Heien v. Archstone , 837 F.3d 97 ( 2016 )

United States Court of Appeals
For the First Circuit
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No. 15-2299
CHRISTOPHER HEIEN, individually and on behalf of all others
similarly situated; ANNA NGUYEN, individually and on behalf of
all others similarly situated; ANNA MINIUTTI, individually and
on behalf of all others similarly situated; BENJAMIN SPILLER,
individually and on behalf of all others similarly situated;
ANTONIA PEABODY, individually and on behalf of all others
similarly situated; ENDICOTT PEABODY, individually and on behalf
of all others similarly situated; HUMOUD AL SABAH, individually
and on behalf of all others similarly situated; BRIAN EPSTEIN,
individually and on behalf of all others similarly situated;
LAURA NESCI, individually and on behalf of all others similarly
situated; RON LEVY, individually and on behalf of all others
similarly situated; ANDREA MANGONE, individually and on behalf
of all others similarly situated; NICOLAI JAKOBSEN, individually
and on behalf of all others similarly situated,
Plaintiffs, Appellants,
v.
ARCHSTONE; ARCHSTONE COMMUNITIES, LLC; ASN PARK ESSEX, LLC; ASN
QUINCY, LLC; ASN QUARRY HILLS, LLC; ASN NORTH POINT I, LLC;
ARCHSTONE NORTH POINT, LLC; ARCHSTONE CRONIN'S LANDING; ASN
WATERTOWN, LLC; ASN KENDALL SQUARE, LLC; ARCHSTONE AVENIR, LP;
ASN BEAR HILL, LLC,
Defendants, Appellees.
_____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
_____________________
Before
Torruella and Barron, Circuit Judges,
and Lisi,* District Judge.
_____________________
Edward Foye, with whom Michael Brier, Kevin Thomas Peters,
Arrowood Peters LLP, Matthew J. Fogelman, Fogelman & Fogelman
LLC, Joshua N. Garick and Law Offices of Joshua N. Garick were
on brief, for appellants.
Craig M. White, with whom Baker & Hostetler LLP, Thomas H.
Wintner and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. were on brief, for appellees.
_____________________
September 14, 2016
_____________________
*
Of the District of Rhode Island, sitting by designation.
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LISI, District Judge. The Plaintiffs in this class
action are former and current tenants of residential property in
Massachusetts leased to them by Defendants Archstone and several
related entities. In their suit, the Plaintiffs challenged
certain “amenity use fees,” which, they alleged, were imposed by
the Defendants in violation of the Massachusetts Security
Deposit Statute, Mass. Gen. Laws ch. 186, § 15B, and Chapter 93A
of the Massachusetts Consumer Protection Act, Mass. Gen. Laws
ch. 93A, § 1 et seq. The underlying litigation having long been
resolved with a complete settlement between the parties, this
appeal springs solely from class counsel’s dissatisfaction with
the amount of attorneys’ fees awarded to them by the district
court. Because the district court did not abuse its discretion
in fashioning the fee award, we affirm.
A. Background
1. The Hermida Litigation
In the related case of Hermida v. Archstone et. al,
C.A. No. 10-12083-WGY (D. Mass., U.S. District Judge William G.
Young presiding), other Archstone tenants had previously brought
identical claims against one of the Defendants’ corporate
affiliates. The Hermida plaintiffs were represented by the same
law firms as in the instant case.
On November 29, 2011, the district court granted
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summary judgment on liability in favor of the Hermidas,
determining that the amenity use fees charged by the Defendants
violated the Massachusetts Security Deposit Statute. Hermida v.
Archstone et. al, 826 F. Supp. 2d 380 (D.Mass. 2011). Eventually,
the Hermida case was settled and the district judge awarded
attorneys’ fees and costs of $62,714.38, which was less than
half of the lodestar amount requested by counsel. Hermida v.
Archstone et. al, 950 F. Supp. 2d 298 (D.Mass. 2013). In a
detailed Memorandum and Order, the district judge explained the
reduction in fees for time spent by counsel on travel, on
performing clerical and administrative tasks, and for the
practice of block billing. Id. at 311-315.
