Debbie Milliron v. T-Mobile USA Inc

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 09-4033
____________
DEBBIE MILLIRON, individually
and on behalf of all others similarly situated
v.
T-MOBILE USA, INC.
LAW OFFICE OF SCOTT A. BURSOR; FARUQI & FARUQI, LLP;
GILMAN & PASTOR, LLP; MAGER & GOLDSTEIN, LLP,
Appellants
(Pursuant to Rule 12(a), Fed. R. App. Proc.)
____________
No. 09-4034
____________
DEBBIE MILLIRON, individually
and on behalf of all others similarly situated
v.
T-MOBILE USA, INC.
GARY HELLMAN; TAMARA RUIZ;
MARGARET GRIPALDI; MARGARET SCHWARZ,
Appellants
(Pursuant to Rule 12(a), Fed. R. App. Proc.)
____________
No. 09-4035
____________
DEBBIE MILLIRON, individually
and on behalf of all others similarly situated
v.
T-MOBILE USA, INC.
BRAMSON, PLUTZIK, MAHLER & BIRKHAEUSER;
FRANKLIN & FRANKLIN; LAW OFFICES OF ANTHONY A. FERRIGNO;
REICH, RADCLIFFE & KUTTLER; LAW OFFICES OF CARL HILLIARD;
CUNEO, GILBERT & LADUCA; LAW OFFICES OF JOSHUA DAVIS,
Appellants
(Pursuant to Rule 12(a), Fed. R. App. Proc.)
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 2-08-cv-04149)
District Judge: Honorable Jose L. Linares
____________
Submitted Pursuant to Third Circuit LAR 34.1(a)
April 13, 2011
Before: FISHER, JORDAN and COWEN, Circuit Judges.
(Filed: April 14, 2011)
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OPINION OF THE COURT
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FISHER, Circuit Judge.
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Law Office of Scott A. Bursor; Faruqi & Faruqi, LLP; Gilman & Pastor, LLP;
Mager & Goldstein, LLP; Gary Hellman; Tamara Ruiz; Margaret Gripaldi; Margaret
Schwarz; Bramson, Plutzik, Mahler & Birkhaeuser; Franklin & Franklin; Law Offices of
Anthony A. Ferrigno; Reich, Radcliffe & Kuttler; Law Offices of Carl Hilliard; Cuneo,
Gilbert & LaDuca; Law Offices of Joshua Davis (collectively, “Appellants”) appeal from
an order of the District Court granting an award of attorneys’ fees. We will affirm.
I.
We write exclusively for the parties, who are familiar with the factual context and
legal history of this case. Therefore, we will set forth only those facts necessary to our
analysis.
Beginning in 2003, Appellants represented various plaintiffs in several
consolidated class action cases in California against cell phone providers, including T-
Mobile USA, Inc. (“T-Mobile”), AT & T, Verizon, and Sprint. These actions challenged
the providers’ imposition of early-termination fees (“ETFs”) in cell phone contracts,
claiming that the fees violate state consumer protection laws. During the pendency of
these cases, Appellants conducted discovery, deposed witnesses, and opposed T-Mobile’s
preemption challenge. Appellants also opposed a petition filed with the Federal
Communications Commission by a trade association representing T-Mobile and other
providers seeking a declaratory ruling that the Federal Communications Act preempted
plaintiffs’ state law claims. In addition, Appellants obtained a favorable ruling against
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Sprint when the court held that the consumer claims were not preempted by federal law.
The trial against Sprint proceeded, and the court ruled that the ETFs Sprint imposed were
illegal under California law. Thereafter, Verizon settled the case against it for $21
million. Appellants also defeated T-Mobile’s motion to compel arbitration and sought
class certification against T-Mobile. Appellants engaged in settlement negotiations with
T-Mobile, but they were unsuccessful.
Before the class could be certified against T-Mobile in California, Debbie Milliron
filed a class action complaint in the United States District Court for the District of New
Jersey challenging T-Mobile’s use of ETFs. The District Court preliminarily certified the
class and appointed Class Counsel. Thereafter, Class Counsel and T-Mobile agreed to a
nationwide class action settlement of $13.5 million, encompassing the claims against T-
Mobile in California. Class Counsel moved for an award of attorneys’ fees of 33 1/3 %
of the settlement proceeds. Appellants filed motions for their own share of the attorneys’
fees, contending that their efforts in the actions pending in California against T-Mobile
and other providers prompted T-Mobile to settle. Specifically, Appellants argued that
their achievements in the California actions were so significant that they, as opposed to
Class Counsel, deserved 80% of the fees.
The District Court conducted a fairness hearing, certified the class, and approved
the settlement. In doing so, the District Court awarded attorneys’ fees of $4.5 million,
based on the percentage-of-recovery method and also conducted a lodestar crosscheck to
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verify the reasonableness of the fee award. The District Court noted that it could award
fees for work performed prior to the appointment of Class Counsel, and recalled the
contributions of Appellants in the California actions. Ultimately, the District Court
concluded that Class Counsel were entitled to the majority of the fees because they
successfully settled the case, thereby achieving favorable results for the class. Reasoning
that 16% of the class members reside in California, the District Court awarded Appellants
16% of the $4.5 million fee awarded, for a total of $720,000. Appellants filed timely
notices of appeal.1
II.
We review the District Court’s award of attorneys’ fees under an abuse-of-
discretion standard. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 299 (3d Cir. 2005).
An abuse of discretion “can occur if the judge fails to apply the proper legal standard or
to follow proper procedures in making the determination, or bases an award upon
findings of fact that are clearly erroneous.” In re Cendant Corp. PRIDES Litig., 243 F.3d
722, 727 (3d Cir. 2001) (internal quotation marks omitted).
