Jason Yamada v. Nobel Biocare Holding Ag ( 2016 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JASON M. YAMADA, D.D.S., on No. 14-55263
behalf of himself and others similarly
situated, D.C. No.
Plaintiff-Appellee, 2:10-cv-04849-
MWF-PLA
v.
NOBEL BIOCARE HOLDING AG; ORDER AND
NOBEL BIOCARE AB; NOBEL AMENDED
BIOCARE USA, LLC, OPINION
Defendants-Appellants.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted
February 12, 2016—Pasadena, California
Filed April 20, 2016
Amended June 9, 2016
Before: Marsha S. Berzon and John B. Owens, Circuit
Judges, and Algenon L. Marbley,* District Judge.
Opinion by Judge Marbley
*
The Honorable Algenon L. Marbley, District Judge for the U.S.
District Court for the Southern District of Ohio, sitting by designation.
2 YAMADA V. NOBEL BIOCARE
SUMMARY **
Attorneys’ Fees
The panel vacated the district court’s order awarding
class counsel more than $2.3 million in attorneys’ fees,
which the district court awarded based on the terms of a
settlement agreement, California Code of Civil Procedure
§ 1021 under the substantial benefit theory, and the private
attorney general theory under California Code of Civil
Procedure § 1021.5; and remanded.
Dr. Jason Yamada, a dentist, filed a class action
complaint against defendants Nobel Biocare AG, and related
entities, alleging defects in the NobelDirect implants.
The lodestar method (calculated by multiplying the
number of reasonable hours the prevailing party expended
by a reasonable hourly rate for the region and for the
attorneys’ experience) may be used in certain class actions
to calculate attorneys’ fees. The court may adjust the
lodestar figure by an appropriate upward or negative
multiplier reflecting a host of “reasonableness” factors.
The panel held that defendants did not waive their due
process argument. The panel also held that the district
court’s use over defendants’ objection of ex parte, in camera
submissions to support its fee order violated defendants’ due
process rights. On remand, the panel held that the district
court must allow defendants access to timesheets,
appropriately redacted to remove privileged information, so
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
YAMADA V. NOBEL BIOCARE 3
they can inspect them and present whatever objections that
they might have concerning the fairness and reasonableness
of plaintiffs’ fee request.
The panel held that the district court’s discount of the
lodestar for lack of success was not erroneous because the
district court concisely and clearly explained its reduction of
the lodestar, and because there was sufficient support for its
finding that plaintiffs’ claims were related to a common goal.
The panel also held that the district court’s cross-check of
the lodestar was entirely discretionary where, as here,
classwide benefits were not easily monetized.
COUNSEL
Eric Y. Kizirian (argued) and Michael K. Grimaldi, Lewis
Brisbois Bisgaard & Smith LLP, Los Angeles, California;
Jeffry A. Miller, Lewis Brisbois Bisgaard & Smith LLP, San
Diego, California, for Defendants-Appellants.
Myron Moskovitz (argued), Piedmont, California; William
M. Audet, and Jonas P. Mann, Audet & Partners, LLP, San
Francisco, California, for Plaintiff-Appellee.
4 YAMADA V. NOBEL BIOCARE
ORDER
The opinion filed on April 20, 2016 and appearing at
2016 WL 1579705 is hereby amended. The amended
opinion will be filed concurrently with this order.
The opinion is amended as follows:
On page 13, line 6 has been added. The
sentence now reads:
On page 15, line 5 has been added. The sentence
now reads
On page 15, footnote 7 has been added. Footnote 7 reads
809 F.3d 462,
471 (9th Cir. 2015). Eyraud “had access to the [victim’s] law
firm’s declaration describing the work it performed relating
to Eyraud’s fraud and the invoice summaries listing the
amount of time that work took.” Id. It was only to verify that
those disclosed “documents accurately reflected the
pertinent information contained in the privileged billing
records,” the court examined the original in camera. Id. The
court then confirmed that the summaries relating to work and
time spent that had been extracted from the privileged
material were accurate, i.e., “simply corroborative of what
counsel already had seen.” Id. With the accurate summaries
YAMADA V. NOBEL BIOCARE 5
in hand, we held that Eyraud was “able to challenge the legal
basis for the court’s order.” Id. Thus, she had been “afforded
adequate notice [of the facts] and a meaningful opportunity
to be heard.” Id. By contrast, here the court made an
independent determination of appropriate fees, but it did not
reveal the actual basis of its ruling or provide Nobel with
access to the information used to reach that ruling. Thus,
unlike Eyraud, Nobel was denied a meaningful opportunity
to review and to litigate the merits of the award.>
The parties may not file petitions for rehearing or
rehearing en banc in response to the amended opinion. The
mandate shall issue forthwith.
