Use this button to switch between dark and light mode.

Experience a New Era in Legal Research with Free Access to Lexis+

In re : Wash. Pub. Power Supply Sys. Secs. Litig.

In re : Wash. Pub. Power Supply Sys. Secs. Litig.

United States Court of Appeals for the Ninth Circuit

June 14, 1993, Argued, Submitted, San Francisco, California ; March 23, 1994, Filed

No. 91-16669, No. 91-16685, No. 91-16687

Opinion

 [*1294]  OPINION

NORRIS, Circuit Judge:

Appellants are 25 law firms ("Class Counsel") who represented bondholders ("Class Plaintiffs") in the largest municipal bond default in history. From 1977 to 1983, the Washington Public Power Supply System ("WPPSS") sold bonds with a face value of $ 2.25 billion to finance construction of two nuclear power plants. The plants were never completed and WPPSS defaulted on its bond payments. In 1983, purchasers of the bonds filed a class action against WPPSS and nearly 200 other defendants alleging violations of state and federal securities laws in the sale of the bonds. 1 The claims of class members totalled almost $ 1.47 billion. The case was ultimately resolved through 22 separate settlement agreements, which created a settlement fund of $ 687 million.

 [**3]  Class Counsel requested attorneys' fees totalling $ 103 million from the settlement fund, which they asserted was a reasonable fee under either the percentage-of-the-fund method or the lodestar/multiplier approach. 2 See In re Washington Pub. Power  [*1295]  Supply Sys. Sec. Litig., 779 F. Supp. 1063, 1084 (D. Ariz. 1990) [hereinafter WPPSS II]. Under the lodestar approach, Class Counsel reached their $ 103 million figure by enhancing a lodestar of nearly $ 33 million by various multipliers which, in the aggregate, constituted a "blended" multiplier of 3.1. In the alternative, Class Counsel claimed that their $ 103 million lodestar figure would be reasonable under the percentage method because it represented only 13.6 percent of the settlement fund. Id. at 1081.

 [**4]  Employing the lodestar rather than the percentage method, the district court made certain reductions from Class Counsel's $ 103 million figure, ultimately arriving at a lodestar of $ 27 million. The court denied most of Class Counsel's requests for multipliers, but enhanced the awards to eleven individual attorneys for the exceptional quality of their representation. These individual enhancements resulted in a blended multiplier of 1.2, which yielded a final award of $ 32 million.

Class Counsel moved for reconsideration of the fee award, stating that their "principal assertion . . . is that larger multipliers should be awarded." Reply Memorandum of Class Counsel in Support of Reconsideration on Attorneys' Fee Order at 7. They also explained that they were arguing "for a percentage as an alternative method, as a way to test the Kerr [lodestar/multiplier] analysis and to confirm the reasonableness of the proposed multipliers." Id. After reconsidering Class Counsel's arguments, the district court refused to increase its initial fee award of $ 32 million. In re Washington Pub. Power Supply Sys. Sec. Litig., 779 F. Supp. 1056, 1063 (D. Ariz. 1991) [**5]  [hereinafter WPPSS III]. Class Counsel appeal this award as unreasonably low. Their principal argument on appeal is that the district court neglected to enhance the lodestar for two of the Kerr factors - risk of non-payment and results obtained - when calculating their fee. See Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975).

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

19 F.3d 1291 *; 1994 U.S. App. LEXIS 5256 **; Fed. Sec. L. Rep. (CCH) P98,137; 94 Cal. Daily Op. Service 2022; 94 Daily Journal DAR 3759