On appeal, Appellants advance two arguments: (1) that the District Court abused
its discretion in allocating the attorneys’ fee award and (2) that the District Court
1
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332(d), and we have
jurisdiction under 28 U.S.C. § 1291.
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incorrectly conducted the lodestar crosscheck in determining that the attorneys’ fee award
was reasonable. We address each argument in turn.
Generally, a district court may rely on lead counsel to distribute attorneys’ fees
among those involved, but we have recognized that the court may take a greater role
when separate counsel requests fees for work performed prior to the appointment of the
lead plaintiff. See, e.g., In re Cendant Corp. Sec. Litig., 404 F.3d 173, 194-95 (3d Cir.
2005). In deciding how to allocate fees, “[w]hat is important is that the district court
evaluate what class counsel actually did and how it benefitted the class.” In re Prudential
Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 342 (3d Cir. 1998).
When awarding fees to non-lead counsel, “[o]nly work that actually confers a benefit on
the class will be compensable.” Cendant, 404 F.3d at 197.
Before the District Court, Appellants argued that their efforts in the California
action were the catalyst for the settlement in the case at hand and that Class Counsel
merely filed a complaint. Appellants assert that the District Court did not properly
evaluate their contributions in comparison with those of Class Counsel in awarding them
16% of the attorneys’ fees. Appellants’ claim is unpersuasive. In a detailed decision, the
District Court recognized that Appellants successfully litigated portions of the California
actions against T-Mobile and other providers, noting that “their successes [in the
California actions] are certainly worth compensating, however, because they directly
benefited the California class of T-Mobile subscribers.” (App. at 49.) Even so, the
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District Court rejected Appellants’ argument that their efforts in separate cases – mostly
against different defendants – would entitle them to the majority of fees in this case
against T-Mobile.
In allocating fees, the District Court thoroughly considered “what counsel actually
did and how it benefitted the class,” Prudential, 148 F.3d at 342, namely, Class
Counsel’s success in bringing suit and negotiating a settlement for the class. The District
Court appropriately credited Class Counsel’s achievement in procuring a favorable
settlement, something Appellants had not done. Appellants’ argument that they logged
more hours and filed more docket entries in the California actions than did Class Counsel
in the case at hand is misplaced. The District Court’s inquiry correctly focused on the
essential consideration, the benefit to the class, not the amount of time expended. See id.The record demonstrates that the District Court properly considered Appellants’ efforts in
the California actions to determine “whether or not the attorneys’ work provided benefits
to the class.” Cendant, 404 F.3d at 197. Having found that Appellants did benefit the
California members of the class, the District Court appropriately exercised its discretion
to award them a fee based on the percentage of class members who presumably
benefitted from their work.2 Because the District Court applied the proper legal standard,
2
While other bases of apportionment could have been suggested, the basis that the
District Court chose was not an abuse of discretion in this instance.
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explained its reasoning in allocating fees, and arrived at a supportable conclusion, it did
not abuse its discretion. See Cendant PRIDES, 243 F.3d at 727.
Next, Appellants assert that the District Court incorrectly conducted the lodestar
crosscheck. In assessing attorneys’ fees, we have approved the use of the percentage-of-
recovery method and the lodestar method. In re AT & T Corp., 455 F.3d 160, 164 (3d
Cir. 2006). “The percentage-of-recovery method applies a certain percentage to the
settlement fund,” while “[t]he lodestar method multiplies the number of hours class
counsel worked on a case by a reasonable hourly billing rate for such services.” Id. The
percentage-of-recovery method is favored in common fund cases, such as the settlement
here. Rite Aid, 396 F.3d at 300. “[W]e have recommended that district courts use the
lodestar method to cross-check the reasonableness of a percentage-of-recovery fee
award.” AT & T, 455 F.3d at 164. “The crosscheck is performed by dividing the
proposed fee award by the lodestar calculation, resulting in a lodestar multiplier.” Id.Although “the lodestar multiplier need not fall within any pre-defined range,” id. at 172(internal quotation marks omitted), we have approved a multiplier of 2.99 in a relatively
simple case. See Cendant PRIDES, 243 F.3d at 742.
After calculating the fee award using the percentage-of-recovery method, the
District Court compared the percentage fee award against the lodestar. The District Court
calculated a lodestar for Class Counsel of $2,034,268.50. In dividing the fee award by
the lodestar, the District Court arrived at a multiplier of 2.21, and found it within the
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range of reasonableness. Alternatively, the District Court also included the lodestar of
Appellants because it had awarded them fees. After adding Appellants’ lodestar, the
District Court arrived at a new lodestar of $5,007,003.25, yielding a multiplier of .9. The
District Court likewise found that this multiplier indicated that the fee award was
reasonable.
Appellants argue that the District Court should have excluded certain amounts
from Class Counsel’s lodestar, and should have conducted the crosscheck for their
lodestar separately. These claims lacks merit. The lodestar crosscheck is intended to
gauge the reasonableness of the attorneys’ fee award as a whole. See AT & T, 455 F.3d at
164; see also Rite Aide, 396 F.3d at 306 (“In performing the lodestar cross-check, the
district courts should apply blended billing rates that approximate the fee structure of all
attorneys who worked on the matter.” (emphasis added)). Indeed, the crosscheck is not
the primary analysis in this type of case and does not entail “mathematical precision []or
bean-counting.” Rite Aide, 396 F.3d at 306. Having properly performed the lodestar
crosscheck and explained the reasonableness of the multipliers, the District Court did not
abuse its discretion.
III.
For the foregoing reasons, we will affirm the order of the District Court.
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