OPINION
MARBLEY, District Judge:
Defendants-Appellants Nobel Biocare Holding AG,
Nobel Biocare AB, and Nobel Biocare USA, LLC
(collectively, “Nobel”) appeal the district court’s order
awarding class counsel more than $2.3 million in attorneys’
fees. Defendants appeal on four bases. First, they contend
that the district court violated their due process rights by
basing its fee order on an ex parte, in camera review of
timesheets that they could not review or challenge. Second,
they argue that the district court did not adequately discount
the lodestar. Third, they assert that the district court’s cross-
check of the lodestar was flawed. Finally, they submit that the
district court erred in awarding a multiplier based solely on
the contingent risk factor of the litigation. Plaintiffs argue
that Defendants have waived the first argument by failing to
raise the issue timely or adequately.
6 YAMADA V. NOBEL BIOCARE
We find that Defendants have not waived their due
process argument, and we vacate the district court’s fee order
and remand with instructions.
BACKGROUND
Named Plaintiff Dr. Jason Yamada, DDS is a Torrance,
California-based dentist specializing in tooth implants. Dr.
Yamada attended a promotional symposium in 2004 hosted
by Nobel featuring their NobelDirect dental implants.
Following the symposium, Dr. Yamada implanted dozens of
NobelDirect implants into his patients but noticed that the
implants failed at a rate he deemed unusually high. Just over
a year after the implant’s launch, two Swedish professors at
the University of Gothenburg warned that the implants were
causing bone loss, and they urged Nobel to withdraw the
implants from the market. In response to those allegations,
Nobel contacted the Swedish Medical Products Agency
(“SMPA”), a government agency akin to the United States
Food and Drug Administration, to investigate. In February of
2008, the SMPA formally closed its investigation with no
adverse findings as to the implants’ safety or efficacy.
Nevertheless, at least a dozen of Dr. Yamada’s patients’
NobelDirect implants failed, which necessitated explant
surgery—that is, removal of the implants—oral
reconstruction, implant replacement, and continued
monitoring. Dr. Yamada performed those necessary
reparative surgeries at his own expense.
On June 30, 2010, Dr. Yamada filed a class action
complaint against Nobel alleging a defect in the NobelDirect
implant. The complaint alleged causes of action for
declaratory relief, implied indemnity, breach of express and
warranty, and a violation of California Unfair Competition
Law (“UCL”), California Business and Professions Code
§§ 17200, et seq.
YAMADA V. NOBEL BIOCARE 7
On November 5, 2010, Nobel filed a motion to dismiss
Dr. Yamada’s first amended complaint. On January 20,
2011, the district court (the Honorable Jacqueline Nguyen)
denied the motion as to all but the implied indemnity claim,
which it dismissed with prejudice. That same day, the district
court ordered Dr. Yamada to file his motion for class
certification by February 28, 2011. Meanwhile, the parties
filed their preliminary report under Rule 26(f) of the Federal
Rules of Civil Procedure. The report was filed prior to
discovery, and it noted that Defendants had sole possession
of the vast majority of key documents in the litigation.
Plaintiffs sought compensatory damages (both past and
projected loss), restitution, and declaratory relief to protect
the class, essentially a form of indemnity. Projected class-
wide damages were estimated at $450 million and were
calculated as follows: $8 million for the price of the 20,0001
failed implants, representing an estimated 20% failure rate
out of 100,000 total implants at $400 per implant; $70–100
million for the surgical replacement of the 20,000 implants
at $3,500 per procedure; $60 million to repair or restore teeth
adjacent to the implant; and $325 million for monitoring and
medical costs.
