary policies unfair to the Class or actually did, lawyers what risks what Montoya v. underlying actions. See made, took, they they and what investment Mall, Ltd., Villa Linda important lawyering victory how their (1990) (stating class.”). scope authority to of contractual award Third, must Court rule is defined American outside judg not substitute its mindful that does determining what fees and that contract Mayeux for that of district court. ment a matter of contract inter appropriate Winder, 2006-NMCA-028, ¶ 32, 139 N.M. district court’s pretation). We review the Staton, 235, 131 85; F.3d at 960 P.3d cf. through the of the fee award determination (noting the abuse of standard discretion of the above considerations be lens of each of settle appellate limits an court’s review fore reach our conclusions. we fairness). ment We do reverse decision standard, un under the abuse of discretion Agreement D. The Settlement ruling below “exceeds the bounds less Fund Doctrine Common fanciful, “arbitrary, un all reason” or begin perti- review We 2006-NMCA-028, Mayeux, reasonable.” Agreement. provisions in the nent (internal ¶ 32, 235, 131 P.3d 85 agreed pay attorneys’ fees “to reasonable omitted). “In marks citation quotation expenses in an amount to be determined already one deed ‘abuse discretion’ — reserved c]ourt.” [district most deferential standards review—takes application, right oppose special significance when re [a is] appeal right court, parties both reserved viewing The district fee decisions. pro- Agreement intimately district court’s award. The familiar with the nuances which is rule; litigation spread among vided the fee issues would fees are all the subject following stipulations be the rele- prevailing party by membеrs of the allo appeal: this vant to proportional recovery. cation of shares of the (1) 479, 481, 100 attorneys’ Id. fees and costs will at 745. be S.Ct. by paid Microsoft addition to the recov- case, In this Microsoft has ery to the New Mexico Settlement Class contractually agreed pay attorney A fees. (2) ...; cy remedy pres and the attorney providing contract for is en attorneys’ amount of the fees will deter- NARAL, 1999-NMSC-028, forceable. See upon mined the basis of the “common ¶ 9, (stating 986 P.2d 450 “prevailing fund” doctrine rather than as a the American rule not bar does enforcement fee, statutory party” party or each fees). provision attorney of a contractual for being argue free to for what it believe [sic] Agreement specifically provides that Mi (3) fee; plain- is a reasonable common fund pay attorney crosoft reasonable fees to “be argue are tiffs free to value of upon determined basis the ‘common litigation “common fund” created is Thus, fund’ doctrine.” the common fund doc (but any up amount no case exceed- applied trine is case this because is Value, ing) Face plus notice and adminis- required Agreement; under the the doctrine costs; expenses

