Securities & Exchange Commission v. Sunwest Management, Inc.

FILED
NOT FOR PUBLICATION MAY 15 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SECURITIES AND EXCHANGE No. 11-35788
COMMISSION,
D.C. No. 6:09-cv-06056-HO
Plaintiff,
v. MEMORANDUM*
SUNWEST MANAGEMENT, INC.;
CANYON CREEK DEVELOPMENT,
INC.; CANYON CREEK FINANCIAL,
LLC; JON M. HARDER; DARRYL E.
FISHER; J. WALLACE GUTZLER;
KRISTIN HARDER; ENCORE
INDEMNITY MANAGEMENT LLC;
SENENET LEASING COMPANY; FUSE
ADVERTISING, INC.; KDA
CONSTRUCTION, INC.; CLYDE
HAMSTREET; CLYDE A. HAMSTREET
& ASSOCIATES, LLC,
Defendants - Appellees,
v.
COHEN MILSTEIN SELLERS & TOLL,
PLLC; KIT A. PIERSON; JUSTINE
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
1
FISCHER; HERBERT E. ADELMAN,
Movants - Appellants,
MICHAEL GRASSMUECK,
Receiver.
ROBERT T. DEVANEY; NANCY L. No. 11-35789
DEVANEY; R. DEVANEY’S
CHESTNUT HILL, LLC; N. DE D
VANEY’S CHESTNUT HILL, LLC; R. .C. No. 6:10-cv-06134-HO
DE VANEY NIELSEN COMPLEX, LLC;
N. DE VANEY NIELSEN COMPLEX,
LLC; R. DE VANEY’S VILLAGE AT
LAKE NORMAN, LLC; N. DE
VANEY’S VILLAGE AT LAKE
NORMAN, LLC; MIKE DUNN; MRD
PROPERTIES, LLC; DUNN’S
WATERFORD, LLC; JOHN E.
SEMASKO; MARY JANE SEMASKO;
SEMASKO’S ENGLEWOOD HEIGHTS,
LLC; SEMASKO’S CHESTNUT HILL,
LLC; SEMASKO’S CORINTHIANS,
LLC; SEMASKO’S CARNEGIE
VILLAGE, LLC,
Plaintiffs,
v.
DAVIS WRIGHT TREMAINE LLP, a
Washington limited liability partnership,
2
Defendant - Appellee,
v.
COHEN MILSTEIN SELLERS & TOLL,
PLLC; KIT A. PIERSON; JUSTINE
FISCHER; HERBERT E. ADELMAN,
Movants - Appellants,
MICHAEL GRASSMUECK,
Receiver.
Appeal from the United States District Court
for the District of Oregon
Michael R. Hogan, District Judge, Presiding
Submitted May 8, 2013**
Portland, Oregon
Before: GOODWIN, REINHARDT, and HURWITZ, Circuit Judges.
Cohen, Milstein, Sellers & Toll, PLLC, Kit A. Pierson, Herbert E. Adelman,
and Justine Fischer (collectively “counsel” or “movants-appellants”) appeal their
award of attorney’s fees in a class action settlement of a securities fraud case
against the law firm of Davis Wright Tremaine LLP (“DWT”). Counsel were one
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
3
set of lawyers among many representing investors before the district court. This
appeal was unopposed until April 24, 2013, when the Receiver moved for a
continuance and to file an answering brief. Because we remand to the district court
to reconsider the award, we deny the Receiver’s tardy request. Our decision shall
not, however, preclude the district judge from determining the extent to which the
Receiver may participate in the remand proceedings.
We would normally review a district court’s award of attorney’s fees and
expenses for abuse of discretion. Lobatz v. U.S. W. Cellular of Cal., Inc., 222 F.3d
1142, 1148-49 (9th Cir. 2000). We cannot do so here, however, because the
district court did not provide sufficient analysis or calculations supporting its
decision to award attorney’s fees in the amount of $231,000 out of a claimed
lodestar of $1,009,22.50. District courts must “show their work” in fee cases.