On August 12, 2011, the district court certified a
nationwide class and appointed Dr. Yamada class
representative. On May 11, 2012, the case was reassigned to
the Honorable Michael Fitzgerald. On June 11, 2012, Nobel
moved both for summary judgment as to all outstanding
claims and for reconsideration of class certification or,
alternatively, decertification of the class, arguing that two
1
The report reaches the figure of $60 million by estimating 3,000
procedures at a cost of $20,000 each. This equation is likely mistaken.
3,000 dollars per procedure for 20,000 procedures (the estimated number
of failed implants) is the likelier equation.
8 YAMADA V. NOBEL BIOCARE
recently decided cases materially changed the applicable law.
The district court denied Nobel’s motion for summary
judgment but ordered supplemental briefing on the motion
for reconsideration, finding well taken Defendants’ argument
that Mazza v. American Honda Motor Co., 666 F.3d 581 (9th
Cir. 2012), and American Honda Motor Co. v. Superior
Court, 199 Cal. App. 4th 1367 (2011), represented material
changes of law under Civil Local Rule 7-18.2 Mazza held that
“California law may only be used on a classwide basis if ‘the
interests of other states are not found to outweigh
California’s interest in having its law applied.’” 666 F.3d at
590 (quoting Wash. Mut. Bank v. Super. Ct., 24 Cal. 4th 906,
921 (2001)). In making that determination, Mazza requires
courts to conduct “a three-step governmental interest test.”3
2
Civil Local Rule 7-18 provides:
A motion for reconsideration of the decision on any
motion may be made only on the grounds of (a) a
material difference in fact or law from that
presented to the Court before such decision that
in the exercise of reasonable diligence could not
have been known to the party moving for
reconsideration at the time of such decision, or
(b) the emergence of new material facts or a change of
law occurring after the time of such decision, or
(c) a manifest showing of a failure to consider
material facts presented to the Court before such
decision. No motion for reconsideration shall in any
manner repeat any oral or written argument made in
support of or in opposition to the original motion.
3
First, the court determines whether the relevant law of
each of the potentially affected jurisdictions with
regard to the particular issue in question is the same or
different.
YAMADA V. NOBEL BIOCARE 9
Id. The district court conducted the test and ultimately denied
Defendants’ motion for reconsideration under Mazza due to,
among other reasons, “the overwhelming connections
between California and [Defendants’] conduct relevant to
[the] case.”
The material change under American Honda concerned
causation. In American Honda, the California Court of
Appeal stated that for a California breach of warranty claim
to proceed, the movant for class certification must provide
“substantial evidence of a defect that is substantially certain
to result in malfunction during the useful life of the product.”
199 Cal. App. 4th at 1375. To do that, the movant must
demonstrate through expert testimony that “there was an
inherent defect and that it caused the product to malfunction
or that it was substantially certain the product would
malfunction as a result of the defect.” Id. at 1377. The district
court found that the record demonstrated hundreds of
potential causes for implant failures, and that the cause of any
Second, if there is a difference, the court examines
each jurisdiction’s interest in the application of its
own law under the circumstances of the particular
case to determine whether a true conflict exists.
Third, if the court finds that there is a true conflict, it
carefully evaluates and compares the nature and
strength of the interest of each jurisdiction in the
application of its own law to determine which
state’s interest would be more impaired if its policy
were subordinated to the policy of the other state, and
then ultimately applies the law of the state whose
interest would be more impaired if its law were not
applied.
Mazza, 666 F.3d at 590 (quoting McCann v. Foster Wheeler LLC, 48 Cal.
4th 68, 81–82 (2010)).
10 YAMADA V. NOBEL BIOCARE
particular failure was uncertain. Accordingly, the district
court granted in part Defendants’ motion and decertified the
class as to the claims for declaratory relief, breach of express
warranty, and breach of implied warranty. The court left
standing the claims for unfair and fraudulent business
practices under California’s UCL.