trative and Microsoft is applied equitable as an exception to argue is free to that the “common fund” Agreement the American rule. The created litigation any created is amount less arrangement a fee falls within the than the or Face Value is the amount of parties provided by American rule —the con directly benefit conferred on class tract that the district court on award fees litigation[.] members virtue basis of the common fund doctrine. See id. Since the common fund is doctrine essential analysis, to our proceed we with an overview Historically, attorney fee principles development awards made on the basis the common common fund and fee awards. fund doctrine are reviewed for reasonable The common fund doctrine See, e.g., ness. Pulp Edwards Alaska equitable exception is an to the American (Alaska 1996) (“Al Corp., 920 P.2d NARAL, 1999-NMSC-028, ¶ 19, rule. 127 though may courts differ and federal 654, 986 P.2d 450. Under Ameri circuits are divided over how best deter rule, litigants can responsible pay are attorney’s mine amount of fees under the fees, ment of their own unless oth doctrine, agree common fund all that a ‘rea provided statute, rule, erwise attorney’s sonable’ proper stan ¶ Id. contract. 9. Under common fund dard.”); Conte, Attorney 1 Alba Fee Awards doctrine, litigant lawyer recovers, aor who (3d 2:3, ed.2004); § at 61 Conte & New- preserves, or increases the of a com value (“Reasonableness 14:8, § berg, supra, fund, thereby mon benefitting persons, other touehstone[.]”). is the Benefit to the class is may be reimbursed for reasonable fees and the talisman for fees costs in a common expenses from the fund as a Boeing whole. fund and the common fund Gemert, Co. v. Van 444 U.S. benchmark used to measure reasonableness. (1980); S.Ct. L.Ed.2d Swedish In re The Prudential Ins. Co. Am. Sales Hosp. Corp., 1 at 1265. The common (3d Litig., Practices Cir. generally princi fund doctrine rests on 1998) (“[T]he amount of the benefit conferred quantum ples of unjust meruit and enrich logically appropriate benchmark 14:6, Newberg, § ment. 4 supra, Conte & against which reasonable common fund fee Attorneys compensation are entitled to (internal charge quota should be assessed.” proportion to the benefit obtained omitted)); tion marks and citation re In Ho class, id., see and unnamed class members Corp. Litig., Healthcare Sec. rizon/CMS recovery unjustly who share a common 1208, 1213 F.Supp.2d (D.N.M.1998); Conte, if enriched named class must members bear 2:7, (“[T]he Gemert, supra, § fund litigation. burden of Van represents U.S. 100 S.Ct. 745. The common the benchmark which a rea awarded.”). Thus, fund doctrine is consistent with the American sonable fee will be we ask argue that ‘common crosoft is free to the properly determined if district court the by by litigation any Counsel what was obtained Class created the is amount benefit fund’ following For on of the Class. the behalf the or is amount of less than Face Value the reasons, court that the district we conclude directly on class the benefit conferred mem- determining in did not abuse discretion by litigation[.]” of bers virtue Class the Class. the value of the benefit to rely did on face of Counsel the value $31.5 argued entitled to million and that it was 25% Proportional- E. the and Benefit to Class ($31.5 million, plus million the of of costs $32 ity the of Fee Award administration), for total of settlement a $8 argues that district the in The million fees. district court the its discretion because fee court abused arguments regarding the value of listened vastly disproportionate to the bene- award is discretion, and, the common fund in its de- fit for the Class. Microsoft likens obtained percentage to award fees as a the clined award in the instant case to a windfall fee value, argued by as Class Counsel. In- face public fee that contributes to adverse stead, approximate the court relied on the legal vividly as perception profession, figures by put forth Microsoft. City in Detroit v. Grinnell described the value of the Microsoft estimated (2d Cir.1974), abrogated Corp., 495 F.2d pleadings in “The total settlement below: grounds, Goldberger, on other at likely total value of the settlement is to be complaints [about bitterest “[T]he 49-50. million, value the [C]lass and net $17 laymen legal profession] direct- [are million.” around Counsel Microsoft $3.1 featherbedding ed the windfall fees at] repeated at the fee these estimations hear- lawyers managed to perpetuate have ing: “The at is about total amount issue $17 judicia- through ... their with the influence how million. That’s much the schools will third, (second, ry.” and fourth Id. vouchers, (internal million receive and about 3.1 will original) quotation alterations omitted). argument go in So that’s [C]lass---- and citation This vouchers marks rests the meas- you on Microsoft’s assertion that when total value of the settlement recovery expect- ure “the is actual amount really going value to the New Mexico what’s [C]lass,” by ed to received which was be schools and to the The district [C]lass.” (10% a maximum million vouchers $3.1 it court did not abuse its discretion when settlement). of the face value of the Ulti- representations on made Mi- relied these mately, the value of claimed vouchers crosoft’s counsel. $725,366. argues reached appeal, Microsoft On com used, figure that if award of either fee pares the award of million $6.1 disproportionate amount million $6.1 actually value of vouchers claimed members will The the Class receive. $725,366. members— district court the benefit to the Class valued it court did not this amount before $24,475,179. period expired had because the claims not hearing the informa- the time of the fee to the Class the Settlement Value yet Microsoft did not tion was available. determining a fee award based When object that court not have the actual did fund, must the district court stipu- figures Although parties it. before estimate of value of make a reasonable “subsequently available claims lated Prudential, In re the settlement. record,” appellate we rate be included parties contemplated litiga- at 333-34. The was decline to evidence that consider fee and tion over the reasonableness An appellate the court below. court before stipulated to minimum and valu- maximum court decision on does not review district purposes ation of the common fund ostensibly in that are the basis facts argue argument: are free to “[P]laintiffs court but not before the below record were fund’ of the ‘common created value 12-209(A), ruling. Rule (but when made its See any up litigation amount no (C) (defining proper as Value, the record NMRA plus Face notice and exceeding) case costs; papers pleadings filed the district expenses and and Mi- administrative Chalamidas, stating that modification of the cessive.” See Lenz (1991) (reduc stipulation any 17, 18-19, may made “[i]f record thing party $17,616, material to is omitted from ing either spent, fees from based on time accident”); by error proper $8,000, the record reasonably required, on time based Eng’r Office, Martinez v. N.M. State 2000- $13,365); judgment where the Ulibarri ¶¶ NMCA-074, 47-49, 413, 129 N.M. 9 P.3d Gee, 637, 638, 640, 10, v. 106 748 N.M. P.2d (stating appellate that courts not con 657 do (1987) 11, attorney (reducing 13 fees part made of sider matters are the $30,101 $10,000, mid-point” to “a of near presented but not the record were to initial $28,820); judgment where the to amounted maker); Keeney, Estate 121 decision re 702, Thompson Drilling, of see also N.M. at 105 58, 60, 751, (Ct.App.1995) 753 N.M. 908 P.2d 705-06, 980, (ruling 736 P.2d at that a (indicating appellate that an court would con $15,945, fee of great award almost two times by were sider matters that considered $8,309, jury’s er than the verdict of was trial the court the time made its deci reducing unreasonable and to the award sion); John Hancock Ins. Mut. Co. v. Life $5,211). Because these cases do not address (10th Weisman, 500, Cir.1994); 506 actions, funds, cy class common or pres ¶ Vincent, 2005-NMCA-064, 9, State v. cf. Lenz, 18, awards, 113 see N.M. at 821 P.2d at 462, (“[U]nless N.M. 112 1119 P.3d the lien); Ulibarri, (enforcing N.M. necessary facts to consider contention are 638, (same), 748 P.2d at 11 cases not the are appeal, in the on we record cannot consider controlling. They provide general guid do claim.”), granted, the cert. 2005-NMCERT- ance, Lenz, however. fee awards 523, 137 N.M. 113 P.3d 346. The value Ulibarri, Thompson Drilling re were claimed vouchers was not “omitted” 59.8%, 34.7%, spectively 62.7% from the documents filed district recovery. City client’s Nava v. Santa Cf. court; yet this value had not been ascer ¶ Fe, 2004-NMSC-039, 25, Thus, tained. we review lower court’s (concluding P.3d 571 district court by using only decision the facts before the did not awarding abuse discretion at court at that time. torney equivalent approximately fees to 34% appeal, On two Microsoft cites New judgment); v. total Lucero Aladdin cases, saying Mexico one that the fee award Colls., Inc., 269, 272, Beauty 117 N.M. upon actually must be “based the benefits (1994) (taking “judicial P.2d notice provided saying client” and the other (50% recovery the standard of the total 33^% fees, in determining court recovery) of the client’s share ‍​​‌​​‌‌‌‌​​​​‌​‌​​​‌​‌​‌‌‌​​‌‌‌​‌​‌​​‌​‌​​‌​‌‌​‌‍consider “the amount involved and the re attorneys typically receive on when retained sults obtained.” These cases establish some a contingent holding fee contract” and general principles regarding fee awards and not did abuse its discretion illustrate fee awards that New Mexico courts by awarding judg about 27% of the total proportional have considered or reasonable. fees). ment, including attorney However, distinguishable; these cases are an Microsoft also relies on Alabama actions, they do not address class Fidelity v. Union Insurance Co. funds, Life ey pres recoveries. See v. Calderon (Ala.2000), McCurdy, sup- 781 So.2d 186 Navarette, 1, 2, 1058, 1059 111 N.M. 800 P.2d port the assertion that the actual amount (1990) (addressing attorney award fees appropriate class received is the quantum meruit concluding after that the Fidelity’s holding measure. Union limited attorney’s contract with his client individual rested court’s conclusion that notice unenforceable); Thompson Drilling, was Inc. inadequate and that class members could 701, 702, Romig, therefore make an decision re- (1987) informеd (addressing attorney garding or not to file a claim whether made pursuant available to a contract a cause of available the settlement. Id. at 190-91 money action recover due and to enforce a lien). (noting generally “that an informed decision mechanic’s Microsoft also cites two participate not to should proposition New for the not dimmish the other Mexico cases counsel, greater fee awards than award to the client’s class because the benefit recovery “routinely as ex- such actually provid- struck down circumstances has been reject agreement may a fee allocation a court ed, simply has chosen class member her”); agreement awards an due him or where it finds that the reap the rewards not to Gemert, disproportion benefits that U.S. at also Van see (holding specific] attorney upon that the award could conferred [a S.Ct. recovery, though class”); Atlantic-Maryland, the entire even be based on Dotson v. Bell pursue Inc., 99-21004, 00-09962, did not elect class members some Nos. CAL CAL recoveries, “right (Md.Cir.Ct. because the individual their *13 WL upon (not A.2d) the harvest of lawsuit 2003) (“[U]n- to share Nov.13, reported in they identity, whether or proof their requires ... a rational con- [c]ourt less the it, in the fund created exercise is benefit nection the fee award and between counsel”). ... Micro- efforts of the class [sic] amount of actual distribution does not contend that Class members soft [c]lass, underlying purpose of ac- not make an informed the instant case could undermined.”). However, to the tions bewill inadequate of because notice. decision contending may the be that extent Microsoft compared in Moreover, fee this case must be in award lower court Union the recovery by mem- in-the-hand Fidelity “might total claims an estimated that bers, $10,000 expresses by period,” the of the class of these cases such reach end none Prudential, of at only 0.2% of the million face value the In re F.3d mandate. See $4.5 at 191 In orn- fund. 781 n. 7. that (agreeing So.2d with the district court ease, se, represented to the court be- though per no common fund there was could reach 10% of low that estimated claims like a “common fund the case was more the that $3.1 face value of settlement and the statutory fee-shifting than ... a paradigm of acceptable million estimate “the was “[c]onsequently, that the district case” and to likely given to be value vouchers required to a ‘reasonable court was make repre- repeatedly Microsoft also [CJlass.” in to of the settlement’s value order estimate’ to the total value of the sented the court that attorneys’ using fees calculate million, was which included settlement $17 method”); FPI/Agretech, recovery In re million cy pres of “another award $14 (ruling of the attor- at 475 that one F.3d represented The value of the settlement so.” neys plaintiffs was representing the not enti- Fidelity and the the lower court in to Union in a fees second settlement tled to share the represented to value the settlement litigat- in fund was not involved because she markedly in our are differ- court below case case); Dotson, 23508428,at ing 2003 WL Thus, Fidelity helpful is not ent. Union (“[T]he by *2 benefit the affected received analysis. our society weighed by should be individuals Similarly, the federal cases against