Health Republic Insurance Company v. United States

Case: 22-1018 Document: 51 Page: 1 Filed: 01/31/2023
United States Court of Appeals
for the Federal Circuit
______________________
HEALTH REPUBLIC INSURANCE COMPANY,
Plaintiff-Appellee
KAISER FOUNDATION HEALTH PLAN INC., KAI-
SER FOUNDATION HEALTH PLAN OF GEORGIA,
KAISER FOUNDATION HEALTH PLAN OF THE
MID-ATLANTIC STATES, INC., KAISER FOUNDA-
TION HEALTH PLAN INC. OF COLO., KAISER
FOUNDATION HEALTHPLAN OF THE NW, GROUP
HEALTH COOPERATIVE, HARKEN HEALTH IN-
SURANCE COMPANY, HEALTH PLAN OF NE-
VADA, INC., OXFORD HEALTH PLANS (NJ), INC.,
ROCKY MOUNTAIN HEALTH MAINTENANCE OR-
GANIZATION, INCORPORATED, UNITEDH-
EALTHCARE BENEFITS PLAN OF CALIFORNIA,
UNITEDHEALTHCARE COMMUNITY PLAN, INC.,
UNITEDHEALTHCARE INSURANCE COMPANY,
UNITEDHEALTHCARE LIFE INSURANCE COM-
PANY, UNITEDHEALTHCARE OF ALABAMA, INC.,
UNITEDHEALTHCARE OF COLORADO, INC.,
UNITEDHEALTHCARE OF FLORIDA, INC., UNIT-
EDHEALTHCARE OF GEORGIA, INC., UNITEDH-
EALTHCARE OF KENTUCKY, LTD.,
UNITEDHEALTHCARE OF LOUISIANA, INC.,
UNITEDHEALTHCARE OF MISSISSIPPI, INC.,
UNITEDHEALTHCARE OF NEW ENGLAND, INC.,
UNITEDHEALTHCARE OF NEW YORK, INC.,
UNITEDHEALTHCARE OF NORTH CAROLINA,
INC., UNITEDHEALTHCARE OF OKLAHOMA,
INC., UNITEDHEALTHCARE OF PENNSYLVANIA,
INC., UNITEDHEALTHCARE OF THE MID-ATLAN-
TIC, INC., UNITEDHEALTHCARE OF THE
Case: 22-1018 Document: 51 Page: 2 Filed: 01/31/2023
2 HEALTH REPUBLIC INSURANCE COMPANY v. US
MIDLANDS, INC., UNITEDHEALTHCARE OF THE
MIDWEST, INC., UNITEDHEALTHCARE OF UTAH,
INC., UNITEDHEALTHCARE OF WASHINGTON,
INC., UNITEDHEALTHCARE OF OHIO, INC.,
ROCKY MOUNTAIN HEALTHCARE OPTIONS,
INC., ALL SAVERS INSURANCE COMPANY, UNIT-
EDHEALTHCARE INSURANCE COMPANY INC.,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant
______________________
2022-1018
______________________
Appeal from the United States Court of Federal Claims
in No. 1:16-cv-00259-KCD, Judge Kathryn C. Davis.
-------------------------------------------------
COMMON GROUND HEALTHCARE COOPERA-
TIVE, ON BEHALF OF ITSELF AND ALL OTHERS
SIMILARLY SITUATED,
Plaintiff-Appellee
KAISER FOUNDATION HEALTH PLAN INC., KAI-
SER FOUNDATION HEALTH PLAN OF GEORGIA,
KAISER FOUNDATION HEALTH PLAN OF THE
MID-ATLANTIC STATES, INC., KAISER FOUNDA-
TION HEALTH PLAN INC. OF COLO., KAISER
FOUNDATION HEALTHPLAN OF THE NW, GROUP
HEALTH COOPERATIVE, HARKEN HEALTH IN-
SURANCE COMPANY, HEALTH PLAN OF NE-
VADA, INC., OXFORD HEALTH PLANS (NJ), INC.,
ROCKY MOUNTAIN HEALTH MAINTENANCE
Case: 22-1018 Document: 51 Page: 3 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 3
ORGANIZATION, INCORPORATED, UNITEDH-
EALTHCARE BENEFITS PLAN OF CALIFORNIA,
UNITEDHEALTHCARE COMMUNITY PLAN, INC.,
UNITEDHEALTHCARE INSURANCE COMPANY,
UNITEDHEALTHCARE LIFE INSURANCE COM-
PANY, UNITEDHEALTHCARE OF ALABAMA, INC.,
UNITEDHEALTHCARE OF COLORADO, INC.,
UNITEDHEALTHCARE OF FLORIDA, INC., UNIT-
EDHEALTHCARE OF GEORGIA, INC., UNITEDH-
EALTHCARE OF KENTUCKY, LTD.,
UNITEDHEALTHCARE OF LOUISIANA, INC.,
UNITEDHEALTHCARE OF MISSISSIPPI, INC.,
UNITEDHEALTHCARE OF NEW ENGLAND, INC.,
UNITEDHEALTHCARE OF NEW YORK, INC.,
UNITEDHEALTHCARE OF NORTH CAROLINA,
INC., UNITEDHEALTHCARE OF OKLAHOMA,
INC., UNITEDHEALTHCARE OF PENNSYLVANIA,
INC., UNITEDHEALTHCARE OF THE MID-ATLAN-
TIC, INC., UNITEDHEALTHCARE OF THE MID-
LANDS, INC., UNITEDHEALTHCARE OF THE
MIDWEST, INC., UNITEDHEALTHCARE OF UTAH,
INC., UNITEDHEALTHCARE OF WASHINGTON,
INC., UNITEDHEALTHCARE OF OHIO, INC.,
ROCKY MOUNTAIN HEALTHCARE OPTIONS,
INC., ALL SAVERS INSURANCE COMPANY, UNIT-
EDHEALTHCARE INSURANCE COMPANY INC.,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant
______________________
2022-1019
______________________
Case: 22-1018 Document: 51 Page: 4 Filed: 01/31/2023
4 HEALTH REPUBLIC INSURANCE COMPANY v. US
Appeal from the United States Court of Federal Claims
in No. 1:17-cv-00877-KCD, Judge Kathryn C. Davis.
