NOT FOR PUBLICATION
`
`FILED
`
`JUN 6 2022
`
`UNITED STATES COURT OF APPEALS
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
` FOR THE NINTH CIRCUIT
`
`In re: OPTICAL DISK DRIVE
`PRODUCTS ANTITRUST LITIGATION,
`
`------------------------------
`
`No. 21-16291
`
`D.C. No. 3:10-md-02143-RS
`
` INDIRECT PURCHASER CLASS,
`
`MEMORANDUM*
`
`Plaintiff-Appellee,
`
` v.
`
`CONNER ERWIN,
`
`Objector-Appellant,
`
` v.
`
`SAMSUNG ELECTRONICS CO., LTD.;
`et al.,
`
`Defendants-Appellees.
`
`Appeal from the United States District Court
`for the Northern District of California
`Richard Seeborg, Chief District Judge, Presiding
`
`This disposition is not appropriate for publication and is not precedent
` *
`except as provided by Ninth Circuit Rule 36-3.
`
`
`
`FILED
`
`JUN 6 2022
`
`UNITED STATES COURT OF APPEALS
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
` FOR THE NINTH CIRCUIT
`
`In re: OPTICAL DISK DRIVE
`PRODUCTS ANTITRUST LITIGATION,
`
`------------------------------
`
`No. 21-16291
`
`D.C. No. 3:10-md-02143-RS
`
` INDIRECT PURCHASER CLASS,
`
`MEMORANDUM*
`
`Plaintiff-Appellee,
`
` v.
`
`CONNER ERWIN,
`
`Objector-Appellant,
`
` v.
`
`SAMSUNG ELECTRONICS CO., LTD.;
`et al.,
`
`Defendants-Appellees.
`
`Appeal from the United States District Court
`for the Northern District of California
`Richard Seeborg, Chief District Judge, Presiding
`
`This disposition is not appropriate for publication and is not precedent
` *
`except as provided by Ninth Circuit Rule 36-3.
`
`
`
`Argued and Submitted April 19, 2022
`Seattle, Washington
`
`Before: GOULD, BEA, and CHRISTEN, Circuit Judges.
`Dissent by Judge CHRISTEN.
`
`This case concerns attorneys’ fees awarded to Hagens Berman Sobol
`
`Shapiro, LLP (HB), class counsel for a class of Indirect Purchaser Plaintiffs (IPP)
`
`in a lengthy multidistrict antitrust suit. We previously vacated the district court’s
`
`decisions awarding a total of $52,780,000 in attorneys’ fees and expenses to HB
`
`and remanded for the recalculation of the award. See In re Optical Disk Drive
`
`Prods. Antitrust Litig., 959 F.3d 922, 926 (9th Cir. 2020) (ODD I) (vacating and
`
`remanding first- and second-round attorneys’ fees and litigation expense awards);
`
`In re Optical Disk Drive Prods. Antitrust Litig., 804 F. App’x 443, 444 (9th Cir.
`
`2020) (ODD II) (unpublished) (vacating third-round attorneys’ fees award and
`
`remanding “for further findings consistent with the standard set forth in the
`
`concurrently filed opinion” in ODD I). On remand, the district court awarded HB
`
`$31,026,000 in attorneys’ fees. Erwin now appeals the district court’s order
`
`granting these attorneys’ fees and denying his motion to “Enforce Settlement,
`
`Return Class Funds, and Disgorge Fees.”1
`
`1 Because the parties are familiar with the factual and procedural history of
`the case, we recount it only where necessary.
`
`2
`
`
`
`Erwin challenges the newly entered award on three grounds. First, he
`
`alleges that violations of the settlement agreements and breaches of ethical and
`
`fiduciary duties by HB require forfeiture of the fee award. Second, Erwin argues
`
`that the district court miscalculated HB’s initial fee bid, rendering the court’s
`
`calculation of the overall fee award unreasonable. Finally, Erwin contends that the
`
`district court abused its discretion by relying upon impermissible grounds to justify
`
`its upward departure from HB’s bid amount.
`
`We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. For the
`
`reasons set forth below, we AFFIRM in part, VACATE in part, and REMAND
`
`for further proceedings consistent with this memorandum.
`
`I.
`
`In common fund class action cases like the one at bar, we “review for abuse
`
`of discretion the district court’s award of attorney’s fees and costs to class counsel
`
`as well as its method of calculating the fees. The factual findings underlying these
`
`decisions are reviewed for clear error.” In re Hyundai & Kia Fuel Econ. Litig.,
`
`926 F.3d 539, 556 (9th Cir. 2019) (en banc) (citation omitted). “Any element of
`
`legal analysis which figures in the district court’s decision is reviewed de novo.”