The parties settled the remaining claims. On May 21,
2013, the district court issued an order granting preliminary
approval of the settlement. The settlement agreement
provided compensation for class members as follows: all
implantees whose NobelDirect implants failed before the
effective date of the settlement agreement and who had not
yet received a replacement for the implants under Nobel’s
warranty plan would receive either compensation for the
actual amount paid for the failed implants or, if Nobel had no
record of the actual amount paid, $450.00 for each failed
implant; and all implantees whose NobelDirect implants
failed after the effective date of the settlement agreement
would receive either reimbursement of the actual amount
paid or any single replacement Nobel implant.
The settlement enhanced Nobel’s original warranty.
Before the settlement, Nobel’s warranty was for 10 years and
provided only for another NobelDirect implant. Further, the
original warranty gave Nobel the right to deny claims if they
suspected that the implant failure was caused by patient
misuse, and the burden was on the patient to prove otherwise.
The prior warranty also required the patient to return the
extracted implant to recover. The settlement provided class
members a lifetime warranty, and those who experienced
past failures could recover merely by signing a declaration
attesting that to their knowledge, the patient was not the
exclusive cause of the failure.
YAMADA V. NOBEL BIOCARE 11
On September 8, 2013, class counsel filed two motions:
one for attorneys’ fees and litigation expenses and the other
for approval of the class action settlement. In the motion for
attorneys’ fees, counsel requested $4,156,631.85 in fees and
$223,989.06 in expenses. The fee request was based on a
$2,771,087.90 lodestar and a multiplier of 1.5 to account for
the contingent nature of the litigation.
Nobel opposed class counsel’s motion for attorneys’ fees.
At a hearing on the motion, the district court ruled that the
summary nature of the time records and declarations
provided by class counsel prevented the court from
adequately evaluating whether the number of hours expended
on the litigation were reasonable or duplicative. To remedy
that defect, the court ordered class counsel to provide
unredacted time records under seal and in camera to the court
only, after which the court would determine whether copies
of the time records should be redacted and provided to
Nobel’s counsel. Nobel asked for copies of the records, but
the district court denied the request, subject to
reconsideration.
On November 4, 2013, class counsel filed the timesheets
under seal for the district court’s in camera review. After
reviewing the timesheets, the court held a hearing on January
14, 2014. At that hearing, Nobel renewed its request to
examine the timesheets submitted by class counsel. The
district court overruled the objection, stating:
I think that [counsel for Nobel] are grossly
overstating [their] ability to dictate to
someone who managed his own law firm for
close to 20 years to read through these bills
and make a determination on [them]. Every
month I had to send out bills to
exceedingly demanding clients, either
12 YAMADA V. NOBEL BIOCARE
corporate clients or insurance companies and
make sure that they would be paid, and I have
the ability to look at that and say would
this pass muster with—you know, with an
insurance company? And, obviously, I think
the order speaks for itself. The alternative
is to force everybody to go through and
decide what is privileged and what’s not and
then what—for [them] to advocate on the
basis of what’s left over and I just don’t
think that’s a good use of anybody’s time.
Shortly after the hearing, the district court entered an
order awarding fees to class counsel on three grounds: the
terms of the settlement agreement; California Code of Civil
Procedure § 1021 under the substantial benefit theory; 4 and
the private attorney general theory under California Code of
Civil Procedure § 1021.5. 5
4
The substantial benefit theory provides for attorneys’ fees in suits that:
(1) invoke the court’s equitable powers; (2) are commenced and
maintained as a representative action; and (3) result in a disposition that
confers substantial benefits (either pecuniary or nonpecuniary) upon the
persons represented. Coal. for L.A. Cty. Planning etc. Interest v. Bd. of
Supervisors, 76 Cal. App. 3d 241, 248 (1977).