2. The Heien Litigation
On May 17, 2012, after the question of liability had
already been decided in Hermida, the Plaintiffs filed a class
action suit against Archstone and eleven other related entities.
In their complaint, the Plaintiffs stated that “the principal
common issues with respect to the class are whether Archstone’s
charging of the amenity fee violated the Security Deposit
statute and chapter 93A.” Complaint at ¶ 71 (ECF No. 2-1) The
Plaintiffs acknowledged that “Judge Young’s decision in the
Hermida v. ASN Reading case, Docket No. 1:10-CV-12083-WGY, is
precisely on point.” Id.
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On August 23, 2012, the district court stayed the
instant class action, pending waiver or resolution of all
appeals of the judgment entered in Hermida. Electronic Order
(ECF No. 41). In a September 30, 2012 status report, the
Plaintiffs informed the district court that the parties were in
settlement discussions. Status Report (ECF No. 43).
On March 13, 2014, the Plaintiffs filed an unopposed
motion in which they requested, inter alia, preliminary approval
of a proposed settlement. Pltfs.’ Mot. for Settlement (ECF No.
47). The settlement agreement reflects that the case was being
settled simultaneously with Hermida and that “by virtue of the
settlement in Hermida there will be no appeals and therefore
there is no longer a reason to stay the Action.” Class Action
Settlement Agreement (ECF No. 49 at Page 2 of 29). The
settlement fund was capped at $1,300,000 for payment of
individual claims and attorneys’ fees and costs. Id. at Page 3
of 29. Under the terms of the settlement agreement, the
Defendants agreed “[t]o not object to the payment of attorneys’
fees and expenses from the Class Settlement Fund in an amount up
to 15% of the total Fund amount ($1,300,000.00).” Id. at Page 5
of 29. Any sums remaining in the settlement fund after payment
of all individual claims, administration expenses, and
attorneys’ fees were to be returned to the Defendants. Id. at
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Page 8 of 29. The district court granted the Plaintiffs’ motion
to approve the settlement on March 27, 2014. Electronic Order
(ECF No. 50).
On June 3, 2014, Plaintiffs’ counsel filed a motion
for attorneys’ fees and costs, in which they requested payment
of $429,000 (33% of the maximum settlement fund) for their
services in this case. Pltfs.’ Mot. for Attorneys’ Fees and
Costs (ECF No. 53). In their motion, the Plaintiffs acknowledged
that the case “by itself did not involve intense litigation,
given the imposition of the stay,” and they conceded that the
case “only was filed because Judge Young concluded that the
Hermidas did not have standing to assert claims against the
defendants in this action.” Id. at 7. Counsel’s submissions in
support of the fee motion included billing records that showed
lodestar attorneys’ fees of $58,693. Exhibits A-F to Pltfs.’
Mot. for Attorneys’ Fees and Costs (ECF Nos. 53-1, 53-2, 53-3).
The Defendants responded with an objection to the motion,
suggesting that the district court consider the effect of
Hermida on the case, as well as the significantly lower lodestar
amount submitted by Plaintiffs’ counsel. Defs.’ Obj. to Class
Counsel’s Petition for Attorneys’ Fees (ECF No. 54 at 1-2).
3. The Order
On October 2, 2014, the district judge entered an
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electronic order awarding, without further explanation or
analysis, attorneys’ fees in the sum of $29,250. Electronic
Order (ECF No. 66). Plaintiffs’ counsel promptly filed a Motion
for Written Findings of Fact and Rulings of Law (ECF No. 67), in
response to which the district court issued a written order on
October 15, 2015. Order (ECF No. 73). The order states as
follows:
ORDER
In response to Class Counsel’s Motion for Written
Findings of Fact and Rulings of Law, ECF No. 67, this
Court clarifies its order awarding the attorneys’ fees
in the sum of $29,250.00. Order, ECF. No.66.
