Reena Frailich v. Sandra Disner , 688 F.3d 645 ( 2012 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER
BRAZEAL; LISA GINTZ; LOREDANA
NESCI; LORRAINE RIMSON; KARI No. 10-55309
BREWER,
Plaintiffs-Appellees,  D.C. No.
2:05-cv-03222-
v. R-Mc
SANDRA DISNER, Executor of the
Estate of Eliot G. Disner, as
successor-in-interest to Eliot G.
Disner and Disner Law
Corporation, Class Counsel,
Appellant.

9063
9064 RODRIGUEZ v. DISNER
RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER No. 10-55342
BRAZEAL; LISA GINTZ; LOREDANA No. 10-56730
NESCI; LORRAINE RIMSON; KARI  D.C. No.
BREWER, 2:05-cv-03222-
Plaintiffs-Appellees, R-Mc
v.
MCGUIREWOODS LLP,
Appellant.

RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER
BRAZEAL; LISA GINTZ; LOREDANA
NESCI; LORRAINE RIMSON; KARI No. 10-56700
BREWER,
Plaintiffs-Appellees,  D.C. No.
2:05-cv-03222-
v. R-Mc
DAVID FELDMAN; CAMERON
GHARABIKLOU; EMILY GRANT; JEFF
LANG; SARAH MCDONALD; CARA
PATTON; RACHEL SCHWARTZ; GREG
THOMAS,
Objectors-Appellants.

RODRIGUEZ v. DISNER 9065
RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER
BRAZEAL; LISA GINTZ; LOREDANA
NESCI; LORRAINE RIMSON; KARI No. 10-56703
BREWER,
Plaintiffs-Appellees,
 D.C. No.
2:05-cv-03222-
v. R-Mc
JAMES JURANEK, Unnamed Class
Member; AUDREY JURANEK,
Unnamed Class Member; RICHARD
P. LE BLANC, III,
Objectors-Appellants.

RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER
BRAZEAL; LISA GINTZ; LOREDANA
NESCI; LORRAINE RIMSON; KARI No. 10-56724
BREWER,
Plaintiffs-Appellees,  D.C. No.
2:05-cv-03222-
v. R-Mc
GEORGE SCHNEIDER, Class Member;
JONATHAN M. SLOMBA, Class
Member; JAMES PUNTUMAPANITCH,
Class Member; JUSTIN HEAD; RYAN
HELFRICH,
Objectors-Appellants.

9066 RODRIGUEZ v. DISNER
RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER
BRAZEAL; LISA GINTZ; LOREDANA No. 10-56737
NESCI; LORRAINE RIMSON; KARI
BREWER,
 D.C. No.
2:05-cv-03222-
Plaintiffs-Appellees, R-Mc
v.
AARON LUKOFF; JOHN PRENDERGAST;
DAVID ORANGE,
Objectors-Appellants.

RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER
BRAZEAL; LISA GINTZ; LOREDANA
NESCI; LORRAINE RIMSON; KARI No. 10-56803
BREWER,
Plaintiffs-Appellees,  D.C. No.
2:05-cv-03222-
v. R-Mc
DAVID ORIOL, Unamed
Classmembers; JASON TINGLE;
JENNIFER BROWN MCELROY; DANIEL
M. SCHAFER; SARAH SIEGEL; EVANS
& MULLINIX, P.A.,
Objectors-Appellants.

RODRIGUEZ v. DISNER 9067
RYAN RODRIGUEZ, on behalf of 
himself and all others similarly
situated; REENA B. FRAILICH, on
behalf of herself and all others
similarly situated; JENNIFER No. 10-57037
BRAZEAL; LISA GINTZ; LOREDANA D.C. No.
NESCI; LORRAINE RIMSON; KARI
BREWER,
 2:05-cv-03222-
R-Mc
Plaintiffs-Appellees,
OPINION
v.
ROBERT GAUDET, JR.; SANDEEP
GOPALAN,
Objectors-Appellants.

Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted
March 5, 2012*—Pasadena, California
Filed August 10, 2012
Before: Jerome Farris, Richard R. Clifton, and
Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Ikuta
*The panel unanimously concludes that Appeal Nos. 10-56700, 10-
56703, 10-56737, 10-56803, and 10-57037 are suitable for decision with-
out oral argument. See Fed. R. App. P. 34(a)(2).
9070 RODRIGUEZ v. DISNER
COUNSEL
Margaret A. Grignon, Reed Smith LLP, Los Angeles, Califor-
nia, for appellant Sandra Disner (Appeal No. 10-55309).
RODRIGUEZ v. DISNER 9071
Terry W. Bird and Thomas R. Freeman (argued), Bird,
Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg,
P.C., Los Angeles, California, and Sidney Kanazawa,
McGuireWoods LLP, Los Angeles, California, for appellant
McGuireWoods LLP (Appeal Nos. 10-55342, 10-56770).
John W. Davis, Law Office of John W. Davis, San Diego,
California, and Steven F. Helfand, Helfand Law Offices, San
Francisco, California, for objectors-appellants David Feld-
man, Cameron Gharabiklou, Emily Grant, Jeff Lang, Sarah
McDonald, Cara Patton, Rachel Schwartz, and Greg Thomas
(Appeal No. 10-56700).
Charles A. Sturm, Steele Sturm PLLC, Houston, Texas, for
objectors-appellants James Juranek, Audrey Juranek, and
Richard P. Le Blanc (Appeal No. 10-56703).
J. Garrett Kendrick and C. Benjamin Nutley (argued), Kendr-
ick & Nutley, Pasadena, California, and John Pentz, Maynard,
Massachusetts, for objectors-appellants George Schneider,
Jonathan M. Slomba, James Puntumapanitch, Justin Head,
and Ryan Helfrich (Appeal No. 10-56724).