5
Section 1021.5 provides that
a court may award attorneys’ fees to a successful party
against one or more opposing parties in any action
which has resulted in the enforcement of an important
right affecting the public interest if: (a) a significant
benefit, whether pecuniary or nonpecuniary, has been
conferred on the general public or a large class of
persons, (b) the necessity and financial burden of
private enforcement . . . are such as to make the
YAMADA V. NOBEL BIOCARE 13
The court deemed it necessary, however, to reduce the
requested fees substantially due to vagueness in time entries,
improper inclusion of clerical work and other work not
properly billed for, inflation of hours due to rounding up of
billing in large time increments, and the use of block billing.
Nobel timely appealed the final fee award to this court.
STANDARD OF REVIEW
We review a district court’s award of attorneys’ fees for
abuse of discretion. Intel Corp. v. Terabyte Int’l, Inc., 6 F.3d
614, 621 (9th Cir. 1993) (quoting Lindy Pen Co. v. Bic Pen
Corp., 982 F.2d 1400, 1409 (9th Cir. 1993)). A district court
abuses its discretion when “its decision is based on an
erroneous conclusion of law or if the record contains no
evidence on which it rationally could have based its
decision.” In re Mercury Interactive Corp. Sec. Litig.,
618 F.3d 988, 992 (9th Cir. 2010) (citations omitted).
DISCUSSION
A. Waiver
Generally, an appellate court will not hear an issue raised
for the first time on appeal. Whittaker Corp. v. Execuair
Corp., 953 F.2d 510, 515 (9th Cir. 1992). There is “no ‘bright
line rule’. . . to determine whether a matter has been properly
raised below.” Id. The standard “is that the argument must be
raised sufficiently for the trial court to rule on it.” Id. (quoting
In re E.R. Fegert, Inc., 887 F.2d 955, 957 (9th Cir. 1989)).
Accordingly, when a party takes a position and the district
court rules on it, there is no waiver. See W. Watersheds
award appropriate, and (c) such fees should not in
the interest of justice be paid out of the recovery, if any.
14 YAMADA V. NOBEL BIOCARE
Project v. U.S. Dep’t of Interior, 677 F.3d 922, 925 (9th Cir.
2012) (explaining that there is “no waiver if the issue was
raised, the party took a position, and the district court ruled
on it”).
Plaintiffs contend that Defendants waived their due
process argument by failing to raise the issue until after the
briefing on the matter of attorneys’ fees was complete. This
argument is specious. It was not until the first fee hearing,
two weeks after completion of briefing, that the issue first
arose. Defendants asked to view the timesheets at that
hearing, saying: “[W]e respectfully submit we should see
[the timesheets], your honor, though I understand there are
privilege[] concerns and that’s been handled in other cases
by way of redaction of confidential information.” Class
counsel objected to Defendants’ request for access even to
redacted timesheets, after which the court indicated that it
“might direct that certain redactions be made [to the
timesheets] and that those be provided . . . pursuant to a
protective order” once the court had “a better sense of just
what they are and what they say, [and] how detailed they
are.” Not until one day before the second fee hearing, held
on January 14, 2014, did the district court first decide that it
would base the fee order entirely on the in camera
timesheets. Defendants renewed their request to examine the
timesheets at that hearing. The district court responded by
telling defense counsel that they overstated the impact of
their anticipated advocacy. The district court’s written order
also addressed Defendants’ objection:
At the hearing held on January 14, 2014,
defense counsel objected to the fact that he
has not had an opportunity to review Class
Counsel’s time records. As indicated above,
Class Counsel did not provide time records
to Defendants in the first instance due to
YAMADA V. NOBEL BIOCARE 15
concerns that the records contained
privileged information. In light of the
Court’s “independent obligation to ensure
that the award . . . is reasonable,” [citation],
this court found that a more efficient use of
time and resources was to review the records
in camera, as opposed to requiring Class
Counsel to redact the time records and
provide a copy to Defendants.
The record demonstrates that Defendants raised the issue
with sufficient specificity and vigor. The parties took
positions on the issue of Nobel’s access to the timesheets, the
basis for this appeal, and the district court ruled on it.
Defendants did not waive their argument.