obtaining it before the the costs by unreported added)); state case cited Microsoft do legal (emphasis see also system[.]” support contention that not Microsoft’s (“[N]o Waters, case has held 190 F.3d at 1295 vastly disproportion- in fee award our case is must that a district court consider by the Class. ate to the benefit received attorneys’ determining payout in actual cases, that the Microsoft asserts With these fees.”); (noting n. 8 that the cases id. by the the Class must be measured benefit to that wheth- cited the defendant “illustrate expected to be received “actual amount judge total considers the er district clearly supports Each case the class.” vary payment fund actual will accord- or the that the the class must proposition benefit each ease” and ing the circumstances of determining reasonable- considered “[h]ere, concluding that where Prudential, In award. See re ness a fee fund the total court considered both (noting that “the F.3d at 336-37 n. would be possibility payment that the actual depend must on full assessment final аward lower, abuse of dis- substantially there is no by [the] of the benefits received extent cretion”). Thus, support not these do cases (internal marks and cita- plaintiffs” quotation position. Microsoft’s omitted)); FPI/Agretech, In tion re addition, Microsoft dis Orange (stating Agent In re Act federal Class Action Fairness Liability Litigation, 216 cusses Product 109-2, 119 2005(Act), 3,§ (2d Cir.1987), Pub.L. No. Stat. “supports proposition (enacted 2005) fees). (add- statutory attorney and effective Feb. award United Nu (e) 1712(a), § ing (Supp.2006)), 28 U.S.C. controlling not clear is this case for several support position award First, Supreme reasons. as noted the two against must be measured actual benefit issue, justices who Court wrote on this attorney Act limits fees the Class. The necessary ruling issue not recovery coupons are based Nuclear. Id. 709 P.2d at United coupons actually the value of the are Second, inapposite; the circumstances are 1712(a). § As not- redeemed. See U.S.C. Nuclear involved avail United earlier, ed we are not bound federal law pursuant statutory authority. able Id. at Moreover, interpret when we state law. 485-86, 654-55; 709 P.2d at see Sloan v. original actions this case were filed almost Co., Farm Auto. Ins. State Mut. 2004- years five before enactment the Act. Cf. ¶ NMSC-004, 12, 85 P.3d 230 Waters, 190 F.3d 1297 n. 11 (declining (“[C]ases authority propositions policy legislation consider the behind that did (alteration (in original) considered.” not apply to actions filed before effective omitted)). quotation ternal and citation marks date). Thus, we pro- decline to consider the Third, two-justice opinion is not consid visions of Act under these circumstances. Bittner, precedential. ered See Gracia v. Finally, we note the conflict (Ct.App. that can exist a district court a between 1995). Finally, stating that the lodestar representations regarding defendant’s bene applied method has been in class action suits fit to the in a approval class settlement hear necessarily preclude does not the existence of ing representations and the defendant’s re appropriate another method to calculate at garding hearing. benefit to the class a fee suits, torney fees in class particularly action (John- Fidelity, See Union 781 at 197 So.2d parties agreed where the have that the dis J., stone, majority dissenting) (criticizing the trict court would determine a reasonable fee opinion rewarding for defendant-appel the on a “calculated common fund The basis.” “likely duplieitousness lant’s and lack of can phrase “calculated on a common fund basis” class). regarding dor” benefit to the The strange would be a if choice of words the judiciary’s duty protect to the interests of the lodestar method were the avail method obligation protect class includes the the able. settling class from a defendant’s conflict interest when the defendant extols the bene Discretionary a. Decision (in fits to the class at the hearing fairness majority jurisdictions, In the the gain approval) order to settlement and then district court has discretion determine denigrates the benefits to at the class the fee which method should be used to award fees (in fees). hearing order to minimize See id. at doctrine, under the common fund depending (Johnstone, J., dissenting) (noting 196-97 on the particular circumstances of each case. conflict that arises when the defendant extols See, e.g., Goldberger, (join- 209 at F.3d 49-50 the benefits the class at the settlement ing courts, majority of circuit which af- hearing disparages the benefits to the ford the district court discretion to choose hearing). class at the fee method); FPI/Agretech, In re 105 F.3d Percentage (stating 2. Error in the Choice of the deference under Method abuse of discretion standard is afforded the court’s choice to use either method for calcu- on relies United Nuclear award); lating Barry, an v. Gottlieb F.3d Co., v. Corp. Allendale Mutual Insurance (10th Cir.1994); Edwards, 920 P.2d (1985), argue 757-58; Corp. Bloyed, at Gen. Motors “application percent-of-recovery (Tex.1996). Historically, 960-61 S.W.2d legal ... Supreme method was error.” Our percentage commonly method was most Court, dicta, observed that “[t]he ‘lodestar’ from used award fees a common fund. multiplier applied generally been 1265; Corp., 1 Hosp. Swedish rights civil see cases and class action Id. suits.” 485-86, Force, also Third Task (addressing 709 P.2d at Circuit Court Fees, Attorney district court’s use of the lodestar method Awarded 108 F.R.D. 821; Brown, (1985) see 838 F.2d at 453-54 Report I] Task also Force [hereinafter (“[T]he was “rea (stating general provides starting that the standard ... lodestar circumstances sonableness under statutory review of point appellate particular case” and reasonableness awardsf.]”). A lodestar determined a the court believed was measured “what reasonably multiplying counsel’s total hours percentage’ of the amount recov ‘reasonable hourly spent on the case a reasonable ered, varying consider percentages Sch., Kennedy rate. v. Dexter Consol. 2000- case”). ably ease ¶¶ NMSC-025, 436, 10 P.3d requi- (discussing application percent Utilization of case). lodestar method to a Section 1988 site contingent of a age method is like calculation fee; may be in- counsel variable An award based a lodestar this method awards to percentage of amount for the multiplier recovered if the creased lower court Trucks, n. F.3d at 819 class. In re GM greater finds that a fee is more reasonable judge percentage allows 38. The method after the court considers the risk factor and showing that the fund confer to “focus on Goldberger, results obtained. 209 F.3d ring on the resulted from the a benefit class objective provides lodestar lawyers’ thereby the and to award efforts” services, valuing attorney’s basis way fee in a “that rewards counsel for suc calculating helpful prelude to a fee that re penalizes cess it for failure.” In purpose action fee serves the Corp. Litig., Prides Cendant compensate the for the award: “to Cir.2001) Prudential, (3rd re (quoting In benefiting value of [sic] reasonable services 333); F.Supp.2d re Copley, 148 F.3d at Lindy unrepresented claimant.” Bros. prefer at 1411. Courts often Builders, v. Am. Radiator & Inc. Phila. less than method because it is burdensome Sanitary Corp., 487 F.2d Standard Copley, method. In re lodestar (3d Cir.1973), grounds limited on other as (“Simply put, it much F.Supp.2d at 1411 is 238, recognized by Brytus Spang, F.3d v. 203 judi demanding far of scarce easier and less Cir.2000). (3d 242-43 percentage cial to calculate a resources hourly billing prac fund fee than to review method has The lodestar {35} complex litigation.”). In long, tices over a criticized, however, extensively for defi been addition, percentage ef method rewards outweigh ciencies that benefits. Task attorneys’ ficiency, helps align inter 246-49; I, Report at 108 F.R.D. Fed. Force interests, their more ests with clients’ and Ctr., Moore’s Federal Practice: Judicial in approximates attorney fees closely found 14.121, Complex Litigation § at Manual for marketplace. rationale for the Id. The (4th ed.2004) [hereinafter Manual 188 applied can be percentage method also (“In practice, the Complex Litigation] lode situations where the and settlement apply, method is difficult to time-con star independent but the funds claimed result, administer, suming inconsistent re actually come from the same source. In capable manipulation.”). Among and Trucks, F.3d at Use of the GM 821. method, however, problems are burden the lodestar these percentage has led to criti judicial system profession imposes legal cism of the because method in large fee flexibility rewarding method has sometimes resulted lack of in a court’s disproportionate ac that were awards In going risk re for the trial. counsel I, Report tual of counsel. Task Force efforts 821; Trucks, at Task Force 55 F.3d GM at 242. 108 F.R.D. I, 246, Moreover, Report 108 F.R.D. at potential to create use of the lodestar has Alternatively, the lodestar {34} counsel, In and its re conflict between class attorney fees can be used to calculate method 820-21, Trucks, F.3d at because this GM is in a fund case. The lodestar inefficiency and resistance to use leads to ordinarily statutory fee-shifting cases used by attorneys who expeditious settlement adequate provides it fees to attor because by billing their fees more want to raise litigation socially neys undertake that is who Babbitt, Chapter Navajo v. hours. Ramah beneficial, pecuniary value irrespective (D.N.M.1999) Trucks, 1091, F.Supp.2d [here- at re GM 55 F.3d to the classes. In I]; I, Report inafter Ramah Task Force common fund. Camden I Condo. Ass’n v. Dunkle, (11th Cir.1991). F.R.D. at 248. 946 F.2d contrast, In the Fifth Circuit uses The Third Circuit led movement v. Strong lodestar method. Tele BellSouth toward use of the lodestar method for com- Inc., (5th comms. 137 F.3d Cir. Lindy mon fund cases Brothers. Task 1998). 242-43; Report I, Force 108 F.R.D. at see Bros., Lindy at 487 F.2d 167. Some courts Supreme The United States Court will choosе to use the lodestar method in directly has not addressed the discretion of common fund cases when it difficult to choosing the lower courts in a method to fund, determine the value of the common award fees based on the common fund doc- particularly where it is easier to calculate the only guidance provided trine. The expended hourly hours rate than is to Stenson, can Court be found v. Blum appropriate percentage determine an U.S. 900 n. 104 S.Ct. Trucks, In award. re GM at 821. 55 F.3d (1984). There, recog- L.Ed.2d 891 the Court The lodestar method is also used when the nized the difference between lodestar percentage method will result in a fee award applied method in statutory fee cases unusually large or unusually small. percentage as applied method to the common Complex Litigation Manual See fund doctrine: “Unlike of at- the calculation 14.121, § generally See 189-90. In re torney’s fees under the ‘common fund doc- Copley, F.Supp.2d (comparing trine,’ where a reasonable fee is on a based advantages disadvantages of each percentage class, of the fund bestowed on the method). a reasonable fee under [Section] 1988reflects preferred method the amount of reasonably time ex- jurisdictions, including in some the Tenth pended on litigation.” Id. Circuit, because this method rewards effi- Our extensive review of the prompt cient and resolutions of class actions addressing case law each method leads tous accurately and because it reflects more advantages believe that there are and disad of litigation realities economics the mar- vantages method, each See, Cendant, depending on the ketplace. e.g., re 243 F.3d 734; MacAllister, circumstances of each case. Rosenbaum Because the (10th Cir.1995); position district court is in a Uselton v. Com- better to assess Inc., mercial Freight, join Lovelace Motor the circumstances of each we 849, (10th I, Cir.1993); 853 Ramah 50 majority jurisdictions and hold that the 1107-08; F.Supp.2d Fidelity, at Union 781 choice method is within the district court’s at 189 (stating So.2d that “the decision discretion. apply percentage whether to [the of] the Microsoft on relies Burke v. Arizona common-fund or approach ap- the lodestar System, 269, State Retirement 206 Ariz. 77 proach is within the trial court’s discretion” (Ct.App.2003), P.3d 444 to “[a] contend that though preferred even the method is the trial apply pereent-of- court’s decision to the method); percentage of the common fund see recovery method over the lodestar method Gottlieb, (discussing 43 at F.3d 483 Uselton’s commonly question held to be of law.” We implied preference percentage for the meth- disagree. clearly Burke states that “whether od). method, In using percentage the the applies the common doctrine is ... a fund “hybrid” Tenth Circuit approach also takes question (emphasis of law.” 77 P.3d at 447 by combining percentage the method added); Edwards, (con- see 920 P.2d at 756 the reasonableness factors derived from a cluding as a matter law that the common case, statutory Georgia fee High- Johnson v. applied fund gave doctrine because facts the Inc., 714, (5th way Express, F.2d 488 717-19 concerns). unjust rise to enrichment doWe Cir.1974), abrogated grounds, on other equate proposition not with Microsoft’s 87, 92-93, Bergeron, Blanchard v. 489 U.S. assertion that the 939, district court’s choice of (1989), 109 S.Ct. 103 L.Ed.2d 67 which Gottlieb, method is a matter of used the lodestar method. law. As discussed earlier, Agreement provided 482-83. The Eleventh Circuit uses the fee the percentage to method award fees from a would be awarded on the basis of the com-