`
`In re Mercury Interactive Corp. Secs. Litig., 618 F.3d 988, 992 (9th Cir. 2010)
`
`(quoting Fischer v. SJB–P.D., Inc., 214 F.3d 1115, 1118 (9th Cir.2000)).
`
`3
`
`
`
`“Although a district court has broad discretion to determine attorneys’ fees, it
`
`abuses that discretion if it makes an error of law,” id. at 993 (citing Koon v. United
`
`States, 518 U.S. 81, 100 (1996)), or if it fails to “‘provide a concise but clear
`
`explanation of its reasons for the fee award’ . . . . [including] not only the grounds
`
`on which it relied, but also how it weighed the various competing considerations,”
`
`Stanger v. China Elec. Motor, Inc., 812 F.3d 734, 739 (9th Cir. 2016) (per curium)
`
`(first quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); then citing Powers
`
`v. Eichen, 229 F.3d 1249, 1257–58 (9th Cir. 2000)).
`
`“We review de novo a district court’s conclusion that an attorney’s conduct
`
`violated court rules. A district court’s exercise of its supervisory powers is
`
`reviewed under an abuse-of-discretion standard.” United States v. Carona, 660
`
`F.3d 360, 364 (9th Cir. 2011) (citation omitted).
`
`II.
`
`Erwin first challenges HB’s treatment of the funds it received as a result of
`
`the district court’s original fee awards. He makes two arguments: (1) that the
`
`settlement agreements required HB to return immediately the fees to the settlement
`
`fund after this court vacated the awards in ODD I and ODD II; and (2) that
`
`California’s ethical rules required HB to place immediately the fees into a client
`
`trust account following vacatur. We reject these arguments and affirm the district
`
`4
`
`
`
`court’s denial of Erwin’s motion to “Enforce Settlement, Return Class Funds, and
`
`Disgorge Fees.”
`
`The applicable local rule provides that attorneys’ practicing before the
`
`district court must “[b]e familiar and comply with the standards of professional
`
`conduct required of members of the State Bar of California.” N.D. Cal. Local Rule
`
`11-4(a)(1). Each of the settlement agreements at issue include provisions requiring
`
`HB to return promptly funds approved as part of attorneys’ fees awards “[i]n the
`
`event . . . the order making the Fee and Expense Award is reversed or modified.”
`
`Because we did not reverse or modify—but rather vacated—the fee award orders,2
`
`the district court did not err in determining that HB was under no clear obligation
`
`per the terms of the settlement agreements to refund immediately the fees.
`
`Erwin further argues that the district court erred by declining to order
`
`disgorgement for purported breaches of ethical and fiduciary obligations. We
`
`disagree. We have held that, “[i]n determining what fees are reasonable, a district
`
`court may consider a lawyer’s misconduct, which affects the value of the lawyer’s
`
`services.” Rodriguez v. Disner, 688 F.3d 645, 653 (9th Cir. 2012) (citing Image
`
`Tech. Serv., Inc. v. Eastman Kodak Co., 136 F.3d 1354, 1358 (9th Cir. 1998)). We
`
`have further made clear that district courts have “broad equitable power to deny
`
`2 See ODD I, 956 F.3d at 926; ODD II, 804 F. App’x at 443.
`
`5
`
`
`
`attorneys’ fees (or to require an attorney to disgorge fees already received) when
`
`an attorney represents clients with conflicting interests,” id., and have also relied
`
`upon the “exercise of supervisory powers [a]s an appropriate means of policing
`
`ethical misconduct by” attorneys, United States v. Lopez, 4 F.3d 1455, 1463 (9th
`
`Cir. 1993) (citing United States v. McClintock, 748 F.2d 1278, 1285–86 (9th Cir.
`
`1984)).
`
`In order for disgorgement of attorneys’ fees to be warranted, the client must
`
`have suffered harm resulting from the alleged misconduct. See Fed. R. Civ. P. 61
`
`(“At every stage of the proceeding, the court must disregard all errors and defects
`
`that do not affect any party’s substantial rights.”); Bertelsen v. Harris, 537 F.3d
`
`1047, 1057 (9th Cir. 2008) (holding “[a] court is not required to order
`
`disgorgement, even where a breach of fiduciary duty is proven” and refusing to
`
`order disgorgement because “Appellants here claim no damages caused by
`
`Appellees’ purported breach of fiduciary duty, apart from the attorneys’ fees they
`
`want back”).