B. Due Process
A district court abuses its broad discretion in awarding
attorneys’ fees when it makes an error of law. Mercury
Interactive, 618 F.3d at 993 (citing Koon v. United States,
518 U.S. 81, 100 (1996)). We find such error here: the district
court’s use over Defendants’ objection of ex parte, in camera
submissions to support its fee order violated Defendants’ due
process rights.
Our adversarial system of justice “is premised on the
well-tested principle that truth—as well as fairness—is best
discovered by powerful statements on both sides of the
question.” Penson v. Ohio, 488 U.S. 75, 84 (1988) (citation
omitted). Accordingly, we have previously held that an
opposing party normally has a right to see the timesheets on
which a district court relied in issuing a fee award.
In Intel Corp., we vacated a district court’s order
awarding attorneys’ fees due in part to the fact that the
16 YAMADA V. NOBEL BIOCARE
district court did not make available to opposing counsel the
timesheets it used to support the fee order. 6 F.3d at 623. We
declared that “[u]nder our adversary system, [opposing
counsel is] entitled to see just what was charged and why,”
and that opposing counsel has a “need and right to peruse and
parse [the] fee demand.” Id. (emphases added). MGIC
Indemnity Corp. v. Weisman similarly concerned a fee order
based on ex parte, in camera submissions. See 803 F.2d 500,
505 (9th Cir. 1986). We remanded the matter to the district
court to give opposing counsel an opportunity to inspect the
timesheets and challenge the reasonableness of the fee
award. Id.Plaintiffs argue that Intel and MGIC are distinguishable
because those fee orders were issued without explanation. In
Intel, the district court “merely awarded the fees without
elaboration,” having made “no findings that the hours
expended were reasonable [or] that the hourly rates were
customary.” 6 F.3d at 623. In MGIC, the district court
provided “[n]o reason . . . why the timesheets should not
have been made available to [opposing counsel] and
[opposing counsel] given the opportunity to challenge them.”
803 F.2d at 505. Here, on the other hand, the district court
issued a detailed, 33-page order evincing thoughtful and
well- informed consideration of the submissions. And the
court offered a reason why it refused Defendants’ access to
the documents: the court found “a more efficient use of time
and resources was to review the records in camera, as
opposed to requiring Class Counsel to redact the time records
and provide a copy to Defendants.” So the question is
whether judicial efficiency may eclipse Defendants’
YAMADA V. NOBEL BIOCARE 17
fundamental right to inspect and challenge the documents. It
may not. 6
“[W]hen a judge constructs a process for setting fees, the
process must contain at least the procedural minima that the
Due Process Clause requires.” In re Nineteen Appeals
Arising Out of San Juan Dupont Plaza Hotel Fire Litig.,
982 F.2d 603, 614 (1st Cir. 1992). Here, the Due Process
Clause requires that opposing counsel have access to the
timesheets relied on to support the fee order. 7 The district
6
The parties argue extensively regarding the application of
Concepcion v. Amscan Holdings, 223 Cal. App. 4th 1309 (2014), to the
due process question in this case. Although informative, Concepcion
does not control the question, for two reasons: (1) the question at issue
is a procedural one, which, under Erie Railroad Co. v. Tomkins, 304 U.S.
64 (1938), should be decided under federal law; and, perhaps more
importantly, (2) Defendants have raised a federal due process challenge
to the district court’s ex parte review procedure. What constitutes a
federal due process violation is a question of federal, not state,
substantive law. Accordingly, we do not discuss Concepcion here, other
than to say that it supports Defendants’ contention that the in camera
procedure implemented here was a violation of their due process rights.
7
This case is different from United States v. Eyraud, in which we held
that the district court’s denial of a defendant’s request for access to the
original billing invoices used for restitution purposes to determine
compensable attorneys’ fees did not violate her right to Due Process.
