2-1 Majority Also Found Denying Motion For Reconsideration Did Not Require A Different Result; Dissenting Circuit Judge Thought The 50% Reduction Was Too Much Without More Explanation, And The Unopposed Reconsideration Request Should Been Considered.
Schwartz (Kaplan Fox & Kilsheimer LLP) v. Arena Pharmaceuticals, Inc., et al., No. 18-55618 (9th Cir. Aug. 20, 2019) (unpublished Memorandum Decision) is an interesting 2-1 Ninth Circuit decision showing how circuit judges apply the abuse of discretion standard to a reduced fee award even where there was a clear sailing clause in a class action settlement.
A $24 million settlement was reached in a class action case in which the district judge acknowledged that excellent results were achieved in a difficult matter. However, she only awarded 15% of the settlement fund as attorney’s fees rather than the 30% requested—awarding $3.6 million rather than the requested $7.2 million—even though the settlement agreement had a “clear sailing” provision. The Ninth Circuit affirmed in a 2-1 decision, determining that the district court has wide discretion in determining the percentage-of-fund number in class actions, had no great lodestar “check” because class counsel failed to provide reliable evidence (rates or hours), and did discuss the relevant guidelines enough so that no more specificity was required.
Class Counsel filed an unopposed reconsideration motion with expert declarations and records to support the requested fees, unlike the presentation in the opening motion. The Ninth Circuit majority found that the district court did not err in denying the reconsideration motion, because this same information was available for counsel to present earlier and the motion is not a substitute for presenting the right evidence in the first instance. (Am. Ironworks & Erectors, Inc. v. N. Am. Const. Corp., 248 F.3d 892, 899 (9th Cir. 2001); In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1306 (9th Cir. 1994).)
Although not discussed in this Memorandum Decision, the district court also cut the claimed $251,313.10 in costs and expenses by $32,712.33 with respect to “Travel/Meals” and $65,095 with respect to “Experts/Consultants,” leaving $152,781.44 as the awarded costs.
In dissent, Circuit Judge Rawlinson found that the 50% reduction was too much without a more detailed explanation. (Stanger v. China Elec. Motor, Inc., 812 F.3d 734, 739 (9th Cir. 2016).) Also, she believed that it was error not to reconsider the request in light of the unopposed reconsideration motion with additional documentation.