The opinion of the court was delivered by: KEEP
Plaintiffs' class counsel ("class counsel") brings this motion for award of attorneys' fees and costs. On October 10, 1995, class counsel appeared before this court on this motion. At that hearing, the court requested additional briefing. Class counsel submitted its supplemental briefs on November 30, 1995.
This case was a securities class action lawsuit. In their complaint, Plaintiffs alleged that Brooktree stock traded at artificially inflated prices between October 20, 1992, and March 9, 1994. Plaintiffs claimed Defendants manipulated the stock price to these artificially high levels in an attempt to stem their declining value. Defendants allegedly issued a series of false and misleading positive statements which increased the stock value. Plaintiffs contended that Defendants represented that they were successfully diversifying into new markets, and that the predicted decline in earnings, disclosed on December 1, 1993, was due to deferred orders. On March 9, 1994, Defendants allegedly revealed that their diversification effort had failed, that revenues would decline further, that Brooktree had discontinued certain products, and that Brooktree would suffer a loss. At that time, the stock price declined sharply.
On June 2 and 3, 1994, two class action lawsuits, later consolidated, were filed in this court on behalf of persons who purchased Brooktree common stock between October 20, 1992, and March 9, 1994. The complaints alleged violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
On March 15, 1995, the parties entered into a definitive settlement whereby Defendants agreed to pay $ 5,500,000 in exchange for dismissal of all claims with prejudice. At a hearing August 14, 1995, this court granted preliminary approval of this settlement. At a hearing October 10, 1995, this court granted final approval of the settlement agreement, and approval of the plan of allocation.
At that hearing, the court also considered class counsel's motion for award of attorneys' fees and costs. Class counsel sought $ 1,650,000 in attorneys' fees, an amount equal to 30% of the settlement fund. Class counsel's brief and declarations provided a superficial overview of the work done in this case, but did not provide a detailed description of the actual amount of time and effort expended in resolving the litigation, nor an analysis of the complexity of the case and the challenges counsel faced in resolving it. For example, there was no indication of the number of attorneys who worked on this matter, for approximately how many hours they worked, or the nature of their efforts.
Instead, class counsel's brief focussed primarily on the broad policy considerations in favor of percentage-of-the-fund fee awards, and included exhibits from other cases in which percentage-of-the-fund fee awards have been approved. While many of these arguments may be compelling in general, class counsel offered no facts to justify its requested fee award in this case. Class counsel did not provide a sufficient factual record demonstrating that it was entitled to the Ninth Circuit "bench mark" percentage fee award of 25%, much less a 5% upward departure from the Ninth Circuit "bench mark." The court was unable to make a proper "reasonableness" determination on that record.
For these reasons, the court denied without prejudice the initial request for attorneys' fees, and granted class counsel leave to submit supplemental materials to justify the fee amount in accordance with the court's October 10 ruling. In its ruling, the court emphasized that justification as to the reasonableness of class counsel's desired fee was required. See Tr. (10/10/95) at 4-6, 17-18, 20.
The court also requested supplemental briefing regarding class counsel's request for costs. At the October 10 hearing, class counsel sought reimbursement for expenses and costs in the amount of $ 150,678.99. Of that amount, lead counsel Milberg Weiss Bershad Hynes & Lerach submitted an expense request of $ 147,083.46. The expense breakdown submitted for the hearing included non-itemized sub-totals, apparently accumulated over a one year period, of $ 117,430.99 for "experts/consultants/investigators," $ 7,389.77 for "photocopying," and $ 3,320.24 for "meals, hotel and transportation."
These sub-totals failed to indicate, inter alia, the identities of the experts and consultants and their time expenditures and hourly rates, how many pages were photocopied and at what cost per page, and how many meals and hotel rooms were charged. Class counsel also failed to explain the necessity for these expenditures, particularly in light of the relative brevity of the case, the fact that only two uncontested motions were brought in this case,
and the fact that Brooktree, lead counsel Milberg Weiss, associated counsel Finkelstein & Associates, and class counsel's primary expert, Princeton Venture Research, Inc., are all located in San Diego, California. Thus, the court had no meaningful way to assess the reasonableness of the claimed expenses and fees, and granted class counsel leave to submit further breakdowns of, and explanations for, their expenses. After reviewing associated counsel Finkelstein & Associates' cost breakdowns, the court granted Finkelstein & Associates' request for reimbursement of expenses.
The district court has discretion to use either the percentage-of-the-fund method or the lodestar/multiplier method in calculating fee awards in common fund cases. In re Washington Pub. Power Supply Sys. Litig., 19 F.3d 1291, 1295 (9th Cir. 1994). In common fund cases in the Ninth Circuit, "no presumption in favor of either the percentage or the lodestar method encumbers the district court's discretion to choose one or the other." Id.
The choice between lodestar and percentage calculation depends upon the circumstances of the case. Id. at 1296 (citing Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990)). "As always, when determining attorneys' fees, the district court should be guided by the fundamental principle that fee awards out of common funds be 'reasonable ...