809 F.3d 462, 471 (9th Cir. 2015). Eyraud “had access to the [victim’s]
law firm’s declaration describing the work it performed relating to
Eyraud’s fraud and the invoice summaries listing the amount of time that
work took.” Id. It was only to verify that those disclosed “documents
accurately reflected the pertinent information contained in the privileged
billing records,” the court examined the original in camera. Id. The court
then confirmed that the summaries relating to work and time spent that
had been extracted from the privileged material were accurate, i.e.,
“simply corroborative of what counsel already had seen.” Id. With the
accurate summaries in hand, we held that Eyraud was “able to challenge
the legal basis for the court’s order.” Id. Thus, she had been “afforded
18 YAMADA V. NOBEL BIOCARE
court abused its discretion by denying Defendants such
access.
On remand, the district court must allow Defendants
access to the timesheets, appropriately redacted to remove
privileged information, so they can inspect them and present
whatever objections they might have concerning the fairness
and reasonableness of Plaintiffs’ fee request. Plaintiffs must
then be allowed to respond to Defendants’ objections and
Defendants must be granted an opportunity to reply. The
district court will then decide the appropriate fee award. See
Hensley v. Eckerhart, 461 U.S. 424, 433–34 (1983).
Vacating the fee order obviates the need for us to reach
the merits of Defendants’ remaining claims. In the interest of
efficient eventual resolution of this dispute, however, we
further hold as follows.
C. Discount of Lodestar
Attorneys’ fees and costs may be awarded in a certified
class action when authorized by law or the parties’
agreement. In re Bluetooth Headset Prods. Liab. Litig.,
654 F.3d 935, 941 (9th Cir. 2011); Fed. R. Civ. P. 23(h). The
“lodestar method” is appropriate in class actions where the
relief sought and obtained is not easily monetized, ensuring
compensation for counsel who undertake socially beneficial
litigation. Id. “The lodestar figure is calculated by
multiplying the number of hours the prevailing party
adequate notice [of the facts] and a meaningful opportunity to be heard.”
Id. By contrast, here the court made an independent determination of
appropriate fees, but it did not reveal the actual basis of its ruling or
provide Nobel with access to the information used to reach that ruling.
Thus, unlike Eyraud, Nobel was denied a meaningful opportunity to
review and to litigate the merits of the award.
YAMADA V. NOBEL BIOCARE 19
reasonably expended on the litigation (as supported by
adequate documentation) by a reasonable hourly rate for the
region and for the experience of the lawyer.” Id. Although
the lodestar figure is “presumptively reasonable,”
Cunningham v. Cty. of L.A., 879 F.2d 481, 488 (9th Cir.
1988), “the court may adjust it upward or downward by an
appropriate positive or negative multiplier reflecting a host
of ‘reasonableness’ factors, ‘including the quality of
representation, the benefit obtained for the class, the
complexity and novelty of the issues presented, and the risk
of nonpayment,’” In re Bluetooth, 654 F.3d at 941–42
(quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th
Cir. 1998)). Of those factors, a party’s success in the
litigation is the “most critical.” Hensley, 461 U.S. at 436.
Defendants argue that the district court made two
dispositive errors: it (1) gave inadequate weight to what it
acknowledged was class counsel’s limited success; and
(2) compounded the mistake by assuming that Plaintiffs’ five
claims were different legal theories addressing the same
alleged violation.
As to Defendants’ first argument, Hensley requires the
district court to provide “a concise but clear explanation of
its reasons for the fee award.” 461 U.S. at 437. Hensley
further states that “[w]hen an adjustment is requested on the
basis of either the exceptional or limited nature of the relief
obtained by the plaintiff, the district court should make clear
that it has considered the relationship between the amount of
the fee awarded and the results obtained.” Id. Here, the
district court did just that. It reduced the lodestar by 20%
because of class counsel’s success on only the UCL claim,
citing Hamed v. Macy’s West Stores, Inc.., No. 10-2790 JCS,
2011 WL 5183856, at *7 (N.D. Cal. Oct. 31, 2011). In
Hamed, the district court reduced a fee award by 10%
20 YAMADA V. NOBEL BIOCARE
because the plaintiff had succeeded on only one of five
original claims. Id.As to Defendants’ second argument, the district court
fairly characterized Plaintiffs’ claims as different theories in
pursuit of the same objective. Hensley provides that the hours
spent on unsuccessful claims should be excluded “[w]here
the plaintiff has failed to prevail on a claim that is distinct in
all respects from his successful claims.” 461 U.S. at 440(emphasis added); see Winterrowd v. Am. Gen. Annuity Ins.