`
`Here, the class suffered no prejudice from the alleged conduct. See
`
`Bertelsen, 537 F.3d at 1057. Contrary to Erwin’s claim that the class suffered
`
`harm by not collecting interest on the entirety of the $52,780,000 distributed to
`
`HB, the class was entitled to interest only on the portion of the funds that
`
`6
`
`
`
`ultimately belongs to the class. See 28 U.S.C. § 1961 (“Interest shall be allowed
`
`on any money judgment in a civil case recovered in a district court.”); Perkins v.
`
`Standard Oil Co. of Cal., 487 F.2d 672 (9th Cir. 1973) (holding § 1961 requires
`
`that where attorneys’ fees awarded by a district court are reduced on appeal, the
`
`parties are each entitled to interest on their portion of the total award dating back to
`
`the original judgment). The district court correctly ordered HB to repay the
`
`difference between its original award and its post-vacatur award, plus interest, and
`
`HB has already complied with that order. Therefore, even assuming HB was
`
`required to return immediately the fee to the settlement fund or to hold it in a client
`
`trust account, the IPP class suffered no prejudice from HB’s refusal to do so. The
`
`district court did not err when it determined that the harmless error doctrine
`
`forecloses Erwin’s disgorgement arguments.
`
`III.
`
`Erwin next challenges the district court’s award of attorneys’ fees on remand
`
`as unreasonable. Erwin contends that the district court began from the wrong
`
`“starting point” in its fee calculation because it declined to read HB’s fee bid as
`
`employing marginal rates rather than flat rates. We agree with Erwin that HB’s
`
`original fee proposal called for marginal rates to calculate the fee.
`
`7
`
`
`
`In ODD I, this court held “that when class counsel secures appointment as
`
`interim lead counsel by proposing a fee structure in a competitive bidding process,
`
`that bid becomes the starting point for determining a reasonable fee.” ODD I, 956
`
`F.3d at 934. In ascertaining this “starting point,” the district court adopted a
`
`calculation that uses the grid incorporated into HB’s bid to calculate the fees for
`
`each group of settling defendants, based on the total amount of each settlement.
`
`This was consistent with our opinion in ODD I. The district court determined that
`
`under its bid, HB was entitled “to recover 14% of the settlements from certain
`
`defendants, 13% from other defendants’ larger settlements, 12% from the largest
`
`settlement, and no fee from one settlement that did not meet the minimum
`
`threshold for recovering fees.” Ultimately, the district court calculated that HB
`
`would be entitled to $25,855,000 under its fee grid proposal, and the court began
`
`its analysis with this figure in mind.
`
`But because the first increment in HB’s proposal calls for no fee for the
`
`“First $5,000,000,” we read HB’s proposed fee structure to incorporate marginal
`
`rates rather than fixed rates. In other words, instead of looking solely to the total
`
`amount of each settlement, plugging that number into the grid, and calculating the
`
`fee as a flat percentage, the district court should have treated each settlement as
`
`entitling HB to 0% for the first $5,000,000, 14% for the next $20,000,000, 13% for
`
`8
`
`
`
`the next $25,000,000, and so on. Using these marginal rates, HB would be entitled
`
`to $22,205,000, which is $3,650,000 less than the figure arrived at by the district
`
`court. This $22,205,000 figure is the proper “starting point” from which the
`
`district court should have begun its analysis, and the court was required to “provide
`
`an adequate explanation for any variance,” ODD I, 956 F.3d at 934–35 (citing
`
`Stanger, 812 F.3d at 739). Because HB’s bid to become class counsel incorporated
`
`marginal rates rather than fixed rates in its fee structure, we vacate the district
`
`court’s order awarding HB $31,026,000 in attorneys’ fees and remand to the
`
`district court to recalculate the award using the proper starting point of
`
`$22,205,000.
`
`IV.
`
`Erwin’s final challenge to the district court’s fee award concerns the factors
`
`considered by the district court in its decision to vary upward from HB’s fee
`
`proposal. Erwin contends that, contrary to our cautionary language in ODD I, the
`
`district court impermissibly justified its upward departure based on circumstances
`
`contemplated at the time of the bid. On this point, Erwin misses the mark.