______________________
Decided: January 31, 2023
______________________
DEREK L. SHAFFER, Quinn Emanuel Urquhart & Sulli-
van, LLP, Washington, DC, argued for plaintiffs-appellees.
Also represented by DAVID COOPER, New York, NY; J. D.
HORTON, ADAM WOLFSON, Los Angeles, CA; STEPHEN A.
SWEDLOW, Chicago, IL.
MOHAMMAD KESHAVARZI, Sheppard Mullin Richter &
Hampton LLP, Los Angeles, CA, argued for plaintiffs-ap-
pellants. Also represented by JOHN BURNS, MATTHEW G.
HALGREN, San Diego, CA.
______________________
Before MOORE, Chief Judge, TARANTO and CHEN, Circuit
Judges.
TARANTO, Circuit Judge.
These appeals present a challenge to awards of attor-
ney’s fees to class counsel taken out of the classes’ recover-
ies in successful class actions against the United States
based on the Patient Protection and Affordable Care Act,
Pub. L. No. 111-148, 124 Stat. 119 (2010), and the Health
Care and Education Reconciliation Act, Pub. L. No. 111-
152, 124 Stat. 1029 (2010) (collectively, the ACA). We va-
cate and remand for reconsideration of the fee awards.
In the ACA, Congress created a three-year Risk Corri-
dors program to accompany the creation of new health-in-
surance marketplaces, which presented uncertain risks for
participating health-insurance companies. To encourage
participation, Congress provided, among other things, that
qualified health-plan issuers (QHP issuers) that offered
Case: 22-1018 Document: 51 Page: 5 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 5
their products in the new marketplaces would be entitled
to payments from the Secretary of the Department of
Health and Human Services (HHS) if they suffered suffi-
cient losses. 42 U.S.C. § 18062(b). When the government
failed to make the payments required by the statute, many
QHP issuers sued the United States in the Court of Federal
Claims (Claims Court) seeking damages under the Tucker
Act, 28 U.S.C. § 1491(a)(1).
Among the suits were two class actions now before us,
Health Republic Insurance Co. v. United States and Com-
mon Ground Healthcare Cooperative v. United States, in
which the law firm of Quinn Emanuel Urquhart & Sulli-
van, LLP (Quinn Emanuel) was appointed lead counsel for
classes of QHP issuers seeking payment of the past-due
amounts. Class Certification Order, Health Republic, No.
16-cv-00259 (Fed. Cl. Jan. 3, 2017); Class Certification Or-
der, Common Ground, No. 17-cv-00877 (Fed. Cl. Jan. 8,
2018). In the opt-in notices sent to potential class members
with court approval, Quinn Emanuel represented that it
would seek attorney’s fees to come out of any recovery, that
it would seek no more than 5% of any judgment or settle-
ment obtained, and that the Claims Court would determine
the exact amount based on, among other things, how many
issuers participated, the amount at issue in the case, and a
so-called “lodestar cross-check” (based on the hours actu-
ally worked). The Health Republic and Common Ground
cases were stayed on the merits pending the resolution of
appeals in other cases involving materially identical
claims. During the stay, the Supreme Court, in other
cases, ruled against the government on the central issue in
the various cases, holding that QHP issuers were entitled
to collect ACA-promised Risk Corridors payments through
Tucker Act actions. Maine Community Health Options v.
United States, 140 S. Ct. 1308, 1331 (2020).
In light of Maine Community, the Claims Court en-
tered money judgments in favor of the Health Republic and
Common Ground classes, in amounts adding to about $3.7
Case: 22-1018 Document: 51 Page: 6 Filed: 01/31/2023
6 HEALTH REPUBLIC INSURANCE COMPANY v. US
billion. See Health Republic Insurance Co. v. United States,
156 Fed. Cl. 67, 71 (2021). The Claims Court then awarded
Quinn Emanuel 5% of each of the common funds recovered
in Health Republic and Common Ground, rejecting various
objections of thirty-four class members (Objectors), the to-
tal fee amounting to about $185 million, to be taken out of
the class members’ recovery. Id. at 84. The Objectors now
appeal, contending that the attorney’s fee award (the two
awards considered as one) was unreasonable. Because the
Claims Court’s analysis was inconsistent with the terms of
the class opt-in notices and did not adequately justify the
extraordinarily high award, we vacate the award and re-
mand for a redetermination of what fees should be
awarded.
I
A
In the ACA, Congress provided for the creation of
online marketplaces through which issuers of health-bene-
fits plans could sell their plans. 42 U.S.C. § 18031(b)(1).
As an incentive for issuers to participate in the market-
places, whose novelty came with substantial uncertainty,
the ACA established the Risk Corridors program, among
other risk-mitigation measures, to “defray the carriers’
costs and cabin their risks” during the first three years of
operation of the marketplaces (2014, 2015, and 2016).
Maine Community, 140 S. Ct. at 1315–16. Under the Risk
Corridors program, QHP issuers participating in the online
marketplaces “with profits above a certain threshold would
pay” amounts to the HHS Secretary, while QHP issuers
participating in the online marketplaces “with losses below
that threshold would receive payments from” the Secre-
tary. Id. at 1316; see 42 U.S.C. § 18062(b).
During the Risk Corridors program’s three-year exist-
ence, Congress passed appropriations bills that included
riders barring use of the appropriated funds to make the
Risk Corridors payments to the unprofitable QHP issuers.