Joshua R. Furman (argued), Joshua R. Furman Law Corp.,
Beverly Hills, California, and John M. Zimmerman, Law
Offices of John M. Zimmerman, Seattle, Washington, for
objectors-appellants Aaron Lukoff, John Prendergast, and
David Orange (Appeal No. 10-56737).
J. Darrell Plamer, Law Offices of Darrell Plamer PC, Solana
Beach, California, for objectors-appellants Evans & Mullinix,
P.A., David Oriol, Sarah Siegel, Jennifer Brown McElroy,
Daniel Schafer, and Jason Tingle (Appeal No. 10-56803).
Robert J. Gaudet, Jr., The Hague, The Netherlands, and
Sandeep Gopalan, Maynooth, Ireland, appearing pro se
(Appeal No. 10-57037).
9072 RODRIGUEZ v. DISNER
OPINION
IKUTA, Circuit Judge:
These thirteen consolidated appeals brought by class counsel1
and six groups of objectors (collectively, “Objectors”)2 chal-
lenge the district court’s decisions regarding attorney fee
awards after the settlement of an antitrust class action against
West Publishing Corp. and Kaplan, Inc. In this opinion, we
address nine separate appeals, which challenge the propriety
of the district court’s decision to deny attorneys’ fees to class
counsel McGuireWoods on account of a conflict of interest
and to deny fees to objectors for their efforts in securing that
decision.3 Because the district court’s decisions were not
legally erroneous, and in light of the deference we give to
such determinations, we affirm the respective fee orders with
the exception of the order denying fees to the Schneider
Objectors, which we vacate and remand for further proceed-
ings consistent with this decision.
1
McGuireWoods LLP and Zwerling Schachter & Zwerling LLP. Sandra
Disner, as successor in interest to Eliot Disner, a former partner of
McGuireWoods, joins in and adopts class counsel McGuireWoods’s brief-
ing.
2
David Feldman, Cameron Gharabiklou, Emily Grant, Jeff Lang, Sarah
McDonald, Cara Patton, Rachel Schwartz, and Greg Thomas (collectively,
the “Feldman Objectors”); James Juranek, Audrey Juranek, and Richard
P. Le Blanc (collectively, the “Juranek Objectors”); George Schneider,
Jonathan M. Slomba, James Puntumapanitch, Justin Head, and Ryan Hel-
frich (collectively, the “Schneider Objectors”); Aaron Lukoff, John Pre-
ndergast, and David Orange (collectively, the “Lukoff Objectors”); Evans
& Mullinix, P.A., David Oriol, Sarah Siegel, Jennifer Brown McElroy,
Daniel Schafer, and Jason Tingle (collectively, the “Oriol Objectors”); and
Robert J. Gaudet Jr. and Sandeep Gopalan. We have considered all argu-
ments raised by the objectors, and any argument not specifically men-
tioned here is rejected.
3
We address the remaining four appeals in concurrently filed memoran-
dum dispositions.
RODRIGUEZ v. DISNER 9073
I
This case is before us for the second time. See Rodriguez
v. W. Publ’g Corp. (Rodriguez I), 563 F.3d 948 (9th Cir.
2009). Because the facts are laid out at length in that opinion,
we describe them only briefly.
A
At the onset of litigation, the law firm of Van Etten Suzu-
moto & Becket LLP (which later merged with McGuire-
Woods LLC) entered into “incentive agreements” with five
plaintiffs, Ryan Rodriguez, Reena Frailich, Loredana Nesci,
Jennifer Brazeal, and Lisa Gintz, in connection with a poten-
tial antitrust class action against West Publishing. Id. at 957.
In these agreements, each of these clients authorized Van
Etten to apply to the court for a fee award based on recovery
against West Publishing, and Van Etten agreed to seek incen-
tive compensation for each client in an amount equal to
between $10,000 and $75,000, depending on the value of the
settlement or verdict. Id. Specifically, the incentive agree-
ments provided that, if the settlement amount was greater than
or equal to $500,000, class counsel would seek a $10,000
award for each client who signed an agreement; if the settle-
ment amount were $1.5 million or more, counsel would seek
a $25,000 award; if it were $5 million or more, counsel would
seek $50,000; and if it were $10 million or more, counsel
would seek $75,000. Id.Plaintiffs brought federal antitrust claims against BAR/BRI
(a subsidiary of West Publishing at that time) and Kaplan, for
their activities in the market for bar preparation courses. Id.
at 955. The operative complaint alleged that West Publishing
illegally acquired the assets of its direct competitor West Bar
Review in violation of Section 7 of the Clayton Act, unlaw-
fully conspired with Kaplan to prevent competition in the
market for full-service bar review courses in violation of Sec-
tion 1 of the Sherman Act, and wrongfully monopolized the
9074 RODRIGUEZ v. DISNER
full-service bar review course market in violation of Section
2 of the Sherman Act. Id. at 955-56.
The district court certified a nationwide class comprised of
all persons who purchased a bar review course from
BAR/BRI between August 1, 1997 and July 31, 2006. Id. at
956. Plaintiffs Rodriguez, Frailich, Nesci, Brazeal, and Gintz,
who had signed incentive agreements, were designated as
class representatives, and McGuireWoods was appointed
class counsel. Id. at 955. Two other class representatives, Kari
Brewer and Lorraine Rimson, did not enter into incentive
agreements, and were separately represented by the law firms
Zwerling Schachter and Finkelstein Thompson LLP. Id. at
957-58.
The parties settled shortly before trial. Under the settlement
agreement, West Publishing and Kaplan agreed to pay $49
million into a settlement fund that would be allocated pro rata
to class members, with 25 percent of the fund set aside for
attorneys’ fees. Id. at 956-57. Before the final fairness hear-
ing, class counsel filed motions seeking $325,000 in incentive
awards for the class representatives and seeking fees for their
representation of the class. Id. at 957, 963.