The attorneys’ fees in the awarded amount are
appropriate because this Court resolved the issues of
law relevant for this case in a related action Hermida
v. Archstone, 826 F. Supp. 2d 380 (D. Mass. 2011).
Moreover, this Court stayed this class action pending
waiver or resolution of all appeals of the judgment
entered in Hermida. Order, ECF No. 41. This case,
therefore, did not proceed to the discovery stage and
the parties did not engage in significant motion
practice. This Court also considered the actual
benefit recovered for the class members, Joint Report
Status 3, ECF No. 60, and took into account that the
Defendants promptly agreed to settle the dispute.
SO ORDERED.
B. Standard of Review
This Court reviews a district court’s determination
regarding attorneys’ fees only for a mistake of law or abuse of
discretion. In re Volkswagen and Audi Warranty Extension
Litigation, 692 F.3d 4, 13 (1st. Cir. 2012); United States v.
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Metropolitan Dist. Com'n, 847 F.2d 12, 14 (1st Cir. 1988)(citing
Wojtkowski v. Cade, 725 F.2d 127, 130 (1st Cir.1984)); Maceira
v. Pagan, 698 F.2d 38, 39 (1st Cir.1983). While mistakes of law
“always constitute abuses of a court’s discretion,” Airframe
Sys., Inc. v. L–3 Commc'ns Corp., 658 F.3d 100, 108 (1st
Cir.2011), a fee determination will be set aside only “if it
clearly appears that the trial court ignored a factor deserving
significant weight, relied upon an improper factor, or evaluated
all the proper factors (and no improper ones), but made a
serious mistake in weighing them.” Id. (quoting Gay Officers
Action League v. Puerto Rico, 247 F.3d 288, 292–93 (1st
Cir.2001)).
As this Court has previously explained, “in a common
fund case the district court, in the exercise of its informed
discretion, may calculate counsel fees either on a percentage of
the fund basis or by fashioning a lodestar.” In re Thirteen
Appeals Arising Out of San Juan Dupont Plaza Hotel Fire
Litigation, 56 F.3d 295, 307 (1st Cir.1995). The Court
recognized that the percentage-of-fund method “in common fund
cases is the prevailing praxis” and acknowledged the “distinct
advantages that the POF method can bring to bear in such cases.”
Id. However, the Court has also noted that the percentage-of-
fund approach “may result in the overcompensation of lawyers in
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situations where actions are resolved before counsel has
invested significant time or resources.” Id. If the fee is
determined according to the lodestar approach, “it is the
court's prerogative (indeed, its duty) to winnow out excessive
hours, time spent tilting at windmills, and the like.” Gay
Officers Action League v. Puerto Rico, 247 F.3d at 296 (citing
Coutin v. Young & Rubicam Puerto Rico, Inc., 124 F.3d 331, 337
(1st Cir.1997)).
Finally, the Court is mindful of the Supreme Court’s
admonition that “fee litigation can, but should not, transform
into the tail that wags the dog.” Victor Corp. v. Vigilant Ins.
Co., 674 F.3d 1, 20 (1st Cir.2012)(citing City of Burlington v.
Dague, 505 U.S. 557, 566, 112 S. Ct. 2638, 120 L. Ed. 2d 449
(1992)). As long as there is a basis for understanding the
district court’s reasoning, the findings “‘need not be
infinitely precise, deluged with details, or even fully
articulated.’” Victor Corp. v. Vigilant Ins. Co., 674 F.3d at 20
(quoting Foley v. City of Lowell, 948 F.2d 10, 20 (1st
Cir.1991)).
C. The Parties’ Positions
The Plaintiffs make two arguments on appeal. They
assert that in considering the actual benefit recovered for the
class members, the district court committed legal error under
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Boeing Co. v. Van Gemert, 444 U.S. 472, 100 S. Ct. 745, 62 L. Ed.
2d 676 (1980)(affirming attorney award from total amount of
class action judgment, including unclaimed portion, on the basis
that the class action bestowed a benefit even on class members
who did not file a claim). In the alternative, the Plaintiffs
contend that when viewed against other cases in which attorney
awards ranged between 20 and 30 percent of the total common
fund, it was abuse of discretion by the district court to award
to class counsel what amounts to 2.25 percent of the common fund
in this case.