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HEALTH REPUBLIC INSURANCE COMPANY v. US 7
See Maine Community, 140 S. Ct. at 1317. Each year,
moreover, the money collected from the profitable QHP is-
suers was insufficient to cover the ACA-required payments
to the loss-incurring QHP issuers. Id. Because of the ap-
propriations riders, the government did not pay what the
ACA required. Id.QHP issuers that were owed government payments
filed several similar actions against the United States un-
der the Tucker Act, 28 U.S.C. § 1491(a), seeking an award
of the overdue amounts. The first of the actions was filed
by Quinn Emanuel on February 24, 2016, on behalf of
Health Republic Insurance Company (Health Republic)
and a putative class of issuers. Health Republic, 156 Fed.
Cl. at 71. The government moved to dismiss the Health
Republic complaint on June 24, 2016, asserting lack of sub-
ject-matter jurisdiction, but the Claims Court denied the
motion on January 10, 2017. Id. at 72.
One week earlier, on January 3, 2017, the Claims
Court had certified the proposed opt-in class in Health Re-
public and appointed Quinn Emanuel as lead class counsel
and Health Republic as class representative, and on Feb-
ruary 24, 2017, the Claims Court approved Quinn Eman-
uel’s proposal for notice to the potential class members. Id.
On March 15, 2017, Quinn Emanuel sent a notice stating
that, if a recovery resulted, it would seek an attorney’s fee
award that would be deducted from any recovery by the
class, but it did not identify how much it would seek,
whether by indicating a percentage of recovery or other-
wise. Id.; J.A. 696; see J.A. 1389 (stating date of that no-
tice). The opt-in deadline was May 12, 2017. J.A. 696.
Almost immediately after the notice was sent, Quinn
Emanuel, based on concerns that some potential class
members misunderstood the possible amount of requested
fees, sought and obtained the Claims Court’s permission to
distribute, and it did distribute, a supplemental class no-
tice, Health Republic, 156 Fed. Cl. at 72, which added the
following:
Case: 22-1018 Document: 51 Page: 8 Filed: 01/31/2023
8 HEALTH REPUBLIC INSURANCE COMPANY v. US
Class Counsel [Quinn Emanuel] represents that it
will request no more than 5% of any judgment or
settlement obtained for the QHP Issuer Class. The
fee may be substantially less than 5% depending
upon the level of class participation represented by
the final membership of the QHP Issuer Class. In
any event, the exact percentage of Class Counsel’s
fees will be determined by the Court subject to,
among other things, the amount at issue in the case
and what is called a “lodestar cross-check” (i.e., a
limitation on class counsel fees based on the num-
ber of hours actually worked on the case). See, e.g.,
Geneva Rock Products, Inc. v. United States, 119
Fed. Cl. 581, 595–96 (2015); Loving v. Sec’y of
Health and Human Servs., 2016 WL 4098722, at *4
(Fed. Cl. Spec. Mstr. July 7, 2016).
Unopposed Motion to Supplement the Class Notice, Health
Republic, No. 16-cv-00259 (Mar. 24, 2017) (emphasis in
original), as modified by Order Approving the Unopposed
Motion to Supplement the Class Notice, Health Republic,
No. 16-cv-00259 (Mar. 27, 2017). Overall, 153 QHP issuers
opted into the Health Republic class. Health Republic, 156
Fed. Cl. at 72.
On March 3, 2017, Health Republic had moved for sum-
mary judgment, and the government cross-moved for sum-
mary judgment on April 12, 2017. Id. On July 11, 2017,
the Claims Court stayed proceedings pending the resolu-
tion of already-pending appeals in other Risk Corridors
cases, in which Quinn Emanuel was not counsel, that
raised identical legal issues.
B
Quinn Emanuel filed a separate class action on behalf
of Common Ground Healthcare Cooperative (Common
Ground) and a putative class, raising the same claims, and
that case proceeded on materially the same course as did
the Health Republic case, with Quinn Emanuel as class
Case: 22-1018 Document: 51 Page: 9 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 9
counsel for a certified opt-in class. See id. at 72–73. The
notice sent to potential members in the Common Ground
class was identical in relevant part to the supplemental no-
tice sent in Health Republic. Id. at 73. Overall, 130 QHP
issuers opted into the Common Ground class. Id. at 73.
C
Both the Health Republic and Common Ground actions
remained stayed until the Supreme Court decided the con-
solidated set of cases covered by the Maine Community
opinion. In one of those cases, the Claims Court had ruled
for the QHP issuer, but on appeal our court ruled for the
government in all the cases, on a single ground: While
agreeing that the ACA, considered on its own, created an
obligation for which the Tucker Act remedy was available,
we held that the appropriations riders overrode that rem-
edy. See Maine Community, 140 S. Ct. at 1318. The Su-
preme Court disagreed with us about the effect of the
riders, id. at 1323–27, and held that the Tucker Act was
available for the loss-incurring QHP issuers to obtain dam-
ages reflecting the overdue ACA-required payments, id. at
1319–23, 1327–31. The Court concluded that “the tempo-
rary Risk Corridors program . . . created a rare money-
mandating obligation” and that the qualifying unprofitable
QHP issuers were entitled “to collect payment” of all re-
quired but unpaid Risk Corridors amounts through dam-
ages actions in the Claims Court. Id. at 1331.
In light of Maine Community, the Claims Court en-
tered Rule 54(b) judgments in favor of the Health Republic
and Common Ground classes, awarding both classes the to-
tality of their unpaid Risk Corridors payments. See Health
Republic, 156 Fed. Cl. at 73–74. The Health Republic class
recovered approximately $1.9 billion, and the Common
Ground class recovered approximately $1.8 billion. Id. at
74.