Multiple nonnamed members of the class challenged the
fairness, reasonableness, and adequacy of the settlement pur-
suant to Rule 23(e) of the Federal Rules of Civil Procedure,
and objected to the applications for $325,000 in incentive
awards for the class representatives and to class counsel’s fee
request. These class members, organized into groups of objec-
tors, were also represented by counsel. Id. at 957-58. The
Schneider Objectors argued that the court should reduce
McGuireWoods’s fee award because the incentive agreements
created a conflict of interest between class counsel and the
five representatives who had entered into the agreements, on
RODRIGUEZ v. DISNER 9075
the one hand, and the remaining members of the class, on the
other.4
On September 10, 2007, the district court approved the par-
ties’ settlement agreement, holding that the settlement was
fair, adequate, and reasonable despite the conflict of interest
between class representatives and class members. Id. at 958.
The court awarded McGuireWoods over $7 million (subject
to further increases for post-settlement work), the full amount
of the requested fees. In a separate order, the district court
declined to approve incentive awards totaling $325,000 to the
class representatives, finding that the incentive agreements
created an appearance of impropriety, violated the ethics rule
against fee-sharing with non-lawyers, and created conflicts of
interest between the class representatives and unnamed class
members. Id. at 959. The court also denied fees to the objec-
tors’ counsel because they “did not add anything to the court’s
order denying” the motion for incentive awards. Id. at 958.
Several groups of objectors appealed.
B
The respective appeals came before this court in Rodriguez
I. There, we affirmed the class action settlement as fair and
adequate, but reversed and remanded the district court’s
orders granting class counsel attorneys’ fees and denying fees
to objectors’ counsel. Id. at 968-69. The incentive agreements
between McGuireWoods and five class representatives played
a central role in our decision.
We first considered the incentive agreements in the context
of determining whether the settlement agreement “should
4
The Feldman Objectors argued that the incentive awards requested on
behalf of the class representatives should be denied, but did not argue that
the incentive agreements affected class counsel’s entitlement to fees. None
of the other objectors challenged the incentive agreements during the set-
tlement hearings or before this court in Rodriguez I.
9076 RODRIGUEZ v. DISNER
have been rejected because the incentive agreements pre-
vented the class representatives from providing adequate rep-
resentation,” id. at 958, as required to certify a class. See Fed.
R. Civ. P. 23(a)(4) (“One or more members of a class may sue
or be sued as representative parties on behalf of all members
only if: . . . the representative parties will fairly and ade-
quately protect the interests of the class.”). We expressed dis-
approval of these incentive agreements, and stated that they
“created an unacceptable disconnect between the interests of
the contracting representatives and class counsel, on the one
hand, and members of the class on the other.” Rodriguez I,
563 F.3d at 960. We noted that class counsel’s agreement to
request incentive awards based on the amount of recovery
“put class counsel and the contracting class representatives
into a conflict position from day one,” and that the effect of
the incentive agreements “was to make the contracting class
representatives’ interests actually different from the class’s
interests in settling a case instead of trying it to verdict, seek-
ing injunctive relief, and insisting on compensation greater
than $10 million.” Id. at 959.
Notwithstanding these serious concerns, we affirmed the
district court’s approval of the class action settlement. We
held that even though “the ex ante incentive agreements cre-
ated conflicts among the five contracting class representa-
tives, their counsel [McGuireWoods], and the rest of the
class,” the adequacy of representation was not a basis to reject
the settlement because “there were two other class representa-
tives who had no incentive agreements and whose separate
counsel [Zwerling Schachter and Finkelstein Thompson] were
not conflicted.” Id. at 955.
We next considered the incentive agreements in the context
of evaluating objectors’ challenge to the award of attorneys’
fees to class counsel. We expressed concern that “the district
court nowhere appears to have considered the effect on the
award of attorney’s fees of the conflict of interest that resulted
from the incentive agreements.” Id. at 967. We explained that
RODRIGUEZ v. DISNER 9077
“ ‘[s]imultaneous representation of clients with conflicting
interests (and without written informed consent) is an auto-
matic ethics violation in California and grounds for disqualifi-
cation,’ ” and that “ ‘[a]n attorney cannot recover fees for
such conflicting representation.’ ” Id. at 967-68 (quoting
Image Technical Serv., Inc. v. Eastman Kodak Co., 136 F.3d
1354, 1358 (9th Cir. 1998)). Although we did not express an
opinion “on the impact of these principles on the fees request
in this case,” we stated that it was “appropriate for the district
court to consider whether counsel could represent both the
class representatives with whom there was an incentive agree-
ment, and absentee class members, without affecting the enti-
tlement to fees.” Id. at 968. Accordingly, we reversed the
award of attorneys’ fees to McGuireWoods and remanded for
the district court “to consider in the first instance the effect,
if any, of the conflict arising out of the incentive agreements
on the request by class counsel for an attorney’s fee award.”
Id.
Finally, we considered certain objectors’ argument that the
district court improperly denied them fees attributable to their
successful challenge to the $325,000 in incentive awards to
class representatives. We held that the district court’s rejec-
tion of objectors’ fee requests on the ground that the objectors
“did not add anything” to the court’s decision to deny incen-
tive awards was “clearly erroneous,” because the district court
did not consider the impropriety of the incentive agreements
until the objectors raised this argument; only then did the dis-
trict court reject the incentive awards. Id. at 963. “The net
effect was to leave $325,000 in the settlement fund—for dis-
tribution to the class as a whole—that otherwise would have
gone to the class representatives.” Id. Accordingly, we
remanded for the district court “to reconsider the extent to
which Objectors added value that increased the fund or sub-
stantially benefitted the class members, and to award attor-
ney’s fees accordingly.” Id.
