Williams v. MGM-Pathe Communications Co., MGM-PATHE

• Citation: 129 F.3d 1026
• Decision Date: 19 November 1997
• Docket Number: No. 96-55473,MGM-PATHE,96-55473
• Parties: Fed. Sec. L. Rep. P 99,573, 97 Cal. Daily Op. Serv. 8728, 97 Daily Journal D.A.R. 14,147 J. Phillip WILLIAMS, Plaintiff, and Herbert Eisen, Trustee for Margaret M. Eisen Family Trust, Plaintiff-Intervenor, v.COMMUNICATIONS CO.; Pathe Communications Corporation; Credit Lyonnais Bank, Credit Lyonnais Bank Nederland N.V.; Giancarlo Parretti, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1026

129 F.3d 1026

Fed. Sec. L. Rep. P 99,573, 97 Cal. Daily Op. Serv. 8728,

97 Daily Journal D.A.R. 14,147

J. Phillip WILLIAMS, Plaintiff and Herbert Eisen, Trustee for Margaret M. Eisen Family Trust Plaintiff-Intervenor, v. MGM-PATHE COMMUNICATIONS CO.; Pathe Communications Corporation; Credit Lyonnais Bank, Credit Lyonnais Bank Nederland N.V.; Giancarlo Parretti, Defendants-Appellees.

No. 96-55473.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 7, 1997.

Memorandum Filed Sept. 4, 1997.

Order and Opinion Filed Nov. 19, 1997.

Arlin M. Adams, Schnader, Harrison, Segal & Lewis, Philadelphia, PA, for appellant.

Travers D. Wood, Ted S. Ward, White & Case, Los Angeles, CA, for appellee.

Appeal from the United States District Court for the Central District of California; Harry L. Hupp, District Judge, Presiding. D.C. No. CV-91-03276-HLH.

Before: CANBY, and THOMAS, Circuit Judges, and KING, ^* District Judge.

PER CURIAM:

Herbert Eisen, Trustee for the Margaret M. Eisen Family Trust, appeals the district court's award of attorneys' fees in connection with the settlement of a securities-fraud class action. The class brought the action against MGM Pathe Communications Co., Pathe Communications Corp., Credit Lyonnais Bank Nederland, and Giancarlo Parretti (the "defendants"). The parties settled the suit in favor of the class.

The class' attorneys contend that the district court should have calculated their fee as one-third of the entire $4.5 million settlement fund, for a fee of about $1.5 million, rather than calculating it as one-third of the class members' claims against that fund, for a fee of only $3,300. We conclude that the district court abused its discretion ¹ by basing the fee on the class members' claims against the fund rather than on a percentage of the entire fund or on the lodestar. We thus reverse and remand.

In Boeing Co. v. Van Gemert, 444 U.S. 472, 480-81, 100 S.Ct. 745, 750-51, 62 L.Ed.2d 676 (1980), the Court concluded that the attorneys for a successful class may recover a fee based on the entire common fund created for the class, even if some class members make no claims against the fund so that money remains in it that otherwise would be returned to the defendants. In Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th Cir.1990), we held likewise, and indicated that our benchmark for an attorneys' fee award in a successful class action is twenty-five percent of the entire common fund. Of course, the percentage may be adjusted to account for any unusual circumstances. See Paul, Johnson, Alston, & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir.1989). We also have applied the lodestar approach in some cases. See Florida v. Dunne, 915 F.2d 542, 545 (9th Cir.1990).

We recognize that in this case, as opposed to Boeing and Six (6) Mexican Workers, the absent class members do not necessarily have a calculable interest in the unclaimed money in the fund, which will be returned to the defendants if it is not used to pay the class attorneys' fees. See Boeing, 444 U.S. at 475-76, 100 S.Ct. at 747-48; Six (6) Mexican Workers, 904 F.2d at 1304. The district court apparently concluded that the payment of fees from the money remaining in the fund thus would amount to prohibited fee shifting: assessing fees against the defendants, rather than against the absent class members. But, also unlike...