897 determining if ruling could relevant when light of our exists fund mon doctrine. however, applies; to common fund doctrine court has discretion district applying question used in the com not choose the method this was before district doctrine, persuaded earlier, we fund fund mon court. As we noted common Brytus, 203 cases cites. See pursuant Microsoft to a applied this case doctrine argument (addressing counsel’s F.3d 244 exception. equitable and not as an contract as a matter of law 129, that the lower court erred Montoya, 110 N.M. at P.2d See proceeded legal on allegedly because agreed pay attorney fees 259. Microsoft to statutory provi misunderstanding that a by the court on the to be determined award); precluded a common fund fee sion of the commоn fund doctrine. basis (“We Edwards, P.2d at therefore to obligated court was enforce terms the common applying hold that a trial fund applying the contract the common fund has the discretion determine doctrine Corp., See Friedman v. doctrine. percentage of apply the fund whether 344, 824, (Ct.App. Ariz. 141 P.3d method method the modified lodestar 2006) properly ap (concluding that the court fees.”); attorney’s Kuhn order calculate fee-spreading principles par when the plied Revenue, 309, Dep’t v. 662 So.2d lein using agreed calculate ties (Fla.1995) 4, (rejecting, a 4-3 deci n. doctrine, though recogniz the common fund sion, as a matter of approach ours, like was a ing that fee-shift noting abuse-of-discretion “[t]he law case). ing, fee-spreading, not a will “[We] if had ac applied standard would we agree contract to create an not rewrite a cepted percentage approach and we were the parties of one of ment the benefit deciding picked the percentage whether that, hindsight, have been wiser.” would judge trial within the boundaries of Males, v. Supply Truck & Co. Watson reasonableness”). Microsoft also cites 639, (1990); P.2d see Moses, v. 104 Cal. Ketchum Cal.4th (“Defense counsel, Waters, 190 (ad (2001) Rptr.2d 17 P.3d having reaped bargain of their the benefits dressing mandatory by stat fees available suit, expect settling the action cannot Priest, 25, 141 ute), and 20 Cal.3d Serrano renegotiate their behalf the the court (1977) Cal.Rptr. arms- agreement terms of an concluded after private under (addressing fees available negotiations.”). parties length Once doctrine). attorney general Because neither doctrine, fund agreed to use the common doctrine, applies these ease the common fund applies relating cases to whether the doctrine holding do affect our cases Weinberger, 925 See become immaterial. is within district court’s choice method (concluding that the district F.2d at discretion. authority court should not be divested per argues also no use the lodestar when there used centage should not have been method Burke, fund); (noting 77 P.3d at 449 they will have shifted: because the fees been “that not conceded fees either defendant had paid paid propor and not by Microsoft or should be awarded under would be Therefore, tionally the Class members. doctrine”); also In Cen see re common fund is “true” that there no Microsoft reasons dant, (concluding at 734 Burke, See 77 P.3d at common fund. appropriate was even percentage method (declining apply the fund doctrine to though it common-fund was not “traditional spreading element was because the fee case”). NARAL, 1999-NMSC-028, present); cf. support of its con In further {42} ¶ 20, (noting that P.2d 450 district court should tention that with exception fund is consistent the common method, cites to Microsoft used lodestar are de the American rule because fees court cases and asserts three state district losing “a liti recovery and ducted from the “every has other court that addressed as a gant is no or worse off result better (al virtually applications in identi contested fee application” fund the common doctrine’s used lode marks, has teration, cal Microsoft settlements quotation and cita internal by this omitted)). persuaded fund star method.” We Whether a true common tion First, argument ger, In for three reasons. the stan 209 F.3d at 52. recoveries $75 more, application dard for review of fee is the range million and to million fees $200 regardless application same of whether the is Conte, 2:9, § supra, 6% 10%. contested or not. In re S.D. 134-35; (listing see id. at 130 n. 3 with cases Cf. Microsoft ¶¶ 69-70, Litig., Antitrust 2005 SD resulting over million in recoveries fee $100 (stating value of N.W.2d 9%). ranging awards from 5.5% to With this is benefit the class measured the face mind, principle compare in we the fee awards value of the voucher settlement when the fee in other Microsoft cases. state application unopposed is and the value of Although the district court Arizona actually the vouchers that are redeemed or method, used lodestar of a use 3.42 ap claimed class members when fee multiplier brought fee award to 18% of earlier, plication opposed). is As discussed the settlement’s face value of million. $104.6 duty protect the court has a class interests (conclud- Friedman, 141 P.3d at reasonable, ensure even ing that 18% the face value or 33-35% applicatiоn unopposed. when the fee See class, the estimated actual value to the in- Strong, (discussing 137 F.3d at 849-50 award, cy cluding pres was not unreason- obligation applica court’s to examine the fee able). The fee was award California $101 paying tion when the defendant fees from million, of a 9.17% billion settlement. In $1.1 its own funds does not oppose the fee ¶ 113, 67, re Litig., S.D. 2005 SD Microsoft Trucks, application); In re GM 55 F.3d at 85; Cendant, re N.W.2d In 819-20; cf. Weinberger, 925 F.2d at 524. alia, (comparing, at 737 inter three cases with Second, law, under South Dakota the district billion, recoveries $1.8 billion $3.16 required court use the lodestar meth 8.275%). ranging from 5% to od to calculate the fee. See In re S.D. 113, ¶ 30, Litig., 2005 SD Microsoft In state cases that were uncon Moreover, a comparison N.W.2d of the tested, agreed pay Microsoft fees in resulting percentages of the face value amounts between 8.32% 20%. See In re Microsoft settlements from states other dem ¶ Litig., S.D. 2005 SD onstrates the fee awarded is about the (comparing N.W.2d 85 of face regardless same of the method used. See 1 (Meier ¶ states); value in different id. Conte, 2:6, supra, § (discussing at 77 henry, J., dissenting) (quoting the lower awards, consistency regardless of fee states). comparison court’s of cases other amount). used method to determine the comparison, the district court in our ease comparing resulting per When In light awarded 19.365% of the face value. centages, the size relative of the settlement is of the relative size of the settlement our Generally, important. percent a reasonable percentages case and the of face value age of a common fund decreases as the size cases, “virtually awarded identical” we Prudential, of the fund See increases. In re cannot conclude (stating 148 F.3d at 339 that the rationale for by awarding abused its discretion 19.365% of relationship this inverse rests on the belief gener the face value the settlement. See recovery “merely that an increase in is often Conte, (chart 2:32, ally 1 supra, § at ‍​​‌​​‌‌‌‌​​​​‌​‌​​​‌​‌​‌‌‌​​‌‌‌​‌​‌​​‌​‌​​‌​‌‌​‌‍240-50 factor size has no fees). comparison of relationship direct efforts counsel” brief, reply In its Microsoft relies (internal quotation marks and citation omit heavily Litigation. on In re S.D. ted)); Conte, 2:9, § supra, (noting years proсeedings, After more than four of that range “[deviations from the normal of evidentiary an hearing, and of review the percentage appropriate fees are when ... factors, see In reasonableness re S.D. Micro extraordinarily the large”). fund recovered is 113, ¶¶ 4, 20, 93, Litig., 2005 SD In up million, to funds about $50 soft N.W.2d the Dakota South district court complex in usually fees class actions are 20% applied multiplier of to a recovery. Conte, 2:8, two award fee of supra, § to the 30% of $2,064,000,which of is 22.12% the face value. ranging 106-07. Cases with recoveries ¶¶23, Supreme Id. million to million 67. The Dakota have resulted South $50 $75 Court, in 3-2, fee awards of 11% to split about 19%. Goldber- decision reversed the award, apply of could for vouchers.” See In re GM for a recalculation the remanded lodestar, (“The Trucks, problem the district court to ... and instructed 55 F.3d ¶¶ 43, 51, multiplier. forego the use of a Id. any simple, arguably, not settlement persuaded by We not the three- 80. are on the award of certificates would based First, majority opinion. parties the judge speculative provide value on which too agree case not that the the Dakota did South award.”). not base a fee We are convinced. on district court would determine the fee the agree whether We that value of the common fund doctrine. See id. basis significant is a can ascertained settlement ¶ ¶¶ 22; (regarding see also id. in the use factor lower court’s decision to one agreement). provisions of the settlement Gemert, method or other. See Van Second, requires Dakota law South dis- 478-79, (spreading S.Ct. 745 U.S. at to use the lodestar method. Id. trict court when of a class has “each member certified ¶¶ 30, Third, earlier, as noted we do not 34. mathematically undisputed ascertain- agree different standard should be part lump-sum judgment of a able claim applied applications opposed fee behalf’). However, on recovered his “the ¶¶ 69, by We are the defendant. See id. methodology will with- ultimate choice of rest two-judge persuaded dissenting more in the district court’s sound discretion.” In opinion majority merely substituting —“the Trucks, re GM at 821. ruling trial its for that court.” Id. ¶ ¶ (“The 88; trial court’s see also id. jurisdictions have Other awarded fеes clearly against decision is not reason and vary on the basis common funds could evidence.”). dissent, agree “[A] We depending on the number class members judicial mind, in view of the and the law advantage right who of a to share in take reasonably circumstances in this could Gemert, common fund. Van 444 U.S. at See reached conclusion arrived at have 480, 100 Although S.Ct. 745. valuation of the ¶ (alteration, trial court.” Id. internal requires computa common fund in our case omitted); marks, quotation and citation see tion, not the value to the Class is difficult to (stat- I, Report Task Force 108 F.R.D. at 273 “undisputed member has an ascertain. Each ing abuse Task Force believed the mathematically ascertainable claim.” “simply discretion standard has not been em- 745; In See 100 S.Ct. see also re id. ployed,” that when a “reversible error occurs Trucks, (concluding GM 55 F.3d at 821-22 as a matter of law district court errs percentage was appropriate that the method procedures utilizing improper standards when the settlement included vouchers be fees,” determining and that “the court of settlement, though “the difficult to val cause appeals honor the discretion its stan- should ue, more hard-to- did award even judges accords to district and exercise dard intangible rights in some value could awards”). reviewing restraint justify using the lode limited circumstances method”); Edwards, star Estimating Propriety b. the Value of cf. (noting n. 9 the common fund the Settlement applicable “sophisticated where economic further contends that (internal required” quota analysis would be percentage appropriate is not method omitted)). tion marks citation Vouchers parties because “the could estimate for fixed amounts were made available to support value settlement.” member, pursuant qualifying each argument, Strong: relies on thus, value to the Class Agreement; the use of courts advocated “[S]everal determined. The face value of the could be the lodestar method lieu specifically set at mil $31.5 settlement precisely the situation fund method lion, best estimate of based Microsoft’s difficult the value of settlement is where systems qualifying operating the number of at 852 n. 5. Micro ascertain}.]” indirectly purchased and software licenses further that the benefit soft asserts Class, 2,769,617, a total of members quantify ... with impossible Class “was to each and on the value of the vouchers any degree certainty of until after the close period which Class member. [C]lass of the within members 900 question value; rather, courts have estimating Other conducted reason- the of class, they