9078 RODRIGUEZ v. DISNER
C
On remand, the district court first considered the objectors’
challenge to the award of attorneys’ fees to class counsel
McGuireWoods.5 Relying on our decision in Rodriguez I and
Image Technical (which Rodriguez I had cited with approval),
the court concluded that the incentive agreements gave rise to
a conflict of interest between the class representatives and the
other members of the class that “tainted McGuireWoods’s
representation,” and that, under California law, such a conflict
“constitutes an automatic ethics violation that results in the
forfeiture of attorneys’ fees.” Accordingly, the district court
held that McGuireWoods was not entitled to any attorneys’
fees for its representation of the class.
In response to McGuireWoods’s motion to reconsider, the
district court reaffirmed its ruling, stating that the “conflict of
interest constituted an egregious breach of McGuireWoods’
ethical duties, and thus further justif[ied] the forfeiture of
McGuireWoods’ fees for the period this conflict was in
effect.” The district court awarded McGuireWoods the costs
and expenses it incurred in bringing the action, and a quantum
meruit award of $500,000 for services provided after the
court’s rejection of the incentive awards, at which point the
conflict of interest had come to an end. McGuireWoods
timely appealed.
Following this decision denying fees to McGuireWoods,
several objectors’ counsel filed additional fee applications.
The objectors reasoned that the elimination of fees to
McGuireWoods meant class members would receive more
from the settlement fund, and thus the objectors’ efforts bene-
fited the class. The district court denied all objectors’ fee
5
The district court also ruled on certain objectors’ motions for attorneys’
fees for their efforts in challenging the class representatives’ requests for
$325,000 in incentive awards. We address the appeals from this ruling in
a concurrently filed memorandum disposition.
RODRIGUEZ v. DISNER 9079
requests, reasoning that it had relied on its own analysis of the
applicable case law in reaching its determination that
McGuireWoods was not entitled to fees due to the conflict of
interest, and that “the work performed by the objectors’ coun-
sel conferred no benefit on the class” and “was merely cumu-
lative.” Six groups of objectors timely appealed.
II
We review a district court’s decision to grant or deny attor-
neys’ fees for abuse of discretion, Class Plaintiffs v. Jaffe &
Schlesinger, P.A., 19 F.3d 1306, 1308 (9th Cir. 1994), and
must affirm unless the district court applied the wrong legal
standard or its findings of fact were illogical, implausible, or
without support in the record, see United States v. Hinkson,
585 F.3d 1247, 1262 (9th Cir. 2009) (en banc). We generally
give broad deference to the district court’s determinations on
fee awards because of its “superior understanding of the liti-
gation and the desirability of avoiding frequent appellate
review of what essentially are factual matters.” Hensley v.
Eckerhart, 461 U.S. 424, 437 (1983).
III
We turn first to McGuireWoods’s challenge to the denial of
its fees on account of an ethical violation.
A
[1] In class action litigation, a district court “may award
reasonable attorney’s fees and nontaxable costs that are autho-
rized by law or by the parties’ agreement.” Fed. R. Civ. P.
23(h). If there is no contractual or statutory basis to award
attorneys’ fees in a class action case, a court may rely on the
“common fund doctrine,” a traditional equitable doctrine
“rooted in concepts of quasi-contract and restitution.” Vincent
v. Hughes Air West, Inc., 557 F.2d 759, 770 (9th Cir. 1977).
Federal courts award attorneys’ fees under the common fund
9080 RODRIGUEZ v. DISNER
doctrine as a matter of federal common law, based on “the
historic equity jurisdiction of the federal courts.” Sprague v.
Ticonic Nat’l Bank, 307 U.S. 161, 164 (1939).6 Under the
common fund doctrine, “a litigant or a lawyer who recovers
a common fund for the benefit of persons other than himself
or his client is entitled to a reasonable attorney’s fee from the
fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472,
478 (1980). The guiding principle is that attorneys’ fees “be
reasonable under the circumstances.” Florida v. Dunne, 915
F.2d 542, 545 (9th Cir. 1990).
[2] In determining what fees are reasonable, a district court
may consider a lawyer’s misconduct, which affects the value
of the lawyer’s services. See, e.g., Image Technical, 136 F.3d
at 1358. A court has broad equitable power to deny attorneys’
fees (or to require an attorney to disgorge fees already
received) when an attorney represents clients with conflicting
interests. See, e.g., Silbiger v. Prudence Bonds Corp., 180
F.2d 917, 920 (2d Cir. 1950) (“Certainly by the beginning of
the Seventeenth Century it had become a common-place that
an attorney must not represent opposed interests; and the
usual consequence has been that he is debarred from receiving
any fee from either [client], no matter how successful his
labors.”).
[3] For example, we have held that a law firm’s representa-
tion of antitrust plaintiffs against a defendant whom the law
firm represented in an unrelated matter constituted a “clear
violation of the applicable ethical rules,” Image Technical,
6
Therefore, we disagree with McGuireWoods’s assumption that the dis-
trict court’s decision regarding the award of attorneys’ fees is controlled
by California law. Because the litigation in this case alleged violation of
federal antitrust law, the award of attorneys’ fees is governed by federal
equitable doctrines, and state decisions are merely persuasive authority. If,
on the other hand, we were exercising our diversity jurisdiction, state law
would control whether an attorney is entitled to fees and the method of
calculating such fees. See Mangold v. Cal. Pub. Utils. Comm’n, 67 F.3d
1470, 1478-79 (9th Cir. 1995).
RODRIGUEZ v. DISNER 9081
136 F.3d at 1359, and that “an attorney cannot recover fees
for such conflicting representation . . . . even where, as here,
the matters in which the firm represents the clients with con-
flicting interests are unrelated,” id. at 1358. We reasoned that
“payment is not due for services not properly performed,” id.(quoting Cal Pak Delivery, Inc. v. United Parcel Serv., 60
Cal. Rptr. 2d 207, 215 n.2 (1997)), and that it “compounds
injustice” to allow the attorney to recover fees from the very
party injured by the ethical violation, id. at 1359. Similarly, in
United States ex rel. Virani v. Jerry M. Lewis Truck Parts &
Equip., Inc., 89 F.3d 574 (9th Cir. 1996), a qui tam action
under the False Claims Act, we noted that a reasonable fee for
an attorney who represents clients with conflicting interests is
“zero” at least “when the violation is one that pervades the
whole relationship.” Id. at 579.
