Facciola, et al v. Greenberg Traurig, LLP, et al

Filing 468

ORDER granting 428 Motion for Attorney Fees and awarding fees in the amount of $13,342,093, and taxable and non-taxable costs in the amount of $1,435,527; granting in part 432 Motion for Attorney Fees and awarding fees in the amount of $400,400, and non-taxable costs in the amount of $14,859.25 (please see attached order for complete information). Signed by Judge Frederick J Martone on 10/3/12.(TLJ)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Robert Facciola, et al.,
Plaintiffs,

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vs.

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Greenberg Traurig LLP, et al.,
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Defendants.
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No. CV-10-1025-PHX-FJM
ORDER

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We now have before us class counsels’ motion for attorneys’ fees and costs (doc.

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428), and supplemental memorandum (doc. 465), RB Liquidation, LLC counsels’ motion for

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attorneys’ fees and costs (doc. 432), and supplemental memorandum (doc. 467).

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I

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The court has an independent obligation to ensure that an award of attorneys’ fees is

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reasonable, even if the parties have already agreed to an amount. In re Bluetooth Headset

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Prod. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011). Where a settlement produces a

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common fund for the benefit of an entire class, the court has discretion to use either the

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lodestar method or the percentage-of-recovery method for determining reasonable fees. Id.

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at 942. Regardless of the method applied, however, we are “guided by the fundamental

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principle that fee awards out of common funds be reasonable under the circumstances.” In

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re Washington Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1296 (9th Cir. 1994).

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Class counsel have requested attorneys’ fees in the amount of $13,342,093 to be paid

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from the settlement fund. They assert that these fees are reasonable under either the

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percentage-of-recovery method or the lodestar/multiplier method.

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The percentage-of-recovery is an award based on a percentage of the total common

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fund. The Ninth Circuit has used 25% as a benchmark for reasonableness. In re Bluetooth,

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654 F.3d at 942. However, that benchmark must be adjusted or replaced by a lodestar

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calculation when “the percentage recovery would be either too small or too large in light of

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the hours devoted to the case or other relevant factors.” Six Mexican Workers v. Arizona

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Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). For example, awarding 25% of a

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“megafund” (funds of $50 million or more) may yield unreasonable windfall profits for class

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counsel as compared to the hours spent on the case. In re Bluetooth, 654 F.3d at 942.

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We agree with class counsel that an award of fees at 15% of the settlement fund is

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reasonable in this case. After two years of litigation within a firm, but fair time frame, class

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counsel have generated proposed class settlements that create a common fund of

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$88,947,288. The result achieved by counsel is significant. An award of 15% of the

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settlement fund is appropriately below the median for funds ranging from $25 million to

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$100 million. See Dr. Renzo Comolli, Recent Trends in Securities Class Action Litigation:

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2012 Mid-Year Review, NERA Economic Consulting, July 24, 2012 (noting median fee of

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27% for funds between $25 and $100 million); see also In re Mercury Inter. Corp. Sec. Litig.,

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No. CV-05-3395, 2011WL826797, at *2 (N.D. Cal. March 3, 2011) (awarding 22% of

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$117.5 million common fund). Class Counsel were retained on a purely contingent basis in

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a complex case fraught with uncertainty. Counsel advanced litigation costs in excess of $1.5

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million in order to prosecute this action, shouldering the risk of non-payment. Absent class

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counsels’ willingness to advance these litigation costs, there likely would have been no

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common fund. Finally, counsel have demonstrated outstanding expertise, diligence, and

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professionalism at every stage of this litigation.

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A lodestar cross-check confirms the reasonableness of the requested fee.1 The

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lodestar amount is calculated by multiplying the number of hours reasonably expended on

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the litigation, by a reasonable hourly rate for the region and the experience of the lawyer.

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We may adjust the lodestar amount by a multiplier based on “the quality of representation,

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the benefit obtained for the class, the complexity and novelty of the issues presented, and the

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risk of nonpayment.” In re Bluetooth, 654 F.3d at 942 (citation omitted).

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The records show that collectively class counsel and their professional staff expended

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over 28,000 hours litigating this action at an average hourly rate of $364 for a total lodestar

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of $10,243,574. We find nothing in the record that would suggest that the hours claimed

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should be disallowed. Counsels’ requested fee of $13,342,093, therefore, represents a

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multiplier of 1.3 over the lodestar amount.