able estimates of benefit to even merely the the illustrate discretion afforded coupons used, when or determining vouchers were the district court in which meth od, percentage lodestar, these courts recommended use of the appropri is most percentage method based on the estimate. ate. opinions Three cases are district court The in re settlement In GM Trucks consisted in which discretionary the courts made a $1,000 coupons purchase of redeemable for of determination that the lodestar was most any new truck light-duty appropriate GM or Chevrolet particular under circum truck built the defendant. F.3d at stances of each See case. Charles v. Good Although Co., approval 321, year settlement was re- Tire & F.Supp. Rubber versed, (D.N.J.1997) 324, obviating thus (choosing need review of to use the award, pri- the fee the court reviewed the lodestar method where the benefit mary surrounding issues equitable fee award in those class included relief vouchers dicta, circumstances. Id. only at 819-22. that could be used for the defendant’s services); coupon court concluded that the products settlement v. Realty Osher SCA separate agreement I, Inc., (D.D.C. fee F.Supp. were “more 1996) closely aligned para- with the (choosing common fund to use the lodestar method statutory digm than the paradigm,” and when the benefit class consisted of a percentage thus the appro- restructuring method was more of the business entities and the priate, despite the fact that “the option specific nature of types select of shares for precise members); the settlement particular evade[d] evalua- Cooperstock v. percentage recovery tion needed Corp., F.Supp. Pennwalt (E.D.Pa.1993) method.” Id. at 821. It advised the court (choosing to use the lodestar below to “make some reasonable assessment plaintiffs only method because the class were of the settlement’s value and determine the partly responsible for the benefit conferred precise percentage represented the attor- only and had acted in monitoring role neys’ fees.” Id. at 822. litigation). appellate Each decision cited by Microsoft affirms the lower court’s deter v. Mercedes- O’Keefe mination that percentage recovery LLC, Benz 214 F.R.D. USA appropriate method not under the facts (E.D.Pa.2003), valued common cre- fund Strong, of its See case. at F.3d agreement ated provid- settlement (affirming the lower court’s use of the ed vouchers and limited extended warranties requisite lodestar to determine that class to class members. Id. at 272. The court counsel was not entitled to the entire fee accepted vouchers, the face value at id. specifically provided agree the settlement 305, and considered four different valuations ment); Municipality Anchorage v. Gal warranty of the extended before the court lion, 436, 438, 445, (Alaska determined a reasonable estimate the set- 1997) (concluding lower court not did Thus, tlement’s value. at Id. 305-07. by declining err award fees though basis the fund “involved a difficult to value the benefit to recovery the class fund,” where non-monetary id. was a surplus restoration of funds a de court based its fee percentage award on a fined plan). benefit retirement we the common fund’s While total estimated Id. value. 304; agree that Wing the district Inc., see also courts these cases Asarco (9th Cir.1997) method, used the lodestar (stating these cases do that the proposition stand for the district court must estimate total value of lodestar method impossible the settlement when is is the method can it be used deter- mine recovery); type Accordingly, the actual value of the In re case. we do Copley, (“The 1 F.Supp.2d find these cases step helpful first under facts of analysis our case. fund is a fund.”). determination of the value of the Although argues Microsoft cites to several in values quantify, cases are difficult to quantify did support of recovery its assertiоn that the in the repre- value of settlement. Microsoft this case was difficult to value. recovery None sented to the court below that the persuasive because the cases do not posited involve was about It million. $17 10% Advocates, value, million, Standards and Guide- acceptable an Consumer was $3.1 the face Litigating Settling lines and Consumer vouchers that would be of the estimate for (1997) Actions, 176 F.R.D. accept- Class was million claimed and that $14 cy in the value (including pres distributions cy through the of the benefit able estimate settlement). of a earlier, the dis- pres As discussed award. by relying err on Micro- trict court did not expressly The Ninth Circuit has held {56} below. representations soft’s percentage method is not limited to that the recovery. on net In a calculations based Finally, Agreement specifi the action, an unnamed class securities class argue cally provided parties the could that challenged a that was member fee award the Class was face value that the benefit to Eichen, recovery. gross Powers v. based on expenses plus and and notice administrative Cir.2000). (9th 1249, 1251 The class F.3d costs, being argue any able argued that the Private Secu member under Nothing was lesser amount. mentioned Litigation Act rities Reform the hourly or rates. The about hours awarding attorney district court erred party Agreement fact each under the percentage gross fees on a calculated argue view of expressly allowed to recovery percentage rather than a the provides the amount of the common fund 1258; expenses. recovery minus Id. at see strong parties the support for view the (“Total 78u-4(a)(6) (2000) § attor U.S.C. on method and value committed decisions neys’ expenses fees and awarded discretion, court’s as well as plaintiff class shall court to counsel percentage could believed that the method be percentage a not exceed reasonable Otherwise, central the court’s decision. damages any prejudgment amount of and Agreement would have been written class.”). actually paid to the The interest different terms. phrase class member contended actually paid ... limit “amount сlass” Percentage Application 3. Error value, calculating purposes fund ed the Recovery Net Method —Gross Versus fee, to net amount received after argues Microsoft next dis- fees, costs, expert litigation other ex applying percentage trict court erred Powers, penses have subtracted. been cy method because the court included Thus, argued appellant award, award, pres expenses the fee per a fee should be as that the calculated recovery. its calculation of the Without cita- recovery rather than as a centage of net authority, asserts tion to that bene- recovery. The court percentage gross Id. derives “not from the fit class members disagreed: it took to deliver that transaction costs provision requires rea- Although the new will not from the amount that be benefit and expenses, it does not sonable fees preferred paid lawyers’ charitable approach a to deter- particular mandate “lawyers They should cause.” contend that legislation’s primary The mining fees. proportion the extent rewarded prevent fee purpose was to awards under they managed to increase the transac- up taking too lodestar method litigation.” tion costs of recovery. great percentage the total however, provision, not elim- does The new has revealed Our own research approach, nor of the lodestar inate use variety of calculations of a wide require on a that fees be based does class, to a funds used to measure the benefit recovery. simply percentage net It re- distributed to class ranging from net benefit quires expenses ultimate- that the gross benefit to class. The members ly in relation to be reasonable awarded most courts gross fund used settlement plaintiffs recovered. what applying method. Conte & (citation omitted). Id. 14:6, 567; n. Newberg, supra, § id. of. recovery). (citing use net that “the district courts that further reasoned Moreover, through cy attorneys’ conferred to base an the benefit choice of whether recovery should gross ordinarily part award on either net pres аward is considered long as the end so Ass’n of make difference to the class. See Nat’l the benefit result is reasonable. Our case law teaches Federal district courts have also in attorneys’ part of fees is attorney the reasonableness cluded as of fees the estimated of recovery not measured the choice the denomina- approving is when a court uncon twenty- tor.” Id. The that “[i]f court stated attorney in tested class action settle fees reasonable, percent gross perhaps five ments. Varacallo Mass. Mut. Ins. Life percent thirty-five of net would reason- (D.N.J. Co., 226 F.R.D. 250 & n. able,” and concluded that the district court 2005) (acknowledging the value to the class prohibited calculating the was not agreement pay defendants’ fees and ex using gross award settlement amount. penses calculating and the total estimated Id.; Waters, F.3d at n. see 8 recovery including the value of and ex fees (“[W]hether judge a district court considers defendants); penses paid by Carnegie v. payment vary fund or the total the actual will Co., Sav. Ins. Mut. No. Civ.A.CV- Life according to the circumstances of each 99S3292NE, 3715446, 2004 WL *37 case.”). (N.D.Ala. 2004) (mem.) Nov.23, (concluding request attorney that the for fees was rea In a later class action for race sonable whether viewed as less than 19.6% of discrimination, the Ninth Circuit concluded benefits, aggregate including fees and attorney lower court could include expenses, or as 25.2% the net viewed putative in its valuation of common benefits); Lucero, see 117 N.M. at fund created under a consent Sta decree. (“Under (including ton, attorney P.2d fees in its 327 F.3d at 972-73 these re monetary judgment); calculation of quirements, plain relief the total see also for the fees) (including attorneys’ Copley, F.Supp.2d tiff provided (comparing class In re the consent could percentage decree be converted awarded based on different qualify as described above as to as a fund); so valuations of the common v. Bd. Chun common fund from which counsel could Trustees Employees’ Sys., Ret. 106 Haw fees.”). attorneys’ obtain an award of The (2005) (“bas ai'i injunctive court disallowed the valuation of ing the ascertained common fund on the calculating hypothetical relief fund but gross amount paid” available to be to the included fees and its costs recalculation calculating using class members and the fee (dis Id.; fund. see id. at common fund). different five values the common cussing recovery rely net gross versus and As listed brief in Microsoft’s ing post- on Powers to conclude that “[t]he chief, the district court determined the value providing settlement cost of notice to the by adding of the common following fund reasonably class can be considered a benefit amounts: class”); Wing, to the see also F.3d at [C]lass, benefit to the based Expected 987-88, (including poten million $60.5 10% on a claims rate: 3,150,000 $ $14,200,000 recovery tial on an claim calcu insurance distribution: Expected cypres Attorneys’ fees of 25% of approximately totaling late the value of a common fund $24,475,179: 6,100,000 $ million). agree with Ninth We $67.5 Plaintiffs’ counsel’s claimed expenses: 525,179 $ An appropriate Settlement administration 500,000 Circuit. fee is determined expenses: $ Thus, reasonableness, the district court and reasonableness awarded 25% a does $24,475,179. depend on whether the based common fund We valued ex- recovery recovery. on gross plain net or the court’s calculations in a footnote.1 algebraic 1. An is used to determine the unknown fees when fees are included equation Using (the the common fund. the known variables numbers for the claims, award, estimated cy pres (attorney fees) expenses), counsel's settlement the unknown variable expenses, can be determined. = In our the relevant + + x 3,150,000 14,200,000 525,179 500,000 x, + + equation .25x being including being Class, the total fees, benefit and .25x recovery, expenses 25% including total fees. is then solved as recovery expenses follows: equation = - ,25x 3,150,000 + + x 14,200,000 525,179 500,000 + = ,75x 18.375.179 = ,75(x)