Our sister circuits are in accord. See Petrovic v. Amoco Oil
Co., 200 F.3d 1140, 1156 (8th Cir. 1999) (affirming the dis-
trict court’s decision to deny attorneys’ fees and costs to a
firm that had been disqualified for a conflict of interest, rea-
soning that the district court “could properly deny the firm
any recovery for services rendered prior to the disqualifica-
tion, even if those services conferred some benefit on the
class”); see also So v. Suchanek, 670 F.3d 1304, 1310-11
(D.C. Cir. 2012) (holding that the district court has broad
equitable power to require counsel who represented clients
with conflicting interests to disgorge fees); In re E. Sugar
Antitrust Litig., 697 F.2d 524, 533 (3d Cir. 1982) (upholding
the disgorgement of attorneys’ fees where “breach of profes-
sional ethics is so egregious that the need for attorney disci-
pline and deterrence of future improprieties of that type
outweighs” the concerns of providing “the client with a wind-
fall” and depriving the “attorney of fees earned while acting
ethically”).
[4] Although the application of the common fund doctrine
is a matter of federal courts’ equitable powers, see Van
Gemert, 444 U.S. at 478; Wininger v. SI Mgmt. L.P., 301 F.3d
9082 RODRIGUEZ v. DISNER
1115, 1120-21 (9th Cir. 2002), we have frequently looked to
state law for guidance in determining when an ethical viola-
tion affects an attorney’s entitlement to fees, see Rodriguez I,
563 F.3d at 967-68 (citing California cases for the proposition
that an attorney cannot recover fees for services provided
after a conflict of interest arose); Image Technical, 136 F.3d
at 1358 (same). California courts have affirmed a trial court’s
decision to deny fees to attorneys laboring under an actual
conflict of interest, such as where an attorney represented two
entities with adverse interests entering a business deal without
informed consent, Fair v. Bakhtiari, 125 Cal. Rptr. 3d 765,
792 (Ct. App. 2011), a law firm represented both wife and
husband in marital dissolution proceedings, Jeffry v. Pounds,
136 Cal. Rptr. 373, 377 (Ct. App. 1977), and an attorney
undertook to represent a client in a proxy fight with a corpora-
tion for which the attorney had been general counsel, Gold-
stein v. Lees, 120 Cal. Rptr. 253, 254-55 (Ct. App. 1975). By
contrast, where the ethical violation is less severe, for exam-
ple where the attorney represented clients with only a poten-
tial conflict of interest, California courts have affirmed
decisions to award attorneys some fees depending on the
equities. See Pringle v. La Chapelle, 87 Cal. Rptr. 2d 90, 94
(1999). In Pringle, the state court held that a trial court may
consider “ ‘the gravity and timing of the violation, its willful-
ness, its effect on the value of the lawyer’s work for the client,
any other threatened or actual harm to the client, and the ade-
quacy of other remedies’ ” in determining whether and to
what extent fee forfeiture is appropriate. Id. at 94 n.5 (quoting
Restatement (Third) of Law Governing Lawyers § 49 (Tenta-
tive Draft No. 1, 1996)). The egregiousness of the violation
is often the critical factor. See Mardirossian & Assocs., Inc.
v. Ersoff, 62 Cal. Rptr. 3d 665, 682 (Ct. App. 2007); see also
Paul W. Vapnek et al., California Practice Guide: Profes-
sional Responsibility, ch. 4 ¶ 4:238; ch. 5 ¶¶ 5:1026, 5:1026.3
(2011). We are not aware, however, of any California case
that has overturned a trial court’s decision to deny attorneys’
fees to an attorney engaged in dual representation of clients
RODRIGUEZ v. DISNER 9083
with actual conflicts of interest, rather than a potential one as
in Pringle.
We apply these equitable principles even more assiduously
in common fund class action cases, such as this one, because
“the district court has a special duty to protect the interests of
the class,” Staton v. Boeing Co., 327 F.3d 938, 970 (9th Cir
2003), and must “act with a jealous regard to the rights of
those who are interested in the fund in determining what a
proper fee award is,” In re Wash. Pub. Power Supply Sys. Sec.
Litig. (WPPSS), 19 F.3d 1291, 1302 (9th Cir. 1994) (internal
quotation marks omitted); see also In re Mercury Interactive
Corp. Sec. Litig., 618 F.3d 988, 994 (9th Cir. 2010). In serv-
ing this “fiduciary role for the class,” the district court must
consider whether class counsel has properly discharged its
duty of loyalty to absent class members. Rodriguez I, 563
F.3d at 968. As we noted in Rodriguez I, “ ‘[t]he responsibil-
ity of class counsel to absent class members whose control
over their attorneys is limited does not permit even the
appearance of divided loyalties of counsel.’ ” Id. (quoting
Kayes v. Pac. Lumber Co., 51 F.3d 1449, 1465 (9th Cir.
1995)). This general principle has exceptions; we have
acknowledged that “conflicts of interest among class mem-
bers are not uncommon and arise for many different reasons,”
id., and a court may tolerate certain technical conflicts in
order to permit attorneys who are familiar with the litigation
to continue to represent the class, see, e.g., In re Agent
Orange Prod. Liab. Litig., 800 F.2d 14, 18-19 (2d Cir. 1986).