`
`The district court took care to confine the scope of its analysis to factors we
`
`indicated could properly be considered in ODD I. In particular, the court pointed
`
`to the considerable risk of the litigation. In ODD I, we made clear that the
`
`9
`
`
`
`subsequent summary judgment in favor of the non-settling defendants3 “amply
`
`supported [the district court’s] determination that this litigation was very risky”
`
`and was a factor that could be considered. ODD I, 959 F.3d at 935. It is also
`
`readily apparent that HB obtained excellent results in light of the ultimate
`
`resolution of the litigation. By the time the IPP class was deemed ineligible to
`
`recover any damages, HB had already secured $205,000,000 via settlement
`
`agreements. In light of the subsequent summary judgment ruling affirmed on
`
`appeal, the district court was free to give greater weight to litigation risk, and this
`
`factor provided strong support justifying a 20% upward departure from HB’s bid
`
`amount.4
`
`3 See In re Optical Disk Drive Prods. Antitrust Litig., 785 F. App’x 406, 407
`(9th Cir. 2019) (unpublished) (affirming district court’s grant of summary
`judgment in favor of two defendants that did not settle because IPP class failed “to
`create a genuine dispute of material fact as to whether the overcharge was passed
`on to the class members (the ‘pass-through’ issue)”).
`4 Accordingly, on remand the district court would not abuse its discretion in
`awarding HB $26,646,000, which represents a 20% upward departure from HB’s
`bid of $22,205,000.
`
`10
`
`
`
`V.
`
`The district court’s order is AFFIRMED in part, VACATED in part, and
`
`REMANDED. The parties shall bear their own costs.5
`
`5 See Fed. R. App. P. 39. On remand, commensurate with its determination
`of proper attorneys’ fees pursuant to this memorandum, the district court shall
`determine what fees, if any, Erwin is entitled to receiving for benefitting the class
`under the equitable principles set forth in Rodriguez v. Disner, 688 F.3d 645, 658
`(9th Cir. 2012).
`
`11
`
`
`
`In re: Optical Disk Drive Products Antitrust Litigation, 21-16291
`CHRISTEN, Circuit Judge, dissenting.
`
`FILED
`
`JUN 6 2022
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
`I join the panel’s memorandum disposition except as to Part III. There, the
`
`majority concludes that HB’s bid to become class counsel was premised upon
`
`marginal rates rather than fixed rates, vacates the fee order entered on remand, and
`
`remands to the district court again, this time with direction to recalculate the fee
`
`using $22,205,000 as its starting point. I would affirm the district court’s fee
`
`award as is.
`
`There is no dispute that the district court’s fee calculation began with the
`
`grid incorporated into HB’s bid to serve as class counsel. I also agree that the grid
`
`can be interpreted as using marginal rates, and if it is, the first five million dollars
`
`of each settlement would not be factored into HB’s fee. But I part ways with my
`
`colleagues because there is no doubt the district court knew all of this. In my view,
`
`the more salient point is that our prior opinion expressly stated that the base fee
`
`calculated from the grid was subject to adjustment. See In re Optical Disk Drive
`
`Prods. Antitrust Litig., 959 F.3d 922, 934 (9th Cir. 2020) (explaining that the “bid
`
`becomes the starting point for determining a reasonable fee” (emphasis added)).
`
`As the district court explained:
`
`While the difference that would result from interpreting the
`bid as requiring marginal rates is not de minimus, the bid
`itself would only remain a starting point. The amount
`awarded by this order is reasonable under all the
`
`
`
`circumstances regardless of the precise calculation of that
`starting point.
`
`The court’s order explained the basis for its upward adjustment and its
`
`conclusion that an award of $31,026,000 was appropriate overall. In particular, the
`
`court decided the cumulative effect of the headwinds HB encountered took the case
`
`beyond what reasonably could have been contemplated at the time it bid on the
`
`case. The litigation spanned more than a decade, the district court was well-
`
`positioned to assess that the drawn-out nature of the litigation was not attributable
`
`to any lack of diligence or inefficiency on HB’s part, and the district court
`
`reasonably concluded that uncontemplated work and the exceptional results
`
`obtained warranted a premium above the bid. The court correctly observed that
`
`summary judgment was entered in favor of the defendants on liability—a ruling we
`
`affirmed on appeal. That left the objectors in the awkward position of contending
`
`on remand that HB was overpaid in spite of the $205 million in settlements it
`
`recovered for claims that were ultimately decided in defendants’ favor.
`
`For good reason, “[d]istrict courts enjoy broad discretion to determine
`
`reasonable fee awards.” Id. at 937; see also In re FPI/Agretech Secs. Litig., 105
`
`F.3d 469, 472 (9th Cir. 1997) (same). Because there is no question the district
`
`court was in the best position to decide upon a reasonable fee award in this case,
`
`2
`
`
`
`and because the court followed our direction on remand and provided cogent
`
`reasons for the premium it awarded, I would affirm the district court’s order in its
`
`entirety.
`
`3
`
`
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