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10 HEALTH REPUBLIC INSURANCE COMPANY v. US
D
After the Claims Court entered judgments in favor of
the Health Republic and Common Ground classes, Quinn
Emanuel moved for attorney’s fees in both cases, request-
ing 5%–that is, about $185 million—of the $3.7 billion com-
mon-fund recovery. Health Republic, 156 Fed. Cl. at 74.
Quinn Emanuel stated in a declaration that its attorneys
worked “almost 10,000 hours” on the two cases, “at a
blended hourly rate of approximately $1033 across part-
ners and associates,” with support staff adding more than
400 hours “at an average rate of approximately $325 per
hour.” J.A. 1792. The Objectors opposed the request for
the $185 million award, arguing that the attorney’s fee
award should be $8.828 million (0.22%) and certainly no
more than $20 million (0.54%). The Objectors also con-
tended that the number of hours Quinn Emanuel claimed
to have worked on the case should be reduced, noting the
stay of the litigation for years and asserting the insuffi-
ciency of Quinn Emanuel’s supporting declaration. Health
Republic, 156 Fed. Cl. at 74.
Rule 23 of the Rules of the Court of Federal Claims
(like Federal Rule of Civil Procedure 23) authorizes the
court to “award reasonable attorney’s fees and nontaxable
costs that are authorized by law or by the parties’ agree-
ment” in a certified class action. RCFC 23(h); see Fed. R.
Civ. P. 23(h) (identical). Appropriately borrowing from
case law under Fed. R. Civ. P. 23, see Progressive Indus-
tries, Inc. v. United States, 888 F.3d 1248, 1253 n.4 (Fed.
Cir. 2018) (“[T]he precedent interpreting the Federal Rules
of Civil Procedure applies with equal force to the compara-
ble Rules of the Court of Federal Claims.”), the parties be-
fore us recognize the existence of two common methods for
determining what fee to award, under the reasonableness
standard, in a case like this, in which a common fund is
recovered. One is a percentage-of-the-fund method,
through which “a reasonable fee is based on a percentage
of the fund bestowed on the class.” Blum v. Stenson, 465
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HEALTH REPUBLIC INSURANCE COMPANY v. US 11
U.S. 886, 900 n.16 (1984). The second is the lodestar
method (used generally outside the common-fund context),
through which “the court calculates . . . the product of rea-
sonable hours times a reasonable rate,” Haggart v. Wood-
ley, 809 F.3d 1336, 1355 (Fed. Cir. 2016) (internal
quotations omitted) (quoting City of Burlington v. Dague,
505 U.S. 557, 559–60 (1992)), and then adjusts that “lode-
star” result, if warranted, “on the basis of such factors as
the risk involved and the length of the proceedings,” Staton
v. Boeing Co., 327 F.3d 938, 968 (9th Cir. 2003). We have
recognized that the Claims Court has discretion to decide
what method to use. Haggart, 809 F.3d at 1355.
To determine the attorney’s fee to award in the Health
Republic and Common Ground actions, the Claims Court
elected to use the percentage-of-the-fund method. Health
Republic, 156 Fed. Cl. at 75. We have not enumerated
what facts must be considered when this method is used,
but several Claims Court decisions have used a multi-fac-
tor test approach, under which the court considers
(1) the quality of counsel; (2) the complexity and
duration of the litigation; (3) the risk of nonrecov-
ery; (4) the fee that likely would have been negoti-
ated between private parties in similar cases; (5)
any class members’ objections to the settlement
terms or fees requested by class counsel; (6) the
percentage applied in other class actions; and (7)
the size of the award.
Moore v. United States, 63 Fed. Cl. 781, 787 (2005) (citing
Manual for Complex Litigation § 14.121 (4th ed. 2004)); see
also Kane County v. United States, 145 Fed. Cl. 15, 18
(2019); Mercier v. United States, 156 Fed. Cl. 580, 591
(2021); Health Republic, 156 Fed. Cl. at 74. Guided by the
seven Moore factors, the Claims Court in the present cases
rejected the Objectors’ challenges and approved the 5%
award requested by Quinn Emanuel. Health Republic, 156
Fed. Cl. at 77–83.
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12 HEALTH REPUBLIC INSURANCE COMPANY v. US
The Objectors had argued for use of a “lodestar cross-
check” as part of the percentage-of-the-fund approach,
which, they urged, would show that a $185 million (5%) fee
would be much too large. The name reflects an approach
taken in many judicial decisions, under which the reason-
ableness of a potential percentage-of-the-fund fee is
checked by “dividing the proposed fee award by the lode-
star calculation, resulting in a lodestar multiplier,” In re
AT & T Corp., 455 F.3d 160, 164 (3d Cir. 2006), and when
this implicit multiplier “is too great, the court should re-
consider its calculation under the percentage-of-recovery
method, with an eye toward reducing the award,” In re Rite
Aid Corp. Securities Litigation, 396 F.3d 294, 306 (3d Cir.
2005). In this case, the $185 million fee would be 18 to 19
times the product of Quinn Emanuel’s asserted hours and
asserted rates. Health Republic, 156 Fed. Cl. at 82. De-
spite that very high implicit multiplier, the Claims Court
stated that it need not perform a lodestar cross-check, then
added: “[E]ven if the Court applied the lodestar cross-
check, a multiplier of 18–19 would, at least, not be outside
the realm of reasonableness.” Id.
The Claims Court entered final judgment in both the
Health Republic and Common Ground actions on Septem-
ber 17, 2021, awarding 5% of the respective common funds
as attorney’s fees. The Objectors timely appealed on Octo-
ber 1, 2021. We have jurisdiction under 28 U.S.C.
§ 1295(a)(3).