But a court may appropriately determine that a conflict of
interest affects class counsel’s entitlement to fees where the
conflict was not one “that developed beyond the control or
perception of class counsel,” and where the conflict was never
disclosed to the district court “so that it could take steps to
protect the interests of absentee class members.” Rodriguez I,
563 F.3d at 958; cf. In Re Agent Orange, 800 F.2d at 18(observing that “ ‘when a potential conflict arises between the
named plaintiffs and the rest of the class, . . . . the attorney’s
duty to the class requires him to point out conflicts to the
9084 RODRIGUEZ v. DISNER
court so that the court may take appropriate steps to protect
the interests of absentee class members’ ” (quoting Pettway v.
Am. Cast Iron Pipe Co., 576 F.2d 1157, 1176 (5th Cir. 1978)).
[5] In sum, under long-standing equitable principles, a dis-
trict court has broad discretion to deny fees to an attorney
who commits an ethical violation. In making such a ruling,
the district court may consider the extent of the misconduct,
including its gravity, timing, willfulness, and effect on the
various services performed by the lawyer, and other threat-
ened or actual harm to the client. See Restatement (Third) of
Law Governing Lawyers § 37 (2000). The representation of
clients with conflicting interests and without informed con-
sent is a particularly egregious ethical violation that may be
a proper basis for complete denial of fees. See Image Techni-
cal, 136 F.3d at 1358-59; see also Petrovic, 200 F.3d at 1156.
A district court has a special obligation to consider these equi-
table principles at the fee-setting stage in common fund class
action cases, given the district court’s fiduciary role to protect
absent class members. Rodriguez I, 563 F.3d at 968.
B
Applying these principles here, we first confirm the district
court’s conclusion that McGuireWoods committed an ethical
violation. Indeed, McGuireWoods does not dispute that its
representation of conflicting interests constituted an ethical
violation. Nor could it.
[6] Under the district court’s local rules, California law
governs a district court’s determination whether an ethical
violation has occurred.7 Rule 3-310(C) of the California Rules
7
Central District Local Rule 83-3.1.2 provides that:
“the standards of professional conduct required of members of
the State Bar of California and contained in the State Bar Act, the
Rules of Professional Conduct of the State Bar of California, and
RODRIGUEZ v. DISNER 9085
of Professional Conduct generally prohibits the representation
of clients with actual or potential conflicts of interest absent
an express waiver.8 The interests of clients “actually conflict”
for purposes of Rule 3-310 “whenever a lawyer’s representa-
tion of one of two clients is rendered less effective because of
his representation of the other.” Gilbert v. Nat’l Corp. for
Housing P’ships, 84 Cal. Rptr. 2d 204, 212 (Ct. App. 1999).
“The primary value at stake in cases of simultaneous or dual
representation is the attorney’s duty—and the client’s legiti-
mate expectation—of loyalty.” Flatt v. Super. Ct., 885 P.2d
950, 955 (Cal. 1994). A potential conflict exists whenever a
lawyer’s representation of one client might, in the future,
become less effective by reason of his representation of the
other. See id. at 954.
[7] In Rodriguez I we indicated that the incentive agree-
ments created an actual conflict of interest between the named
members and class counsel, on the one hand, and the other
members of the class, on the other. We explained that the
the decisions of any court applicable thereto . . . . are hereby
adopted as the standards of professional conduct, and any breach
or violation thereof may be the basis for the imposition of disci-
pline. The Model Rules of Professional Conduct of the American
Bar Association may be considered as guidance.”
However, the decision whether to sanction or impose other discipline is a
question of federal law. See, e.g., C.D. Cal. R. 83-3.1.3.
8
Rule 3-310(C) of the California Rules of Professional Conduct states:
A member shall not, without the informed written consent of
each client:
(1) Accept representation of more than one client in a matter in
which the interests of the clients potentially conflict; or
(2) Accept or continue representation of more than one client in
a matter in which the interests of the clients actually conflict; or
(3) Represent a client in a matter and at the same time in a sepa-
rate matter accept as a client a person or entity whose interest in
the first matter is adverse to the client in the first matter.
9086 RODRIGUEZ v. DISNER
incentive agreements “put class counsel and the contracting
class representatives into a conflict position from day one”
because “[b]y tying their compensation—in advance—to a
sliding scale based on the amount recovered, the incentive
agreements disjoined the contingency financial interests of the
contracting representatives from the class.” Rodriguez I, 563
F.3d at 959. This meant that “once the threshold cash settle-
ment was met, the agreements created a disincentive to go to
trial; going to trial would put their $75,000 at risk in return
for only a marginal individual gain even if the verdict were
significantly greater than the settlement.” Id. at 959-60. We
then noted that under California law, “[s]imultaneous repre-
sentation of clients with conflicting interests (and without
written informed consent) is an automatic ethics violation in
California and grounds for disqualification,” id. at 960 (quot-
ing Image Technical, 136 F.3d at 1358), and faulted the dis-
trict court for not considering “the effect on the award of
attorney’s fees of the conflict of interest that resulted from the
incentive agreements,” id. at 967.
[8] We are bound by our decision in Rodriguez I, both as
law of the case and law of the circuit, see Gonzalez v. Ari-
zona, 677 F.3d 383, 389 n.4 (9th Cir. 2012) (en banc), and
therefore conclude that the district court could reasonably
have found that, by entering into the incentive agreements
without informed consent, McGuireWoods engaged in con-
flicted representation, as defined in Rule 3-310. Therefore, the
district court did not err in determining that McGuireWoods
had committed an ethical violation under its local rules.
C
We next consider whether the district court abused its dis-
cretion in concluding that McGuireWoods was not entitled to
any fees as a result of this ethical violation. McGuireWoods
argues that the district court erred in concluding that a conflict
of interest resulted in an automatic forfeiture of legal fees.