On their part, the Defendants contend that the
attorneys’ fees awarded in this case are tied to the lodestar
award in Hermida, and they suggest that the rationale for the
reduced award in the instant case is implied in the district
judge’s reasoning in Hermida.
D. Discussion
It is undisputed that the relevant legal issues in
this case were decided in Hermida before this case was even
filed; that the case was stayed shortly after its commencement
until final settlement; and that the parties did not engage in
any discovery or motion practice. Moreover, although the common
benefit fund amounted to $1,300,000, only a small portion,
$180,480, was paid out to the individual claimants. Joint Status
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Report (ECF No. 60 at Page 3 of 4). Following settlement of the
case, class counsel sought $429,000 in attorneys’ fees, more
than seven times counsel’s asserted lodestar amount of $58,693.
In the October 15, 2015 order, the district court gave
several reasons why the court deemed the amount of the award
appropriate. First, the court pointed out that the relevant
legal issues had already been resolved in Hermida. Order ECF No.
73 at 1. “Moreover,” the court pointed out that the Heien case
had been stayed pending waiver or resolution of all appeals in
Hermida and that, as a result, the Heien case had not proceeded
to discovery, nor had the parties engaged in any significant
motion practice. Id. at 2. Further, the court took into account
the fact that the Defendants agreed to settle this matter
“promptly.” Id. Finally, the court stated that it had “also
considered” the actual benefit recovered for the class members
in Heien. Id.
The Plaintiffs have focused on the single reference to
the claimed portion of the common benefit fund to arrive at the
conclusion that the court impermissibly based the fee award on
only that consideration. However, the order as a whole,
especially when viewed against the procedural history of this
case and the close connection to Hermida, makes clear that this
consideration was only one of the factors the district court
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included. The primary reason given for the size of the award is
that the case had required little, if any, legal work. As the
Plaintiffs had repeatedly conceded, the legal issues in this
case had already been resolved in Hermida. The fee award in this
case, set at almost exactly half of the lodestar amount
submitted by the Plaintiffs, was entirely consistent with the
lodestar-based attorneys’ fee award in Hermida, where counsel
had already been provided with detailed reasoning and precise
calculations by the court. The order in this case makes two
separate references to Hermida, indicating that, just like in
Hermida, the award for attorney’s fees was based on the lodestar
method and then reduced to what the district court considered an
appropriate award. Boeing, which affirmed a fee award based on
the total amount of a class action judgment, does not render a
consideration of the claimed benefits as one of the factors in
awarding attorney’s fees legal error in a lodestar calculation.
Such consideration is not impermissible under the lodestar
method because it clearly relates to one of the twelve factors
enunciated in Hensley v. Eckerhart, 461 U.S. 424, 430, 103 S. Ct.
1933, 76 Ed.2d 40 (1983)(listing among the factors “the amount
involved and the results obtained” and confirming that “the
level of a plaintiff’s success is relevant to the amount of fees
to be awarded.”).
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The Plaintiffs’ alternative suggestion that the fee
award constitutes an impermissibly low percentage of the total
common fund may be dealt with in short order. As stated by the
district court, it reflects the court’s effort to fashion a
reasonable and appropriate fee award in consideration of the
unique procedural history of this case and its close connection
to Hermida. The court gave several reasons for awarding $29,250
to class counsel, none of which are the subject of factual
dispute. In addition, the district judge detailed in the fee
memorandum and order in Hermida his rationale for reducing
attorneys’ fees for block billing and for time spent on travel
and administrative tasks.
The order in this case left room for speculation by
the parties as to the method utilized by the district court to
arrive at the fee award. While the inclusion of an explanation
as to the district court’s elected method or of the court’s
calculation of the award might have foreclosed such speculation—
and, we think it to be the better practice—neither the absence
of such mathematical analysis nor the amount of the award itself
constitute an abuse of discretion.
Affirmed.
Each side to bear its own costs.
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