II
We review an award of attorney’s fees for an abuse of
discretion. Hall v. Secretary of Health & Human Services,
640 F.3d 1351, 1356 (Fed. Cir. 2011). A court abuses its
discretion when it makes “a clear error of judgment in
weighing relevant factors or in basing its decision on an er-
ror of law or on clearly erroneous factual findings.” Bayer
CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302,
1306 (Fed. Cir. 2017) (quoting Mentor Graphics Corp. v.
Case: 22-1018 Document: 51 Page: 13 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 13
Quickturn Design Systems, Inc., 150 F.3d 1374, 1377 (Fed.
Cir. 1998)). We conclude that the Claims Court abused its
discretion in its fee award for several reasons, mostly but
not exclusively limited to the court’s discussion of a lode-
star crosscheck.
A
The Claims Court concluded that it was not necessary
to perform a lodestar cross-check in this case. That conclu-
sion, we hold, was legal error.
It is a sufficient reason for us to so hold that in this case
the court-approved notices sent to potential class members,
for use by potential members in deciding to whether to opt
into the classes, expressly guaranteed use of a lodestar
cross-check by the Claims Court in determining an attor-
ney’s fee award. See supra p. 8. Quinn Emanuel cites ju-
dicial decisions from other circuits reciting that a trial
court need not always subject a potential percentage-of-
the-fund fee award to a lodestar cross-check. See, e.g., Keil
v. Lopez, 862 F.3d 685, 701 (8th Cir. 2017) (“Although not
required to do so, the court verified the reasonableness of
its award by cross-checking it against the lodestar
method.”); Appellees’ Br. at 36 n.6. But none of the cited
decisions recite the existence of a class notice like the ones
distributed here and nevertheless approve dispensing with
a lodestar cross-check, much less when, as in this case, no
change of circumstances or other basis has been advanced
for disregarding the guarantee. We conclude that it is an
abuse of discretion to dispense with a lodestar cross-check
in these circumstances.
As the Claims Court recognized, the court-approved
guarantee of a judicial lodestar cross-check was part of the
“deal” offered to potential class members and accepted by
what we may assume to be all issuers that chose to join the
classes. Health Republic, 156 Fed. Cl. at 79; id. (endorsing
characterization, in another case, that the act of “opting
into the class . . . effectively accepted the offer of
Case: 22-1018 Document: 51 Page: 14 Filed: 01/31/2023
14 HEALTH REPUBLIC INSURANCE COMPANY v. US
representation” by the named plaintiffs and class coun-
sel). 1 That characterization properly reflects a well-recog-
nized legal constraint applicable in a class action:
Assurances about the future course of the litigation, when
stated in a court-approved class notice like the ones here,
must generally be respected. See In re Diet Drugs, 369 F.3d
293, 298 (3d Cir. 2004) (concluding that the trial court must
manage the actions of class members in a manner “con-
sistent with fair class notice” by abiding by “the terms of
the . . . class notice”); id. at 318 (“But the Court’s power has
to be exercised consistent with the terms of the notice . . .
on which potential class members relied at the outset of the
process.”); City of Detroit v. Grinnell Corp., 495 F.2d 448,
472–74 (2d Cir. 1974) (concluding that the district court
abused its discretion by acting “[c]ontrary to the terms” of
the class notice’s assurances regarding the administration
of a class action), abrogated in part on other grounds by
Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d
Cir. 2000); cf. In re Chicken Antitrust Litigation, 810 F.2d
1017, 1019–20 (11th Cir. 1987) (recognizing principle but
finding no violation of the notice).
We see no basis for a departure from that principle
here. The class notice in each case before us unequivocally
1 All issuers that opted into the Common Ground class
did so after the sole notice in that case. In the Health Re-
public class, an initial notice was superseded, within ten
days, by the notice quoted above (identical to the Common
Ground notice), and the deadline for opting into the class
was still at least six weeks away. No argument has been
made to us to give distinctive treatment to class members
that opted in between the two notices in Health Republic
(as such members seemingly could have rescinded initial
opt-ins, before the deadline, had there been no modifica-
tion). We therefore treat the deal as applying to all persons
that joined the class.
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HEALTH REPUBLIC INSURANCE COMPANY v. US 15
stated that a lodestar cross-check would be conducted by
the Claims Court in its determination of a reasonable at-
torney’s fee. In each case, developments in the litigation
subsequent to the notice and the choices to join the class
did not make the process of a cross-check no longer mate-
rial to a proper adjudication of how much money would be
subtracted from the class recovery to pay counsel. In these
circumstances, the law required a lodestar cross-check,
contrary to the Claims Court’s conclusion. And because
each class-action notice referred simply to a “lodestar cross-
check,” what was promised and therefore required was ap-
plication of the scrutiny and accompanying standards gen-
erally bearing that name in attorney’s-fee case law. 2
2 Because of what the class notices promised, we need
not decide whether a lodestar cross-check would be re-
quired here had there been no class notices requiring it. It
is evident, however, that the policies that govern a court’s
determination of a “reasonable” percentage-of-the-fund at-
torney’s fee under Rule 23(h), noted infra, might well call
for a lodestar cross-check as part of the inquiry at least as
a general matter. See Vizcaino v. Microsoft Corp., 290 F.3d
1043, 1050 (9th Cir. 2002) (“Calculation of the lodestar,
which measures the lawyers’ investment of time in the lit-
igation, provides a check on the reasonableness of the per-
centage award. Where such investment is minimal, as in
the case of an early [resolution], the lodestar calculation
may convince a court that a lower percentage is reasonable.