18.375.179

.75 .75 discretion, to cross-check the fee award’s rea- the district lodestar exercising by relying repre- stating types fund valued sonableness” and below, provi- made Microsoft regard sentations arguments made defendant principles Agreement, sions “lead to the demise of the to the lodestar as discussed above. common fund doctrine method”); re 1 Copley, F.Supp.2d lodestar attorney fees the Even if we the deleted (“[t]aking 1414 all of counsel’s at claimed denominator, apрroximately one- the fees are “rough ... as a legitimate” hours to conduct recovery used third of the amount Microsoft analysis” and the lodestar confirm that below, argument plus expenses. per- This in per- relation to the work award “bears some centage only slightly higher per- than the counsel”); by Harring- formed Lachance v. centages up usual in cases considered $50 (E.D.Pa.1997) ton, 630, F.Supp. million, and value of this case consid- the (“It necessary preci- is not with determine erably paragraph less million. than See $50 appropriate what an lodestar would be. sion that the district court did 43. We conclude Indeed, primary advantages one of of by estimating abuse discretion not its [percentage] using the method to avoid in this value the benefit Class reviewing figures a lodestar with fine tooth manner. comb.”). by crosscheck is The conducted Application F. Errors in Lodestar by dividing percentage award Method as a Crosscheck See Counsel’s lodestar. Manual Com- for 14.122, Litigation § If plex at 193. the re- district court used the lodestar The sulting multiplier is not in com- method to crosscheck the reasonableness unreasonable percentage cases, of re- multipliers the award calculated as a with parison other covery. provid- The court used the lodestar recovery percentage is considered reason- by approximately ed Class Counsel of $2 See id. able. that million. Microsoft asserts the district Kennedy Microsoft relies by automatically accepting Class court erred argue and Calderon to that the district court proffered lodestar because out-of- Counsel’s by accepting Class lodestar. erred Counsel’s hourly rates state Class Counsel’s were earlier, the New cases As discussed Mexico by market rates in New defined Mexico inapposite they because do involve improperly Counsel because Class submitted Moreover, con class actions. we are not spent litigation on fee and on hours both Kennedy’s of multi vinced discussion a performed for Microsoft in other work cases statutory helpful in a fee case is plier also states. Microsoft contends that Class percentage using a lodestar to crosscheck provide supporting docu- Counsel failed law, recovery award. Under federal $81,201 “for worth of lodestar.” mentation multiplier contingency on risk or can based Given our conclusion statutory fee not be used in a case. See the district court did not abuse discretion 557, City Burlington Dague, 505 U.S. method,' using by percentage our review 120 L.Ed.2d S.Ct. court’s of Class district use Counsel’s (1992) position put (adopting the forth lodestar limited. When used crosscheck Pennsyl principal opinion White’s Justice award, percentage the lodestar is estimat Valley v. Del. Citizens’ Council vania for ed, using fee provided information Air, U.S. 107 S.Ct. Clean Complex Litigation applicant. Manual for (1987), concluding that L.Ed.2d 14.122, 193; Goldberger, at § see ap contingency is not an enhancement (“[W]here cross-check, used as mere fee-shifting provisions of propriate under not be hours documented counsel need Disposal Act and Waste the Clean Solid by exhaustively scrutinized Act); Valley see also Del. Citizens’ Water court.”); O’Keefe, F.R.D. Council, 483 U.S. S.Ct. (noting also recom “[t]he Third Circuit (“[I]n guid- legislative exacting the absence further using mends a less version = Thus, 24,500,238.66, recovery, recovery. we use x the fee award is of the total which is total If 25% = = Thus, .25(24,500,238.66) 6,125,059.66. appears that the district value we for x: .25x million, award. $6.1 even the amount of court rounded down reach an anee, (noting multipliers proper hourly we conclude other rate “is less of a enhancement reasonable lodestar fee to analysis”). in a critical fund compensate assuming the risk of loss is record reflects out-of-state counsel has impermissible fee-shifting the usual under practice in an established national class ac- statutes.”). Moreover, purpose experience litigat- tions had extensive crosscheck the lodestar method is to com- ing throughout actions A similar nation. multipliers pare resulting multiplier nationally brings signifi- established firm fund from other common cases. We discuss experience expertise in large cant multipliers paragraph opinion this necessary litigate properly actions this multiplier and conclude that the used type (approving of case. See id. the district comparаble case was to other similar com- court’s determination that out-of-state coun- mon fund cases. higher sel’s rates reasonable were for light holding In of our that dis- {64} rendered). Moreover, services the reason- by calculating court did err trict not the fee necessity obtaining ableness and out-of- using method, percentage con- award we state counsel is illustrated Microsoft’s did err clude that lower court substantial use of out-of-state See counsel. using provided by an estimated lodestar Inc., Berry, F.Supp.2d v. Jack M. 192 Wales regard, In this Class Counsel. we examine (M.D.Fla.2001) 1313, (stating 1324 that while briefly specific arguments Microsoft’s re- case, local counsel could have handled the garding Class Counsel’s lodestar. reasonable retain out-of-state counsel where the defendant found it reasonable to Hourly 1. Excessive Out-of-State Rates counsel). obtain out-of-state The district court has dis addition, Microsoft, In note we hourly cretion to determine reasonable rate “ support argument regarding hourly of its ‘prevailing that reflects the market rates ” rates, cites to cases that do not address the community.’ relevant Jane L. v. Ban computation lodestar in a com- class action (10th 1505, Cir.1995) gerter, 61 F.3d 1510 mon fund case. See Ellis v. Kan. Univ. Blum, 895, (quoting 465 U.S. at 104 S.Ct. (10th Ctr., 1186, 1192, 1541). Med. 163 F.3d 1203 judge, familiar with the case and Cir.1998) (reviewing a fee that was area, rely awarded may normal rates in the on his 1988(b)); pursuant knowledge supplement Bangerter, § to 42 own U.S.C. evidence regarding hourly (same); a reasonable rate. Smith 61 F.3d Avalon Cinema Freeman, (10th 1120, (8th 921 1122 137, v. F.2d Thompson, Cir. v. Corp. 689 F.2d 138 1990); Calderon, 3, Cir.1982) see N.M. at 800 P.2d (same); City Homans v. Albu- (“[T]he may apply also its own (D.N.M. querque, F.Supp.2d knowledge expertise regarding the na 2003) (same). Thus, these cases do not alter ture the services ... rendered to calculate analysis our or conclusion that the district fee.”). Ordinarily, the value of the the rele by using court did not abuse its discretion community vant is the local area in which the lodestar, hourly estimated which included litigation place. Thompson takes See Drill Mexico, exceeding rates those found New 983; ing, 105 N.M. at 736 P.2d at see percentage its crosscheck award. Lamm, v. also Ramos (10th Cir.1983), grounds, overruled on other Supporting Billing 2. Records Council, Valley Del. Citizens’ 483 U.S. argues the district 4, 730-31, 107 However, n. if S.Ct. by accepting court erred Class Counsel’s requires litigation special is unusual or lodestar because the lodestar included time skills, knowledge community the relevant spent litigation, spent time on work Ramos, ceases local area. See performed states, Microsoft eases other F.2d at 555. We cannot conclude that the supporting and time submitted without bill- by accept district court abused its discretion ing challenges records. Microsoft also ing hourly out-of-state counsel’s rates for acceptance district court’s automatic estimating a lodestar used crosscheck a expenses. percentage fee award calculated with the Counsel’s claimed Microsoft con- Gottlieb, method. See at 485 n. 8 tends that the district court did address greatly.”). billing Detailed records objections expenses and varies to the claimed its finding to the court and defense no reason at all for were made available “gave Moreover, below, expenses ... reasonable.” these are not included in were but records Moreover, that out-of-state Class appellate Microsoft asserts record. $225,833 in expenses with- summary claimed billing Counsel cite does not expenses those were “showing out records can be in the expense found reasonably necessarily in the incurred appellate record. To the extent case____[and thereby] failed New Mexico review, necessary billing records for our satisfy proving that the ex- their burden of Rojo, See the record deficient. State provided any ... benefit” to penses ¶ 1999-NMSC-001, N.M. Class. (“Where is a P.2d 829 there doubtful record, every presumption must be deficient unpersuaded by Microsoft’s We are indulged reviewing court in favor of regarding expenses time and arguments earlier, regularity First, [dis- the correctness and reasons. as discussed three (internal quotation judgment.” court’s trict] method used once omitted)); fund as a marks and re Estate the lodestar is used citation crosscheck, Heeter, and the lodestar itself is estimat- Second, (“This neglected Microsoft has to cite (Ct.App.1992) ed. court will not search the any documentary support evidence in support to appel- to find to an record evidence assertions, expert’s report. claims.”). than its its other lant’s has no review the record revealed Our own Class Counsel submitted their {69} support evidence to Microsoft’s additional report expert and affidavits that countered regard spent to time on contentions. With Although Microsoft’s contentions. Microsoft litigation, expert’s report con- fee Microsoft’s present argument not its as one of does following, to the cludes the without citation support to the facts substantial evidence billing records: (e.g., whether time was time allocated ... Counsel’s] affidavit [In-state preparing application, whether spent the fee states that his firm’s lodestar does was out-of-state counsel’s multi-state time attorneys’ applica- include work on the fee Class, beneficial the New Mexico not, tion. It should but fact is that reasonably expenses were whether claimed $14,851 charged in fees on [Class Counsel] incurred), it is that substantial evidence clear petitioning and relating work for fees support exists Class Counsel’s affidavits though expenses, even the firms intended Mayeux, the lower court’s decision. See It to exclude such time from the lodestar. ¶ 33, 235, 2006-NMCA-028, N.M. however, interesting, contrast 85; Fighters Las Fire v. P.3d Cruces Prof'l very in a time and fees devoted concentrat- ¶ 1997-NMCA-044, 12, Cruces, City Las 2 through No- ed effort from November (“The 329, question N.M. 940 P.2d 28, attorneys’ and vember 2004 on the fees evidence exists not whether substantial ... Application. ‍​​‌​​‌‌‌‌​​​​‌​‌​​​‌​‌​‌‌‌​​‌‌‌​‌​‌​​‌​‌​​‌​‌‌​‌‍In one month the costs result, rather support opposite but $151,852 attorneys devoted 591 hours or supports the result whether such evidence application. ... That is fee reached.”); 2000-NMSC-025, Kennedy, cf. equivalent of 22% of total lodestar (affirm ¶¶ 34, 36, P.3d 129 N.M. in almost work the firm did on case fees ing this Court’s reversal January through Sep- years from five failed to on a lodestar because counsel based tember 2004. any time rec supply the district court with report other conclusions contains similar ords). petitioning regarding spent hours on Third, importantly, most after and expenses, performed work on cases and opportunity had the court and Microsoft states, expenses. fees and See other rеcords, billing view the both detailed No. F.3d v. Sch. Dist. Case Unified presented argument regarding these (10th Cir.1998) (‘While parties 1243, 1250 parties issues, the issue and the court below resolved experts may regarding submit affidavits Case, billed, See prac in favor Class Counsel. of the hours reasonableness (“More testimony important the discre- very helpful when the tice is tionary knowledged they determination the district court of been had reimbursed hours, in many experience, how expenses application should certain after was expended specific been Thus, expenses filed. awarded court given maneuverings of each side by any payments below shall be offset made facts, law, complexity litigation.”); application Microsoft after the fee Wimberly, see also Reeves filed. (“Upon (Ct.App.1988) 755 P.2d a record, every presump doubtful or deficient Multiplier of Three indulged tion is favor of the correctness asserts the district decision, regularity of the trial court’s by concluding multiplier court erred that a appellate indulge and the in rea will appropriate three was enhancement of the presumptions support sonable order in these It lodestar circumstances. contends entered.”); Inc., Molycorp, Sanchez v. action, tag-along that this case was a “piggy- (Ct.App. backing” actions from the federal court and 1985) (“[T]he opinions expert of an even “[njeither such, and, other state courts as uneontradicted, where are not conclusive on expended, assumed, efforts nor risks nor may reject facts in issue and the fact[-]finder exceptional” the results ... were obtained Gottlieb, opinion such part.”); in whole or in enough justify multiplier of three. Mi- (stating 43 F.3d at 487 that a decision-mak proper crosoft asserts that a lodestar would er’s particular determination about the cir $1,509,023 lodestar, and that en- finding cumstances of ease is like a 1.5, multiplier produce hanced would credibility). $2,263,534. fee of reasonable addition, argues uncon- cases, vincingly, in reliance on New Mexico earlier, As discussed use of the “supposedly spent by the time the Ler- percentage lodestar to crosscheck a award ” litigation’ ach firm ‘on overall comparing resulting multiplier involves specific did not confer a benefit on the New multipliers with from similar cases. The dis earlier, Mexico Class. As noted Mexico New trict court divided its fee award of about $6 attorney regarding paid by law fees individu- by million lodestar Class Counsel’s of about helpful al analyzing attorney clients is not in million, multiplier resulting in a of three. $2 large in awards class that are actions Although multiplier approaches high national in ignores nature. Microsoft multipliers years, end of in awarded recent apparently practice large common Cendant, 737-38, 742, see In re allocating percent- actions of to each state a we conclude that court the district did not age spent “virtually of overall time identi- it multiplier err when determined the of Litig., cal” cases. In re See S.D. Microsoft comparable three was reasonable. Other ¶¶ (re- 113, 37-43, 2005 SD N.W.2d See, multipliers. had e.g., cases have similar manding for recalculation of with in- Inc., Infospace, 1203, F.Supp.2d In re structions to allocate to the South Dakota (W.D.Wash.2004) (using a multiplier 1215-16 litigation one-eighth of the total hours “garden variety a of 3.5 in securities case jurisdictions). Moreover, eight worked in present law”); not that did issues novel of detailing Counsel submitted affidavits 304, O’Keefe, (noting F.R.D. at that a justifications allocating their ex- these $4,896,783award, $32,645,220,yields 15% of penses court, a to New Mexico. The district fact-finder, multiplier using of “2.95 any as the is entitled to class counsel’s esti resolve Casteneda, conflicts the evidence. State v. using mated reasonable hours and 6.08 [the (Ct. 1129, 642 P.2d hours”; defendant’s] estimated reasonable App.1982). concluding multiplier that neither seems un reasonable); Kuhnlein, So.2d Finally, parties agree (concluding that of multiplier a five is reason granting expenses court erred first contingency alleviate able “to risk factor applica- claimed Class Counsel the fee tion, $525,179. high involved and attract level counsel to reply the amount In the below, cases”); brief fund Class Counsel their re- see also In re revised Cen quest $521,601 dant, (concluding reimbursement and ac- 243 F.3d at 742-43 that a Lomb, Litig., 183 F.R.D. & Inc. Sec. acceptable be even multiplier of three would (W.D.N.Y.1998) legally (using multiplier neither nor though the “case was requirе sig ... factually eomplex[,] did not present any did two where “case practice discovery^] or ... nificant motion issues,” litigation especially novel or difficult duration of the case and the entire action, government with coincided news filing Complaint to the sub of the Amended exposed “a risk of lia- investigations serious Agreement ... mission a Settlement Second, bility”). factual circumstances Prudential, months”); In re four enough are these cases not similar orn- multipliers (recognizing that F.3d at 341 court ease for us conclude the district ranging from one to four often awarded now abused its discretion. We review cases). fund In related Ari in common used reasonableness factors the district awarded fees zona Microsoft awarding court in fees. using multiplier plaintiffs’ counsel Friedman, 141 P.3d 835. We ac 3.42. Award and G. Reasonableness majority in cordingly disagree South Rule 16-105 re S.D. Mi Dakota’s three-two decision. In earlier, As we discussed ¶ 76, Litig., 2005 SD 707 N.W.2d crosoft question re reasonableness the ultimate multiplier (concluding that a should attorney an award fees. Under garding applied, “given ‘exceptional lack of suc ”). mind, majority’s miserly lodestar method or the cess’ To our either the as litigation method, view of the benefits of the well “the fee must be reason awarded seemingly novo of the issue Gottlieb, as de review F.3d at The attor able.” 482. entirely inappropriate. fees is ney proving that his bears burden ¶¶ J., (Meierhenry, generally id. See provided legal a benefit to the client. services dissenting). Calderon, 111 N.M. at determining attorney’s the value persuaded are not Microsoft’s We services, legal court can use its the district multiplier of three is not assertion that Id.; efforts, risk, knowledge expertise. Gavin own justified by Class Counsel’s prior gov N.M. at 744 P.2d at 543. piggybacked Maloof, because success First, relies on Historically, ernment action. New Mexico courts have also using the fee award cases that calculate factors now found in Rule 16-105 of used the method, than cases that use lodestar rather of to examine the Rules Professional Conduct crosscheck, sup method as a lodestar See, of fees. the reasonableness In re port assertion. See Auction Houses Calderon, 2, e.g., 111 at 800 P.2d at N.M. CIV.0648, Litig., 2001 Antitrust No. 00 WL (addressing of fees the reasonableness (S.D.N.Y. 2001) *1, Feb.26, 210697, theory quantum a of meruit after awarded on order) (amended (concluding multiplier that a voided); contingency agreement a was was appropriate was not where there risk .no 486-87, Johnsen, 485, Fryar 93 N.M. v. non-recovery party an interested because (1979) 718, (addressing the P.2d 719-20 issue publicly alleged wrong had admitted attorney fees in the context of of reasonable (af 45, Goldberger, doing); 209 F.3d at cases). compensation These factors workers’ not to use firming the district court’s decision effectively are identical to the “Johnson fac multiplier to calculate a lodestar fee award a Circuit, see Ramah tors” used the Tenth corporations to the defendant where related Norton, F.Supp.2d Navajo Chapter v. prior filing of the class pleaded guilty (D.N.M.2002) Ramah [hereinafter issue); City action at Detroit Grinnell IT], commonly to as the referred and (2d 1093, 1095-96, Corp., F.2d Cir. “Fryar See Econ. factors” in New Mexico. 1977) (concluding multiplier was not Garcia, Rentals, Inc. v. complaints were filed appropriate when the 1306, 1322(1991). 819 P.2d appeal action been government after the had Court, Supreme re ed the United States Rule relief, a final hearings on and manded for 16-105(A) the follow- entered), Rule establishes abrogated by decree had been {77} 49-50; ing factors to be considered: Goldberger, 209 In re Bausch (1) required, the time and labor the nov- oranda have filed. The was been certi- difficulty questions fied, in- elty and of the appealed, the certification and volved, requisite perform and skill appeal was briefed to this Court. addi- legal properly; service tion, Class Plaintiffs in New Mexico were f2) accep the likelihood ... required attorneys repre- to coordinate with employment particular tance of the will senting similar class actions other states preclude employment by lawyer; other Further, pur- and federal courts. an indirect (3) customarily charged the fee in the presents chaser antitrust class action novel services; locality legal for similar certification, complex and regarding issues

