Appeal from the United States District Court for the Central District of California Manuel L. Real, District Judge, Presiding D.C. No. 2:05-cv-03222-R-Mc
The opinion of the court was delivered by: Ikuta, Circuit Judge:
D.C. No. 2:05-cv-03222- R-Mc
Argued and Submitted March 5, 2012*fn1 -Pasadena, California
Before: Jerome Farris, Richard R. Clifton, and Sandra S. Ikuta, Circuit Judges.
These thirteen consolidated appeals brought by class counsel*fn2 and six groups of objectors (collectively, "Objectors")*fn3 challenge the district court's decisions regarding attorney fee awards after the settlement of an antitrust class action against West Publishing Corp. and Kaplan, Inc. In this opinion, we address nine separate appeals, which challenge the propriety of the district court's decision to deny attorneys' fees to class counsel McGuireWoods on account of a conflict of interest and to deny fees to objectors for their efforts in securing that decision.*fn4 Because the district court's decisions were not legally erroneous, and in light of the deference we give to such determinations, we affirm the respective fee orders with the exception of the order denying fees to the Schneider Objectors, which we vacate and remand for further proceedings consistent with this decision.
This case is before us for the second time. See Rodriguez v. W. Publ'g Corp. (Rodriguez I), 563 F.3d 948 (9th Cir. 2009). Because the facts are laid out at length in that opinion, we describe them only briefly.
At the onset of litigation, the law firm of Van Etten Suzumoto & Becket LLP (which later merged with McGuire-Woods LLC) entered into "incentive agreements" with five plaintiffs, Ryan Rodriguez, Reena Frailich, Loredana Nesci, Jennifer Brazeal, and Lisa Gintz, in connection with a potential antitrust class action against West Publishing. Id. at 957. In these agreements, each of these clients authorized Van Etten to apply to the court for a fee award based on recovery against West Publishing, and Van Etten agreed to seek incentive compensation for each client in an amount equal to between $10,000 and $75,000, depending on the value of the settlement or verdict. Id. Specifically, the incentive agreements provided that, if the settlement amount was greater than or equal to $500,000, class counsel would seek a $10,000 award for each client who signed an agreement; if the settlement amount were $1.5 million or more, counsel would seek a $25,000 award; if it were $5 million or more, counsel would seek $50,000; and if it were $10 million or more, counsel would seek $75,000. Id.
Plaintiffs brought federal antitrust claims against BAR/BRI (a subsidiary of West Publishing at that time) and Kaplan, for their activities in the market for bar preparation courses. Id. at 955. The operative complaint alleged that West Publishing illegally acquired the assets of its direct competitor West Bar Review in violation of Section 7 of the Clayton Act, unlawfully conspired with Kaplan to prevent competition in the market for full-service bar review courses in violation of Section 1 of the Sherman Act, and wrongfully monopolized the full-service bar review course market in violation of Section 2 of the Sherman Act. Id. at 955-56.
The district court certified a nationwide class comprised of all persons who purchased a bar review course from BAR/BRI between August 1, 1997 and July 31, 2006. Id. at 956. Plaintiffs Rodriguez, Frailich, Nesci, Brazeal, and Gintz, who had signed incentive agreements, were designated as class representatives, and McGuireWoods was appointed class counsel. Id. at 955. Two other class representatives, Kari Brewer and Lorraine Rimson, did not enter into incentive agreements, and were separately represented by the law firms Zwerling Schachter and Finkelstein Thompson LLP. Id. at 957-58.
The parties settled shortly before trial. Under the settlement agreement, West Publishing and Kaplan agreed to pay $49 million into a settlement fund that would be allocated pro rata to class members, with 25 percent of the fund set aside for attorneys' fees. Id. at 956-57. Before the final fairness hearing, class counsel filed motions seeking $325,000 in incentive awards for the class representatives and seeking fees for their representation of the class. Id. at 957, 963.
Multiple nonnamed members of the class challenged the fairness, reasonableness, and adequacy of the settlement pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, and objected to the applications for $325,000 in incentive awards for the class representatives and to class counsel's fee request. These class members, organized into groups of objectors, were also represented by counsel. Id. at 957-58. The Schneider Objectors argued that the court should reduce McGuireWoods's fee award because the incentive agreements created a conflict of interest between class counsel and the five representatives who had entered into the agreements, on the one hand, and the remaining members of the class, on the other.*fn5
On September 10, 2007, the district court approved the parties' settlement agreement, holding that the settlement was fair, adequate, and reasonable despite the conflict of interest between class representatives and class members. Id. at 958. The court awarded McGuireWoods over $7 million (subject to further increases for post-settlement work), the full amount of the requested fees. In a separate order, the district court declined to approve incentive awards totaling $325,000 to the class representatives, finding that the incentive agreements created an appearance of impropriety, violated the ethics rule against fee-sharing with non-lawyers, and created conflicts of interest between the class representatives and unnamed class members. Id. at 959. The ...