Similarly, the lodestar calculation can be helpful in sug-
gesting a higher percentage when litigation has been pro-
tracted. Thus, while the primary basis of the fee award
remains the percentage method, the lodestar may provide
a useful perspective on the reasonableness of a given per-
centage award.”); Goldberger, 209 F.3d at 50 (“[T]he lode-
star remains useful as a baseline even if the percentage
method is eventually chosen. Indeed, we encourage the
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16 HEALTH REPUBLIC INSURANCE COMPANY v. US
B
The Claims Court in this case did not perform the re-
quired lodestar cross-check. The court did note what the
implicit multiplier would be for the $185 million award if
the hours and rates asserted by Quinn Emanuel were ac-
cepted, and it stated, citing three judicial decisions in sup-
port, that “even if the Court applied the lodestar cross-
check, a multiplier of 18–19 would, at least, not be outside
the realm of reasonableness.” Health Republic, 156 Fed.
Cl. at 82. That analysis does not suffice even apart from
the lack of scrutiny of the lodestar figure itself.
1
The Claims Court did not give required consideration
or weight to pertinent principles and to consensus norms
based on those principles. Two principles of central im-
portance here were articulated and implicitly endorsed by
the Supreme Court in a non-class-action case discussing
fees to be paid from a recovery even when agreements be-
tween counsel and plaintiffs set a presumptive fixed per-
centage: “If the benefits are large in comparison to the
amount of time counsel spent on the case, a downward ad-
justment is . . . in order”; and “[a] court should disallow
windfalls for lawyers.” Gisbrecht v. Barnhart, 535 U.S.
789, 808 (2002) (internal quotation marks and citation
omitted). Those principles are reflected in various circuit-
court decisions in the class-action setting. See, e.g., In re
Bluetooth Headset Products Liability Litigation, 654 F.3d
practice of requiring documentation of hours as a ‘cross
check’ on the reasonableness of the requested percentage.”
(quoting In re General Motors Corp. Pick-Up Truck Fuel
Tank Products Liability Litigation, 55 F.3d 768, 820 (3d
Cir. 1995))). No concrete, persuasive arguments to the con-
trary have been presented to us. But we need not and do
not decide the question.
Case: 22-1018 Document: 51 Page: 17 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 17
935, 942 (9th Cir. 2011) (“Thus, for example, where award-
ing 25% of a ‘megafund’ would yield windfall profits for
class counsel in light of the hours spent on the case, courts
should adjust the benchmark percentage . . . .”); Walmart
Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 122 (2d Cir.
2005) (“Recognizing that economies of scale could cause
windfalls in common fund cases, courts have traditionally
awarded fees for common fund cases in the lower range of
what is reasonable.”); In re Cendant Corp. PRIDES Litiga-
tion, 243 F.3d 722, 736 (3d Cir. 2001) (“[A]bsent unusual
circumstances, the percentage will decrease as the size of
the fund increases.”); In re Prudential Insurance Co. Amer-
ica Sales Practice Litigation Agent Actions, 148 F.3d 283,
339 (3d Cir. 1998)) (“[I]n many instances the increase in
recovery is merely a factor of the size of the class and has
no direct relationship to the efforts of counsel.” (cleaned up)
(quoting In re First Fidelity Bancorporation Securities Lit-
igation, 750 F. Supp. 160, 164 n.1 (D.N.J. 1990))); Gold-
berger, 109 F.3d at 49 (noting that courts should “prevent
unwarranted windfalls for attorneys”).
Here, the Claims Court did not apply those principles.
Indeed, it indicated a contrary view. The Claims Court
noted that “[w]here a successful lawsuit results in a multi-
billion-dollar award, even a minute fee percentage can re-
sult in a sizeable award to counsel, the case at hand being
such an example.” Health Republic, 156 Fed. Cl. at 81. But
it used that fact as a reason to approve, not reduce, Quinn
Emanuel’s request. Id. at 79 (small percentage of recovery
“weigh[ed] heavily” in favoring approval of requested fee).
Those principles are reflected in judicial decisions that
establish a relevant norm far below an implicit multiplier
of 18 to 19. For a lodestar cross-check, “the resulting mul-
tiplier need not fall within any pre-defined range,” In re
Rite Aid, 396 F.3d at 307 & n.17, but “[e]ven when the lode-
star method is used only as a cross-check, ‘courts must take
care to explain how the application of a multiplier is justi-
fied by the facts of a particular case,’” In re Cendant, 243
Case: 22-1018 Document: 51 Page: 18 Filed: 01/31/2023
18 HEALTH REPUBLIC INSURANCE COMPANY v. US
F.3d at 742 (footnote omitted) (quoting In re Prudential,
148 F.3d at 340–41). In particular, a court must provide
sufficient analysis and “[c]onsideration of multipliers used
in comparable cases” to justify the award made. In re Rite
Aid, 396 F.3d at 307 & n.17. More particularly still, a court
should “examine[] the reasoning behind . . . awards in cases
of similar size.” In re Cendant, 243 F.3d at 737. “[C]ourts
setting attorneys’ fees in cases involving large settlements
must avoid basing their awards on percentages derived
from cases where the settlement amounts were much
smaller.” Id. at 736.
That approach is consistent with the principles en-
dorsed by the Supreme Court. And it does not exclude tak-
ing full account of the relevant attorney-fees considerations
as they apply to a particular case. For example, the parties
before us do not dispute that such considerations may in-
clude the risk of nonpayment in a contingency-fee common-
fund arrangement, see, e.g., In re Synthroid Marketing Lit-
igation, 325 F.3d 974, 978 (3d Cir. 2003), and the interest
in “sustain[ing] the incentive for attorneys to continue to
represent such clients,” Florin v. Nationsbank of Georgia,
N.A., 60 F.3d 1245, 1247 (7th Cir. 1995). See also Fed. R.
Civ. P. 23, 2003 Advisory Committee Note (“In determining
a fee for class counsel, the court’s objective is to ensure an
overall fee that is fair for counsel and equitable within the
class.”).