Relying on Pringle, McGuireWoods asserts that a court may
RODRIGUEZ v. DISNER 9087
not deny counsel fees where the client suffered no injury as
a result of an ethical violation, unless counsel engaged in
egregious conduct by knowingly or willfully violating an ethi-
cal rule. Pringle, 87 Cal. Rptr. 2d at 94. Under the Pringle
standard, McGuireWoods argues, it was improper for the dis-
trict court to deny all fees, because the class suffered no hard-
ship as a result of the conflict of interest and the record
provided no basis for holding that McGuireWoods had know-
ingly or willfully disregarded established ethical rules.
We disagree with McGuireWoods’s analysis. As explained
above, although a federal court may consider California cases
as persuasive authority, the district court’s award of attorneys’
fees in this case is guided by “the historic equity jurisdiction
of the federal courts,” Sprague, 307 U.S. at 164, and the dis-
trict court was not bound by Pringle or other state law. In
light of federal equitable principles, we cannot say the district
court abused its discretion in denying McGuireWoods all
fees.
[9] First, the district court here could reasonably determine
that by entering into the incentive agreements that created a
conflict of interest “from day one,” Rodriguez I, 563 F.3d at
959, McGuireWoods did not properly discharge its duty of
loyalty to absent class members. As Rodriguez I explained,
this was not a case where the conflict of interest developed
during the course of litigation, or that developed “beyond the
control or perception of class counsel”; rather, it was a con-
flict that “was inserted into the retainer agreement.” Id. at
968. A knowing and willful creation of a conflict of interest
is egregious conduct even under the standard for fee forfeiture
under the test enunciated in Pringle, which McGuireWoods
urges us to adopt. 87 Cal. Rptr. 2d at 94 (explaining that the
denial of attorneys’ fees may be appropriate where “the pur-
ported violation of the rules was serious, if any act was incon-
sistent with the character of the profession, or if there was an
irreconcilable conflict”). Moreover, McGuireWoods took no
steps “to disclose their agreement to the court, and to the
9088 RODRIGUEZ v. DISNER
class,” in violation of its “fiduciary duties to the class and
duty of candor to the court.” Rodriguez I, 563 F.3d at 959.
Accordingly, the district court could reasonably conclude that
because McGuireWoods knowingly and willfully represented
conflicting interests, its services were “not properly per-
formed,” Image Technical, 136 F.3d at 1358, and therefore it
was not entitled to fees.
[10] McGuireWoods argues that fee forfeiture was
improper here because the incentive agreements did not lead
to an actual injury to the class: the class representatives did
not settle for just $10 million (which would have given the
class representatives the maximum amount of incentive
award), but achieved a $49 million settlement. The district
court could have considered this factor, among others, in
exercising its equitable discretion, and could have reasonably
concluded that McGuireWoods was entitled to some attor-
neys’ fees for its efforts and notable success in this case. But
our conclusion that the district court could have reasonably
taken this approach does not make its failure to do so an abuse
of discretion. A district court has the primary responsibility
for determining a reasonable fee award and must weigh any
benefits McGuireWoods conferred on the class against the
pervasive conflict of interest caused by the incentive agree-
ments with class representatives. Given our deferential review
of the district court’s fee determinations, and in light of Image
Technical and Rodriguez I, we cannot say the district court
abused its discretion in denying all fees. We therefore affirm
the district court’s decision.9
IV
We next consider the objectors’ applications for fees based
on their contributions to the district court’s decision to award
no fees to McGuireWoods. Because we uphold the district
9
Because Sarah Disner joins in and adopts all parts of McGuireWoods’s
Brief, we also dismiss her appeal.
RODRIGUEZ v. DISNER 9089
court’s decision on forfeiture, we must consider the objectors’
challenge to the district court’s denial of their fee applica-
tions.
A
Under certain circumstances, attorneys for objectors may
be entitled to attorneys’ fees from the fund created by class
action litigation. Nonnamed members of a certified class have
the authority to object to the fairness of a settlement at the
fairness hearing required by Rule 23(e) of the Federal Rules
of Civil Procedure, as well as appeal the court’s decision to
ignore their objections. See Devlin v. Scardelletti, 536 U.S. 1,
8-9, 14 (2002).
[11] If these objections result in an increase to the common
fund, the objectors may claim entitlement to fees on the same
equitable principles as class counsel. Vizcaino v. Microsoft
Corp., 290 F.3d 1043, 1051-52 (9th Cir. 2002). Conversely,
objectors who do “not increase the fund or otherwise substan-
tially benefit the class members” are not entitled to fees, even
if they bring “about minor procedural changes in the settle-
ment agreement.” Id. at 1051; see also Reynolds v. Beneficial
Nat’l Bank, 288 F.3d 277, 288 (7th Cir. 2002) (explaining that
“[t]he principles of restitution that authorize” the award of
fees to objectors “also require, however, that the objectors
produce an improvement in the settlement worth more than
the fee they are seeking; otherwise they have rendered no ben-
efit to the class”). Nor is it error to deny fees to objectors
whose work is duplicative, or who merely echo each others’
arguments and confer no unique benefit to the class. See
Reynolds, 288 F.3d at 288-89; see also WPPSS, 19 F.3d at
1298.
B
[12] The district court did not abuse its discretion in deny-
ing attorneys’ fees to the Feldman, Juranek, Lukoff, Oriol, or
9090 RODRIGUEZ v. DISNER
Gaudet objectors. These objectors did not confer any material
benefit on the class though their appeals in Rodriguez I. To
the contrary, in Rodriguez I we rejected the Feldman Objec-
tors’ challenges to the inadequacy of the class notice and class
counsel, the Juranek Objectors’ argument regarding the inade-
quacy of the settlement and the use of the cy pres doctrine, the
Oriol Objectors’ contention that the attorney fee award was
excessive, and Gaudet and Gopalan’s argument that the dis-
trict court should have considered treble damages. See Rodri-
guez I, 563 F.3d at 962-68. The Lukoff Objectors did not
participate in the Rodriguez I appeal, and therefore did not
render any ascertainable benefit to the class on this basis. On
remand, the Feldman, Juranek, Lukoff, Oriol, and Gaudet
objectors filed briefs capitalizing on arguments already made
by the Schneider Objectors regarding why class counsel’s fees
should be reduced. With respect to these efforts, we agree
with the district court that, where objectors do not add any
new legal argument or expertise, and do not participate con-
structively in the litigation or confer a benefit on the class,
they are not entitled to an award premised on equitable princi-
ples. See Vizcaino, 290 F.3d at 1051-52.