Co., 556 F.3d 815, 827 (9th Cir. 2009) (“[W]here a lawsuit
consists of related claims, a plaintiff who has won substantial
relief should not have [her] attorney’s fee reduced simply
because the trial court did not adopt each contention raised.”
(alterations omitted) (quoting Hogar v. Cmty. Dev. Comm’n
of Escondido, 157 Cal. App. 4th 1358, 1369 (2007))). Here,
all of the relief Plaintiffs sought was for those harmed by
Defendants’ dental implants, which relief Plaintiffs received.
Defendants argue that Winterrowd is distinguishable
because the plaintiffs there obtained 100% of the relief
originally sought. This is true but unpersuasive for three
reasons. First, Plaintiffs here filed their complaint when
many of the key documents in discovery were in Defendants’
sole possession. Plaintiffs did not have access to some
documents until after the case’s Rule 26 scheduling
conference. This circumstance is unlike that in Winterrowd,
where the complaint concerned breach of a severance
contract. See 556 F.3d at 818. Plaintiffs here filed their
complaint while somewhat in the dark, while the Winterrowd
plaintiffs filed theirs when aware of both the contract and the
operative facts concerning its breach.
Second, it was easier to determine the amount of recovery
in Winterrowd and indeed the damages were ultimately
calculated to the cent: $288,240.56. Id. The relief here is
YAMADA V. NOBEL BIOCARE 21
difficult to monetize because it includes injunctive relief and
intangible benefits, including the peace of mind that comes
with the enhanced warranty and streamlined claims process
provided by the settlement.
Third, all but one of Plaintiffs’ original claims here were
frustrated by intervening changes in law announced after
Plaintiffs filed the complaint.
Because the district court concisely and clearly explained
its reduction of the lodestar, and because there was sufficient
support for its finding that Plaintiffs’ claims were related to a
common goal, the district court’s discount of the lodestar for
lack of success was not erroneous.
D. Cross-Check of Lodestar
Defendants argue that the district court’s cross-check of
the lodestar was flawed because its valuation of the
settlement was based on an unrealistically high estimated
implant failure rate. Purporting to quote our holding in In re
Bluetooth, Defendants further argue that “the district court
must guard against an unreasonable result by cross-checking
its calculations against a second method.”
We agree that the district court likely overstated its
monetary valuation of the settlement. But where, as here,
classwide benefits are not easily monetized, a cross-check is
entirely discretionary. Defendants’ argument to the contrary
is either mistaken or a deliberate misrepresentation of the
law. In re Bluetooth in fact provides that “even though the
lodestar method may be a perfectly appropriate method of
fee calculation, we have also encouraged courts to guard
against an unreasonable result by cross-checking their
calculations against a second method.” 654 F.3d at 944(emphasis added). California courts agree. See In re
22 YAMADA V. NOBEL BIOCARE
Consumer Privacy Cases, 175 Cal. App. 4th 545, 557 (2009)
(“While the court has discretion to [conduct a cross-check]
where appropriate, it is not required [to do so].”); Ramos v.
Countrywide Home Loans, Inc., 82 Cal. App. 4th 615, 628
(2000); Lealao v. Beneficial Cal., Inc., 82 Cal. App. 4th 19,
49–50 (2000).
CONCLUSION
We VACATE the fee order and REMAND this matter to
the district court for further proceedings. Class counsel will
submit their timesheets to the district court and may propose
that certain information is privileged. The district court will
then determine what, if any, information is privileged. After
the district court makes its privilege determination, class
counsel will then file redacted timesheets that comply with
the district court’s determination. Counsel for Defendants
will then have an opportunity to submit arguments as to the
reasonableness of the submission. Plaintiffs will then have
an opportunity to respond before the district court renders its
decision concerning fees, and Defendants will have an
opportunity to reply.
VACATED AND REMANDED.