A number of courts have surveyed relevant fee awards
and noted a norm of implicit multipliers in the range of 1
to 4. See Vizcaino, 290 F.3d at 1051 n.6 (surveying percent-
age-based attorney’s fee awards in common fund cases of
$50–200 million from 1996 through 2001, “with most . . .
from 1.0–4.0 and a bare majority . . . in the 1.5–3.0 range”);
In re Cendant, 243 F.3d at 737–38, 742 (completing a sim-
ilar survey and reaching a similar conclusion); In re Pru-
dential, 148 F.3d at 341 (“[M]ultiples ranging from one to
four are frequently awarded in common fund cases when
the lodestar method is applied.” (quoting 3 Newberg on
Case: 22-1018 Document: 51 Page: 19 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 19
Class Actions § 14.03 at 14–15)). Quinn Emanuel recog-
nized the same at oral argument before us. Oral Arg. at
30:43–31:12 (Q: “Do you agree that as a general matter the
lodestar multiplier tends to be between the range of 1 and
4?” A: “I think that is true in terms of the reported deci-
sions . . . .”). A multiplier of 18 or 19 is far outside the
evident relevant norm and so would require exceptional
justification.
The Claims Court cited three decisions as approving
implicit multipliers of an order of magnitude akin to the
18-to-19 implicit multiplier based on Quinn Emanuel’s fig-
ures here. Health Republic, 156 Fed. Cl. at 82 (citing Stop
& Shop Supermarket Co. v. SmithKline Beecham Corp.,
2005 WL 1213926 (E.D. Pa. May 19, 2005); In re Merry-Go-
Round Enterprises, Inc., 244 B.R. 327 (Bankr. D. Md.
2000); and Americas Mining Corp. v. Theriault, 51 A.3d
1213 (Del. 2012)). But the existence of outliers does not
negate the existence of a norm. The Claims Court did not
discuss the three decisions, aside from noting the multipli-
ers in each case. And the cited decisions offer particularly
weak support for the implicit multiplier here.
The court that decided Americas Mining was not a fed-
eral court, was not applying federal-law standards, and did
not actually conduct a lodestar cross-check. 51 A.3d at
1253–58. In Stop & Shop, the district court’s award corre-
sponded to a 15.6 multiplier, but none of the class members
objected to the award—rather, plaintiffs offered “extraor-
dinary support . . . for counsel’s request for fees.” 2005 WL
1213926 at *18. And Merry-Go-Round was a bankruptcy
proceeding in which the bankruptcy court concluded that a
court-approved fixed-percentage contingency agreement
between counsel and the bankruptcy trustee was reasona-
ble under 11 U.S.C. § 328(a), that enforcement of the agree-
ment was not “unethical” under the rules of professional
conduct despite a lodestar multiplier of 19.6, and that the
matter was not subject to the standards for assessing fees
in common-fund class actions. 244 B.R. at 337–38, 343–44.
Case: 22-1018 Document: 51 Page: 20 Filed: 01/31/2023
20 HEALTH REPUBLIC INSURANCE COMPANY v. US
The three decisions cited by the Claims Court do not justify
a conclusion that the award here is consistent with “re-
sponsible discretionary parameters.” In re Cendant, 243
F.3d at 742.
2
The Claims Court erred in another way as well. In
stating simply that an implicit multiplier of 18 to 19 was
not outside “the realm of reasonableness,” Health Republic,
156 Fed. Cl. at 82, the Claims Court misconceived its task
as one in which the request for fees was presumptively to
be granted, subject only to challengers’ demonstration that
the request is outside the range of reasonableness and
must be reduced. In fact, the Claims Court pervasively
framed its inquiry that way once it decided to apply the
percentage-of-the-fund method. See, e.g., id. at 77 (pro-
ceeding “to evaluate the reasonableness of Class Counsel’s
requested fee” (emphasis added)); id. (finding “nothing in
this category [quality of counsel] that justifies a reduction
in the requested fee” (emphasis added)); id. at 79 (applying
risk factor to “support[] [counsel’s] fee request”); id. at 81
(stating that task is “to evaluate the reasonableness of
Class Counsel’s fee request,” and addressing “why a reduc-
tion of fees is not justified” (emphases added)).
That approach was improper. This is not a case in
which a class notice stated that a fixed percentage of recov-
ery would be awarded unless the court determines it to be
unreasonable. Cf. Gisbrecht, 535 U.S. at 808 (discussing a
contingency-fee agreement reviewed only for reasonable-
ness by a court). The class notice in each case before us
stated a maximum possible request and that the court it-
self would determine the proper fee. See supra p. 8. At
least in such a case, although a range of reasonableness
undisputedly exists, see Health Republic, 156 Fed. Cl. at
82; Torres-Rivera v. O’Neill-Cancel, 524 F.3d 331, 340 (1st
Cir. 2008), the court’s task is to make its own determina-
tion of what fee to award, within the range of reasonable
Case: 22-1018 Document: 51 Page: 21 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 21
possibilities, considering the relevant principles and prec-
edents addressing comparable facts.