In re: Washington Public Power Supply System Securities Litigation; CLASS PLAINTIFFS; CHEMICAL BANK, in its representative capacity as Trustee for Bondholders, Plaintiffs, and BERNSTEIN, LITOWITZ, BERGER & GROSSMAN; MILBERG, WEISS, BERSHAD, SPECTHRIE & LERACH; MOLLOY, JONES & DONAHUE, P.C.; et al., Appellants, v. CITY OF SEATTLE; OREGON PUBLIC ENTITIES, BENTON RURAL ELECTRIC ASSOCIATION, Washington; WASHINGTON PUBLIC POWER SUPPLY SYSTEM; R.W. BECK AND ASSOCIATES; EBASCO SERVICES INCORPORATED; UNITED ENGINEERS & CONSTRUCTORS, INC.; DIRECTOR DEFENDANTS, PARTICIPANTS' COMMITTEE DEFENDANTS; PUBLIC UTILITY DISTRICT NO. 1, OF KLICKITAT COUNTY; UNITED STATES OF AMERICA, ON BEHALF OF ITSELF AND ITS AGENCY, THE BONNEVILLE POWER ADMINISTRATION; STATE OF WASHINGTON; BONNEVILLE POWER ADMINISTRATION, Defendants-Appellees. CLASS PLAINTIFFS, Plaintiff, and LAWRENCE LAUB, Plaintiff-Appellant, v. CONTINENTAL ASSURANCE COMPANY, Plaintiff-Appellee, v. CITY OF SEATTLE; OREGON PUBLIC ENTITIES, BENTON RURAL ELECTRIC ASSOCIATION, Washington; WASHINGTON PUBLIC POWER SUPPLY SYSTEM; R.W. BECK AND ASSOCIATES; EBASCO SERVICES INCORPORATED; UNITED ENGINEERS & CONSTRUCTORS, INC.; DIRECTOR DEFENDANTS, PARTICIPANTS' COMMITTEE DEFENDANTS; PUBLIC UTILITY DISTRICT NO. 1, OF KLICKITAT COUNTY; UNITED STATES OF AMERICA, ON BEHALF OF ITSELF AND ITS AGENCY, THE BONNEVILLE POWER ADMINISTRATION; STATE OF WASHINGTON; BONNEVILLE POWER ADMINISTRATION, Defendants-Appellees. CLASS PLAINTIFFS, Plaintiff, and CONTINENTAL ASSURANCE COMPANY, Plaintiff-Appellee, v. BERGER & MONTAGUE, P.A., Appellant, v. CITY OF SEATTLE; OREGON PUBLIC ENTITIES, BENTON RURAL ELECTRIC ASSOCIATION, Washington; WASHINGTON PUBLIC POWER SUPPLY SYSTEM; R.W. BECK AND ASSOCIATES; EBASCO SERVICES INCORPORATED; UNITED ENGINEERS & CONSTRUCTORS, INC.; DIRECTOR DEFENDANTS, PARTICIPANTS' COMMITTEE DEFENDANTS; PUBLIC UTILITY DISTRICT NO. 1, OF KLICKITAT COUNTY; UNITED STATES OF AMERICA, ON BEHALF OF ITSELF AND ITS AGENCY, THE BONNEVILLE POWER ADMINISTRATION; STATE OF WASHINGTON; BONNEVILLE POWER ADMINISTRATION, Defendants-Appellees.

Prior History:  [**1]  Appeal from the United States District Court for the District of Arizona. D.C. No. MDL-551-WDB. William D. Browning, District Judge, Presiding.

CORE TERMS

district court, multiplier, lodestar, common fund case, cases, enhanced, percent, statutory fee, circumstances, contingency, fee award, Appellants', awarding, records, firms, class plaintiff, compensate, abused, lodestar method, settlement fund, common fund, hourly rate, calculation, attorney's fees, reasonable fee, handwritten, settlement, reconsideration, non-payment, individual attorney

Civil Procedure, Special Proceedings, Class Actions, Judicial Discretion, Legal Ethics, Client Relations, Attorney Fees, Excessive Fees, Costs & Attorney Fees, Attorney Fees & Expenses, General Overview, Basis of Recovery, American Rule, Reasonable Fees, Remedies, Appeals, Standards of Review, Abuse of Discretion, Compromise & Settlement, Governments, Fiduciaries, Class Attorneys, Fees