(4) causation, Moreover, the amount and involved the results damages. and an ac- obtained; against corporation tion like Microsoft re-

(5) imposed quires high expertise. level skill time limitations and circumstances; client or Employment b. Preclusion Other

(6) the length profes- nature and client; relationship sional with the The record demonstrates that (7) experience, reputation, abili- and specific during five-year times course services; ty lawyer performing of proceedings, Class Counsel would have precluded employment, par been other (8) whether the fee fixed or contin- ticularly preparing while for coordination gent. jurisdictions, with other preparing while appeal, class certification and and while chal equal The factors are lenging proposed global settlement. weight, and all of the factors need I, F.Supp.2d considered. Ramah Ordinary c. Fee for Similar Actions in (declining to consider “the time and labor the Locale when, judgment involved factor ... in the court, reasonable fee is derived The support record contains factors, by giving greater weight to other the conclusion that fees awarded cases clearly basis of which is reflected in the recently resolved within New Mexico were (internal quotation record” marks cita 25%, 30%, percentages based on omitted)). tion expressly court below addition, 33.33%. In the Federal District stated it considered the Rule 16-105 percent Court Mexico New has noted that factors, ample evidence exists in the ages usually range from 20% to 30%. Ra support record the court’s decision. See I, F.Supp.2d mah at 1096. Sanchez, Landavazo v. Moreover, in a class action (1990) (“Substantial evi size, relatively Mexico, infrequent New such dence is relevant that a rea evidence comparison throughout to similar cases adequate support sonable mind would find country appropriate. is The record refer- Brown, conclusion.”); 838 F.2d at 455 revealing ences studies that fee awards na- (“There ample evidence the record to tionwide are often based on 25% to 30%. See support by each upon of the reasons relied Complex Litigation, 14.121, § Manual at judge.”); (finding the trial see also id. for 188; also, Edwards, e.g., see at no of abuse disсretion where the relevant 14 (adopting percent- & n. 25% aas baseline were factors considered and evidence age permitting according and modification supported the record the court’s determina tion). circumstances); We Ass’n review relevant factors Nat’l Consumer of Advocates, (“In were considered the district court after 176 F.R.D. at 397 the ab- argument presented. evidence and were circumstances, special sence of including ei- unusually an large monetary recovery ther Labor, Novelty a.Time and and Difficul- relatively monetary recovery coupled small ty, Requisite and Skill very beneficial but difficult to value relief, equitable recognized began This case more five the courts have than {79} years ago vigorously litigated ranging and has been per- benchmarks from 19 parties. Multiple fund.”). both mem- percent motions and cent to 45 of the common litigation in class action ... on behalf pertise Results Ob- d. Involved and Amount recognized plaintiffs.” report The also tained of a firm with an that Class Counsel includes basis, per capita On a New practice national in class actions. established highest na fourth Mexico settlement sig- nationally brings the A established firm settlement, The face value of the tionwide. experience expertise large nificant million, represents 25% approximately $31.5 necessary properly litigate quantified class actions potential damages total experts. Crossing estimated type Class’s of case. See In re Global settlement, excluding of the Litig., value & ERISA 225 F.R.D. Sec. costs, The actual (“[T]he at million. (S.D.N.Y.2004) $17.5 fees and opposing quality of face the settlement is less than value of important evaluating the counsel is also value, sys to the nature of the voucher due (internal plaintiffs’ quality of counsels’ work.” two-step process required to tem and the omitted)). marks and quotation citation advantage of the direct benefit take purchased Members of the who Class. g.Type Arrangement of Fee system operating may claim a voucher accepted the ease on a Class Counsel $13; applica purchased at those valued who contingent They expenses basis. advanced may claim tion software a voucher $6.75. years. payment without for five and worked may A be redeemed after voucher purchase computer or a non- hardware Court’s of the 2. District Consideration application. software Products custom Factors may purchased to vouchers are redeem consideration, After careful the dis- products; limited to Microsoft-related majority concluded of the trict court that the may purchase vouchers be redeemed for the weigh in favor the reasonableness factors any type or brand of hardware or non- appli- fee award. court’s The district The are transfer custom software. vouchers cation of these to our case revealed factors limits. aggregated, able and can be within attorneys users, including experienced highly Mexico that skilled Large-volume New award, cy pres significant schools as beneficiaries of the of time and made investment tangible benefits will receive substantial and risk of expense in a case with a substantial because the vouchers are transferable successfully in order resolve a payment no aggregated. can be say class action. cannot complex We clearly against trial court’s decision was “the e. Limitations Time and circum- logic and effect the facts court, As noted the district In re Estate stances before court.” significant the risk Class Counsel 74; P.2d at see Greig, 107 N.M. to a would when it committed case that be Calderon, 111 N.M. P.2d at years. proceed vigorously litigated for rely (noting a district can on its It years. lasted more than five ings have assessing a knowledge expertise own placed limit time that is not the counsel’s fee); reasonable Gavin Maloof in a ease at hand. significant like the one a court (declaring P.2d at 543 Rather, it is Class commitment Counsel’s case and may rely knowledge on its Class, despite probability represent assessing a reasonable pleadings filed years litigation. Agreement If had fee). Thus, we the district conclude reached, proceedings could not been reasonableness court’s determination for an indeterminate time. continued not an Rule fаctors was on the 16-105 based of discretion. abuse Reputation, Ability Experience, f.