E.g., Padgett v. Loventhal, 706 F.3d 1205, 1208 (9th Cir. 2013). The district court
must “explain how it arrived at its determination with sufficient specificity to
permit an appellate court to determine whether the district court abused its
discretion in the way the analysis was undertaken.” McCown v. City of Fontana,
565 F.3d 1097, 1102 (9th Cir. 2009).
On the record before us, we cannot determine whether the district court
abused its discretion. On three occasions, the district court suggested reasons that
4
might justify awarding counsel a reduced fee. First, on March 22, 2011, the district
court ordered counsel to show cause why fees should not be reduced “for paralegal
work performed in excess of $100/hour” and for work “having a marginal
contribution to the estate.” Second, during the telephone hearing on the order to
show cause, the district court told counsel:
“I’ve been over your billing in detail. Frankly, some of the concerns I
have about it, it appears that a lot of time was spent in efforts, frankly,
to disassociate yourself with proceeding under the receiver in this case,
to split it off.”
Finally, in its September 26, 2011 order on counsel’s expenses (decided after the
order awarding attorney’s fees), the district court reasoned:
“These actions were not typical class action litigation. Plaintiffs’
counsel’s role was not instrumental in developing the class action.
Rather the court proactively created the trust and through settlement
resolved the issues rather than through protracted motions and
procedural practice. Given the abbreviated litigation through settlement
procedures, the requested fee amounts are unreasonable.”
5
Although these statements gave some indication of the district court’s motivation,
they do not constitute sufficient explanation for appellate review.1 We cannot
simply guess as to the calculations the district court engaged in in order to reach
the ordered amount of $231,000.
Thus, we remand to the district court to reconsider attorney’s fees. The
lodestar figure is a presumptively reasonable amount of attorney’s fees. Perdue v.
Kenny A. ex rel. Winn, 559 U.S. 542 (2010). If the district court departs from this
amount it should explain its decision in light of the relevant factors:
(1) the time and labor required, (2) the novelty and difficulty of the
questions involved, (3) the skill requisite to perform the legal service
properly, (4) the preclusion of other employment by the attorney due to
acceptance of the case, (5) the customary fee, (6) whether the fee is fixed
or contingent, (7) time limitations imposed by the client or the
circumstances, (8) the amount involved and the results obtained, (9) the
experience, reputation, and ability of the attorneys, (10) the
‘undesirability’ of the case, (11) the nature and length of the professional
relationship with the client, and (12) awards in similar cases.
1
The movants-appellants suggest that the district court may have
incorrectly believed that they did not contribute to the ultimate settlement. They
contend that they represented the interests of the class and contributed to the
ultimate result by (1) determining that class relief was available and filing a class
action that tolled the statue of limitations; (2) negotiating with the Receiver to
assure maximum recovery for the class; and (3) negotiating and preparing the class
settlement filings. We need not resolve that issue here.
6
Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975). More than just
reasons, we require the district court to explain how—i.e., what calculations it
employed—it arrived at the award. Padgett, 706 F.3d at 1208.
Regarding the district court’s reduced award of expenses, we conclude that it
abused its discretion by denying certain expenses. The district court stated that
“expenses for copying, fees for computer assisted legal research and PACER,
internal long distance charges, etc.” were “more appropriately considered overhead
expenses subsumed in the attorney fee hourly rates charged.” The district court
thus correctly identified a principle governing the award of expenses—whether
those expenses are normally charged to paying clients. Harris v. Marhoefer, 24
F.3d 16, 19 (9th Cir. 1994). Nonetheless, the district court awarded these sorts of
expenses to other counsel for plaintiffs in full while denying them to movants-
appellants.
CONCLUSION
Accordingly, we REVERSE the district court’s fee award and REMAND
with instructions to reconsider counsel’s fees and give a detailed explanation of the
calculation upon which it bases its award. We REVERSE the district court’s
denial of counsel’s expenses and direct the district court to AWARD those
expenses as appropriate. Because this court granted counsel’s partial stay of the
7
distribution of funds from the litigation trust pending this appeal, we vacate the
stay so that the district court may award the expenses.
REVERSED and REMANDED.
8