No Bright-Line Rule Is Set, But Timing of Motions Must Take into Account Timing of Objections to Actual Fee Request Submissions on Due Process Grounds.
This next case should be of keen interest to class action practitioners.
The Ninth Circuit, in In re Mercury Interactive Corp. Sec. Litig., Case No. 08-17372 (9th Cir. Aug. 18, 2010) (for publication), ruled that a district judge abused its discretion under Federal Rule of Civil Procedure 23(h) in setting an objection deadline for class members regarding a fee request on a date before the deadline for lead class action counsel to file their fee motion.
[Above: “I object! The gentleman from Pennsylvania objects, the gentleman will reduce his objection to writing.” American cartoon, between 1800-1840. Library of Congress.]
The district judge approved a 25% percentage of recovery from a common fund amounting to class action attorney’s fees of $29,375,000 in a stock option backdating securities case, when the supporting fee submissions showed class counsel expended a lodestar value of $8,396,593.20. The problem was that two objectors lobbied for a lower 18% percentage of recovery, even though they objected before seeing the class action attorneys’ fee submissions. The fee award was challenged.
The appealing parties were successful and the fee award reversed, because Circuit Judge Tashima (on behalf of the majority) found that Rule 23(h) requires a district court to set the deadline for objection to class counsel’s fee request on a date after the fee submissions have been filed, a rationale further bolstered on due process grounds. This was especially justified where a common fund was involved. Although the majority refused to adopt a “bright-line rule” with respect to Rule 23(h) fee motion timing, the schedule at least requires that any objections be filed after the fee motion itself is filed.
Circuit Judge Bybee agreed that the district judge erred with respect to the scheduling, but dissented because he found that the scheduling challenge had been waived.