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The multiplier is adequately supported by the factors in this case. Again, the quality

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of class counsel’s representation was superb. The benefit obtained by the class exceeds what

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is generally awarded in securities fraud cases. The issues in this case were both novel and

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complex. And finally, the risk to class counsel of nonpayment was significant.

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We conclude that under all the circumstances of this case class counsels’ request for

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fees is reasonable. We also conclude that counsels’ request for reimbursement of $1,435,527

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in taxable and non-taxable litigation expenses is reasonable. Class counsels’ motion for

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award of attorneys’ fees and costs is granted (doc. 428).
II

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Counsel for RB Liquidation LLC request fees in the amount of $704,000. Counsel

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state that the amount is less than 3% of the amount contributed to the settlement fund by

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Quarles. On a lodestar cross-check, counsel explain that the total time expended since

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October 2008 is approximately 1,700 for all shareholders, associates and paralegals, which,

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at an average hourly rate of $286, amounts to a lodestar fee of $486,988.50. Therefore, the

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Class counsel have lodged under seal billing detail to allow the court to perform a
lodestar cross-check. The clerk shall file the lodged documents under seal (doc. 465).
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requested amount of $704,000 represents a multiplier of 1.4 over the lodestar amount.

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Counsel also represent that they have incurred $14,859.25 in non-taxable costs, but they do

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not request a separate reimbursement. Instead, they suggest that the costs will be paid from

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the $704,000 award.

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We decline to apply the percentage-of-recovery method in calculating fees for RB

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Liquidation counsel. While we agree that their efforts likely benefitted the class, the RB

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Liquidation lawyers were not representing a class, but were retained by a liquidation entity

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in bankruptcy.

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Therefore, we consider the reasonableness of the fee request based on a lodestar

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analysis. We first question the propriety of including fees related to counsels’ representation

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of Radical Bunny and its principals in the course of the SEC investigation. Approximately

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700 of the 1,700 hours claimed were incurred during the two years before RB Liquidation

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LLC was formed. Without specifying an amount, counsel acknowledge that they “have

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received some compensation for representing Radical Bunny and its members in the SEC and

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ACC actions.” Motion at 4 n.6. They nevertheless include those fees in this application, id.,

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suggesting a double recovery, which is clearly unreasonable.

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We also decline to apply a multiplier to RB Liquidation counsel’s lodestar amount.

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We have no way to assess the quality of counsel’s representation, or to determine to what

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extent RB Liquidation counsels’ efforts actually contributed to the establishment of the

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common fund. We agree that the issues addressed by RB Liquidation counsel were novel

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and complex and that they bore a risk of non-payment by assuming the representation on a

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contingency basis. But we do not believe that these factors alone warrant an enhancement

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of fees over those actually incurred.

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Based on counsels’ representation that they have already been compensated for some

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of the claimed hours, and further reducing the hours by an estimate of hours incurred during

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the SEC representation that did not ultimately contribute to the benefit of the class, we reduce

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the compensable hours to 1400, for a total attorneys’ fees award of $400,400. Because we

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have declined to approve an enhanced award, we separately grant counsel reimbursement of
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$14,859.25 in non-taxable costs.

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III

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IT IS ORDERED GRANTING class counsels’ motion for an award of attorneys’

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fees (doc. 428), and awarding fees in the amount of $13,342,093, and taxable and non-

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taxable costs in the amount of $1,435,527.

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IT IS ORDERED GRANTING in part RB Liquidation LLC’s counsels’ motion for

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an award of attorneys’ fees (doc. 432), and awarding fees in the amount of $400,400, and

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non-taxable costs in the amount of $14,859.25.

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Because this order modifies the Net Settlement Fund, the parties shall file within 10

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days of the date of this order, revised proposed orders and final judgments and plans of

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allocation incorporating the revised Net Settlement Fund. The parties shall also itemize all

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deductions from the gross Settlement Funds, including deductions made for administrative

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fees and notice costs so that the court can effectively reconcile the difference between the

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gross and net settlement funds.

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DATED this 3rd day of October, 2012.

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