The Claims Court did not identify, and Quinn Emanuel
has not cited, any authority that defines the adjudicator’s
task, in these circumstances, as determining the range of
reasonableness and awarding the top end or whatever class
counsel requests below that top end. And where there is
no agreement by the class to a specified percentage subject
only to an unreasonableness check, such an approach
would be contrary to the widespread recognition that the
trial court has a “fiduciary duty” to protect the interests of
the class, given the general non-alignment of the interests
of class counsel and the class when a common-fund fee is
proposed. See In re Optical Disk Drive Products Antitrust
Litigation, 959 F.3d 922, 930, 934–35 (9th Cir. 2020); In re
Washington Public Power Supply Systems Securities Liti-
gation, 19 F.3d 1291, 1302 (9th Cir. 1994) (“Because in com-
mon fund cases the relationship between plaintiffs and
their attorneys turns adversarial at the fee setting stage,
courts have stressed that when awarding attorneys’ fees
from a common fund, the [arbiter] must assume the role of
fiduciary for the class plaintiffs.”); id. (“[A]t the fee-setting
stage, plaintiffs’ counsel, otherwise a fiduciary for the class,
has become a claimant against the fund created for the ben-
efit of the class. It is obligatory, therefore, for the trial
court judge to act with a jealous regard to the rights of
those who are interested in the fund in determining what
a proper fee award is.” (cleaned up)); Skelton v. General
Motors Corp., 860 F.2d 250, 253 (7th Cir. 1988) (“The court
becomes the fiduciary for the fund’s beneficiaries and must
carefully monitor disbursement to the attorneys by scruti-
nizing the fee applications.”); In re Fine Paper Antitrust
Litigation, 751 F.2d 562, 583 (3d Cir. 1984) (“[F]ee requests
from the resulting equitable fund in court must be sub-
jected to heightened judicial scrutiny.”); Goldberger, 209
F.3d at 52 (reaffirming the standard of fiduciary duty); Ge-
neva Rock Products, Inc. v. United States, 119 Fed. Cl. 581,
Case: 22-1018 Document: 51 Page: 22 Filed: 01/31/2023
22 HEALTH REPUBLIC INSURANCE COMPANY v. US
593 (2015) (“Under RCFC 23(h), the court has a fiduciary
duty to independently review the reasonableness of class
counsel’s proposed fee.”), rev’d in part on other grounds by
Longnecker Property v. United States, 2016 WL 9445914(Fed. Cir. Nov. 14, 2016); see also In re Continental Illinois
Securities Litigation, 962 F.2d 566, 568 (7th Cir. 1992) (re-
viewing and reversing a district court’s fee award on behalf
of the class though no class member objected).
The Claims Court stated that the “Objectors are seek-
ing to pay an infinitesimal portion of their recovery to
[Quinn Emanuel] in attorney’s fees.” Health Republic, 156
Fed Cl. at 81. But the “portion” of the recovery is not all
that matters: Quinn Emanuel, with court approval, ex-
pressly promised a lodestar cross-check, whose focus is the
actual dollar amount based on hours worked and hourly
rates. Quinn Emanuel’s numbers for hours and rates, even
if accepted, would produce a lodestar of approximately $10
million, and Quinn Emanuel’s $185 million proposal is
huge compared to that figure, whereas the Objectors’ dollar
proposal of $8.828 million is pretty close to it. And to the
extent that the Claims Court was suggesting that it could
default to adopting the requester’s proposal just because it
deemed the Objectors’ proposal too low, we see no basis for
such a suggestion. One proposal may be too high and the
other too low, with a third figure (proposed by no one) being
best supported by the evidence. The Claims Court did not
identify, and Quinn Emanuel has not cited, authority that
requires or supports adoption of the position of the re-
quester in that circumstance. Indeed, such an approach
would run counter to a federal trial court’s responsibility to
“ensure that the amount and mode of payment of attorney
fees are fair and proper whether the fees come from a com-
mon fund or are otherwise paid[, e]ven in the absence of
objections,” Fed. R. Civ. P. 23(h), 2003 Advisory Committee
Note, and to the placement of the burden regarding fees on
the fees claimant in other contexts where there is no ad-
vance client agreement to a fixed amount, see Blum, 465
Case: 22-1018 Document: 51 Page: 23 Filed: 01/31/2023
HEALTH REPUBLIC INSURANCE COMPANY v. US 23
U.S. at 895–96 n.11 (stating, in case involving lodestar
method, that burden is on fee claimant to support a fee
award); Hensley v. Eckerhart, 461 U.S. 424, 433, 437 (1983)
(same regarding lodestar components); Rumsey v. Depart-
ment of Justice, 866 F.3d 1375, 1379 (Fed. Cir. 2017)
(same).
C
For the reasons discussed, we must vacate the award
of fees and remand for reconsideration. That reconsidera-
tion must include a lodestar cross-check in accordance with
this opinion, including an assessment of whether there is
sufficient justification for an award with an implicit multi-
plier outside the mainstream of relevant multipliers. We
do not see such justification in what Quinn Emanuel has
presented to us.
As part of the lodestar cross-check on remand, the
Claims Court should also readdress the Objectors’ conten-
tions that Quinn Emanuel has not done enough to justify
the lodestar itself—the approximate number of hours and
blended rates used to produce the 18-to-19 implicit multi-
plier. More relaxed specificity and documentation stand-
ards apply to examination of the lodestar in a percentage-
of-the-fund case compared to the standards applied when
the lodestar method is directly used to set the fee (espe-
cially where paid by the adverse party). See In re Rite Aid,
396 F.3d at 306 (“The lodestar cross-check calculation need
entail neither mathematical precision nor bean-counting.”
(footnote omitted)). But the Claims Court should provide
more explanation than so far presented concerning the ad-
equacy of Quinn Emanuel’s hours and rates in light of the
Objectors’ criticisms. See Health Republic, 156 Fed. Cl. at
81–82.
One final point. We have concluded that the court
must honor the class-notice commitments if, as here, they
remain material to the court’s task and that the court in
this case may not treat the request as presumptively the
Case: 22-1018 Document: 51 Page: 24 Filed: 01/31/2023
24 HEALTH REPUBLIC INSURANCE COMPANY v. US
proper award but must play a more neutral role, character-
ized as a fiduciary one, in deciding what fee is warranted.
The Objectors argue that those conclusions may have a
bearing on aspects of the fee analysis beyond the lodestar
cross-check. Opening Br. at 48–53. On remand, the Claims
Court should reconsider any parts of its analysis affected
by the conclusions we have reached above.
III
For the foregoing reasons, we vacate the fee award and
remand for further proceedings consistent with this opin-
ion.
Costs are awarded to the appellants.
VACATED AND REMANDED