C
[13] Finally, we turn to the arguments of the attorneys for
the Schneider Objectors, who claim their efforts were instru-
mental in causing the district court to deny fees to class coun-
sel. The record shows that the Schneider Objectors first
brought the incentive agreements to the district court’s atten-
tion. These objectors argued in Rodriguez I that the incentive
agreements implicated McGuireWoods’s entitlement to fees,
and briefed the same issue on remand to both the district court
and to us. Our decision in Rodriguez I acknowledged the seri-
ous implications of McGuireWoods’s conflict of interest, and
remanded to the district court with instructions to consider the
effect of the incentive agreements on McGuireWoods’s enti-
tlement to fees. 563 F.3d at 969. Consistent with the Schnei-
der Objectors’ arguments, the district court determined on
RODRIGUEZ v. DISNER 9091
remand that McGuireWoods was not entitled to fees, a deci-
sion we now affirm, resulting in direct savings to the class in
the amount McGuireWoods would have otherwise received.
The district court concluded that the Schneider Objectors
did not add anything because the district court relied on “its
own analysis of the case law laid out by the Ninth Circuit” in
Rodriguez I. Based on our review of the record, this finding
is a clear error. Although we do not doubt that the district
court made its own interpretation of our decision in Rodriguez
I and applied that interpretation to the facts before it, the dis-
trict court failed to consider that our ruling in Rodriguez I was
a response to the Schneider Objectors’ arguments on appeal.
Accordingly, we remand for the district court to calculate the
appropriate amount of attorneys’ fees that should be awarded
to counsel for the Schneider Objectors in light of the benefit
they conferred on the class.10
Our determination that the district court clearly erred in
denying fees to the Schneider Objectors is consistent with our
similar ruling in Rodriguez I. In that case, we considered the
district court’s decision to deny fees to the objectors who had
first challenged the $325,000 in incentive awards to the class
representatives, a challenge which directly led to the district
court’s rejection of the $325,000 award. See Rodriguez I, 563
F.3d at 963. We held that the district court clearly erred in rul-
ing that the objectors’ actions “did not add anything” to its
decision to deny incentive awards, given that the court had
not focused on the incentive agreements before the objectors
raised the issue. Id. The same analysis applies here.
[14] Because the district court abused its discretion by
10
Relying on In re Synthroid Marketing Litigation, 325 F.3d 974, 980
(7th Cir. 2003), the Schneider Objectors ask us to calculate the appropriate
award of attorneys’ fees, rather than remanding this determination to the
district court. Because the district court is in the best position to make such
equitable determinations in the first instance, we decline to do so.
9092 RODRIGUEZ v. DISNER
denying attorneys’ fees to the Schneider Objectors on the
ground that the court relied on “its own analysis of the case
law,” we vacate that fee order and remand for further pro-
ceedings consistent with this opinion.11
V
In awarding attorneys’ fees from the common fund gener-
ated by litigation, courts are bound by traditional principles of
equity and we must review awards to class counsel and objec-
tors in that light. See Van Gemert, 444 U.S. at 478. We con-
clude that the district court did not abuse its discretion in
declining to award fees to McGuireWoods from the common
fund on the ground that its representation of conflicting inter-
ests made it undeserving of such compensation. Therefore, we
affirm the district court’s decision. We conclude the district
court abused its discretion in not awarding attorneys’ fees to
the Schneider Objectors for their work leading to the forfei-
ture of McGuireWoods’s fees, and therefore vacate the dis-
trict court’s determination and remand for further
11
We grant the Schneider Objectors’ requests for judicial notice of
briefs filed in Rodriguez I. See Corder v. Gates, 104 F.3d 247, 248 n.1
(9th Cir. 1996).
We reject class counsel’s argument that the Schneider Objectors lack
standing to appeal the order denying their request for fees because they did
not file a claim to receive a share of the settlement proceeds. Even assum-
ing that none of the Schneider Objectors submitted a claim, this argument
fails because an attorney who confers a benefit on the class is entitled to
fees based on equitable principles of unjust enrichment, and has standing
to challenge the denial of such fees, regardless whether the attorney’s cli-
ent will receive any of the savings. See Class Plaintiffs, 19 F.3d at
1307-08 (addressing whether attorneys in related state action were entitled
to fees for services benefiting the class in federal action). While it is true
that objectors who do not participate in a settlement lack standing to chal-
lenge class counsel’s (as opposed to objectors’) fee award because, with-
out a stake in the common fund pot, a favorable outcome would not
redress their injury, see Knisley v. Network Assocs., Inc., 312 F.3d 1123,
1128 (9th Cir. 2002), class counsel does not make this argument.
RODRIGUEZ v. DISNER 9093
consideration in light of this decision. We affirm the district
court on its denial of fees to the other objectors.12
AFFIRMED (Nos. 10-55309, 10-55342, 10-56700, 10-
56703, 10-56730, 10-56737, 10-56803, 10-57037).
VACATED AND REMANDED (No. 10-56724).
12
We reject the argument raised by the Lukoff Objectors that the district
court abused its discretion by awarding $500,000 to McGuireWoods for
work performed after July 2007, the date on which the district court
refused to honor the incentive agreements and denied the class representa-
tives’ requests for incentive awards. The district court properly determined
that its rejection of the incentive awards cured any conflict of interest and
that McGuireWoods’s services thereafter were properly performed and
conferred a benefit on the class. See, e.g., Jeffry, 136 Cal. Rptr. at 377.