Class Counsel summary, court the district {88} consider its decision after careful reached expert’s report In its submitted {85} evidence, ar and oral pleadings, of all ation below, acknowledged to the court Microsoft judge presided over the entire gument. pre that Counsel includes “one Class litigation and set of the consolidated Mexico[, course attorneys in who] trial New mier of the record recognized approval. ex- Our review experience and tlement has extensive so, In doing district court’s fees on the the court has reveals that the award class. it; based on the facts before we reasonable employing percentage a choice of either the below, second-guess the will not court nor or to method the lodestar method determine analysis can redo we the reasonableness placed fees. Where the fee burden is on the facts before based on different those class, it does not follow that either method Although argues the below. court necessarily logically primary must or the prove that it was Class Counsel’s burden to determinant of fees. The common fund doc- expenses they that the incurred benefitted appears have significance trine to little ex- Class, adequately the Class Counsel rebutted cept equity where demands that the class is pleadings and at those contentions their attorney to bear burden fees. below, thereby carrying oral argument their appeal, burden. On Microsoft carries the Where, agreement parties, {93} showing burden that the district court placed the burden of on fees is concluding met erred that Counsel class, why defendant and not would the its burden below. See Martinez Sw. case, parties agree, they present as did Inc., 181, 184-86, Landfills, that common fund doctrine would be (Ct.App.1993) (discussing P.2d why, to used determine fees? And after appellant’s appeal). burden on agreeing pay fees it have to would has not met this burden. to were be determined based on the common (1) doctrine, fund would Microsoft state that III. CONCLUSION contractually agreed pay it to because hold that did not We cоurt {89} fees, Agreement’s “the Settlement reference by choosing abuse its discretion to use the superfluous,” to the common fund doctrine is percentage method to calculate the fee award (2) (3) fund,” there “is no common “there on the basis of the common fund. alsoWe belonging is no ‘true’ common to fund did conclude the court abuse have could allowed the district in awarding expenses, discretion with the spread to paying the burden of attor- proviso expenses awarded ney[ awarding ] fees to all class members by any expenses order offset reimbursed percentage fund to counsel for their filing application. after the of the fee Ac- fees?” cordingly, light opinion, we affirm. In of our necessary we do not deem it on the rule attorneys, Microsoft and its trial so- supplement motion to the record with materi- actions, phisticated experienced in class al that we have not referenced. appear intentionally agreed to lan- IT IS SO ORDERED. worse, vague, guage arguably or meaningless subject How Mi- attack. PICKARD, Judge WE CONCUR: LYNN agree wording can crosoft “based on SUTIN, Judge B. JONATHAN agree the common fund doctrine” and (specially concurring). fund, yet ranges valuation the common argue SUTIN, essentially agreement later Judge (specially concurring). language meaningless addressing majority I concur in opinion’s fees, determining issue the method analyses separately only and results. I write comprehend. difficult to The reasonable and emphasize points regard few to Micro- logical language view of is that used shortcomings shortcomings soft’s in this parties intended there be a valuation of a that have made easier me to concur as fund,” giving “common the court discretion to majority’s analyses I have in the and results. primary

use the method as the Microsoft’s Positions the Common fees, determining method of but nevertheless Fund Doctrine and Use of the Percent- did intend to rule out the use of the age Method method, primary as the lodestar method leaving right open parties argue A district court invokes the common and which method supervise fund value the court should use doctrine order to the fund primary place and to the burden of class counsel’s as a determiner fees. purposes determining for the wheth- Fund Class 2. Valuation award, fee on a valuation of the er the based ele- The issue concerns the valuation {95} fund, is reasonable. that can included the valuation ments be to in- common fund. Microsoft wants say Again, I the court cannot {99} by only in-hand amounts received clude fee, awarding its nor abused discretion voucher pursuant members Class analysis say majority’s I can (1) they Yet Microsoft claims exercised. is The reasonableness of the fee defective. agreed ascertaining to the a fund value court arbitrary. irrational nor award is neither attorney purposes determination well fee has not how Microsoft shown the law were and the voucher claims exercised before incorrectly applied to the facts. valua- The were and the in-hand amounts known before cy pres tions of the and class voucher court, (2) presented quite Microsoft and essentially amounts are based Microsoft’s to the court for its consider- different values figures presented own estimated the court. ascertaining fund for attor- ation in a value figure has attacked the 25% as Microsoft purposes. Again, Mi- ney fee determination arbitrary. And Microsoft does not contest appears have taken avenue crosoft one methodology it by the district court’s which only attempt avenue to switch and another implanted first the fee into the common fund appeared advantageous later on to be when only to afterwards derive that fee from the It to side to do so. is difficult with Microsoft persuade fund. does Nor Microsoft these under circumstances. multiplier me that the of three was irrational Further, adequate, is if not there {96} arbitrary in or this case. authority for the inclusion of plentiful, court’s amount, giv- Because attorney of the broad discretion cy pres as well as measuring expenses, and in the valuation of the benefit to a trial court in the reason- en to the Class. Based on abuse of discre- of an of fees based on the ableness award employ, we I cannot tion standard of review class, to the from both the circum- benefit say court abused its disсretion this case and fees awarded stances including in the valuation. those items cases, I say am unable to that the similar present court in the case abused its discre- 3. Reasonableness of Fee agree appellate I must tion. courts be majority stating that is correct in oversight in their role to vigilant assure appropriate by rea- determined “[a]n Majority reasonable. the fees awarded are ¶ Majority Opinion Rea- sonableness.” ¶¶ however, flip-side, Opinion 12-13. theOn judged whether there is sonableness is our must be careful not to substitute we rational connection between the amount court, judgment for and we that of its to the the fee the benefit class. reverse if the are to the district (1) paid amounts Settlement to be ruling “exceeds the bounds of all rea- court’s (e.g., class action to the class defendant son,” arbitrary capricious, or erro- is an redeemed), expected to value of vouchers be application Majority Opinion neous of law. (2) satisfy financial of the class burden ¶ 14. (3) fees), (e.g., attorney to benefit vouchers), (e.g., all public cy pres should be Language Contract 4.Other Microsoft If other considered a class. benefit Arguments accepted of benefit than broad and view brief, argues reply parties, intent should is intended agreement, if all “under the settlement agreement. in the made clear settlement claimed, class the class vouchers had been consequences Again, must take the argued could that the com- counsel Thus, agreement. as vague of a settlement attorney[ ] fund fees.” Mi- mon included its present where there is an in the argument on the crosoft bases this belated cy availability, agreed-to pres voucher following language agreement: in the agreed-to shifting of the fee burden argue value are free to that the “[P]laintiffs defendant, to the without litigation the ‘commonfund’ created clearly expressed contrary each intent (but in no any up amount case exceed- considered a benefit can should be Value, ing) plus Face notice and administra- expenses

tive costs.” Microsoft’s

view, it follows that “there is no basis for attorneyf

including the value of the ] fees simply

recovery fewer than all of the because footnote, By

vouchers were claimed.” Micro- po-

soft counsel switched indicates appeal

sitions on the issue between trial and were whether to be included “recovery.”

in the class position no Microsoft ‍​​‌​​‌‌‌‌​​​​‌​‌​​​‌​‌​‌‌‌​​‌‌‌​‌​‌​​‌​‌​​‌​‌‌​‌‍is in to isolate agreement might

wording in the ben-

eficial to Microsoft after fact. Microsoft wording

cannot show that on which it parties bring

relies was intended

about result Microsoft asserts. The

wording Agreement Settlement re-

gard awarding sufficiently fees is unclear against interpretations. hold Microsoft’s

It was Microsoft’s burden assure that the

language agreement was clear.

2007-NMCA-009 P.3d RENDLEMAN, Plaintiff-Appellant,

Mark HEINLEY, Defendant-Appellee.

Donna 25,358.

No. Appeals

Court of New Mexico.

Nov.

Case Details

Case Name: In Re New Mexico Indirect Purchasers Microsoft Corp.

Court Name: New Mexico Court of Appeals

Date Published: Nov 15, 2006

Citation: 149 P.3d 976

Docket Number: 25,789

Court Abbreviation: N.M. Ct. App.