Edward O'bannon, Jr. v. Ncaa ( 2018 )

FILED
NOT FOR PUBLICATION
JUN 29 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
EDWARD C. O’BANNON, Jr., On Behalf No. 16-15803
of Himself and All Others Similarly
Situated, D.C. No. 4:09-cv-03329-CW
Plaintiff-Appellee,
MEMORANDUM*
v.
NATIONAL COLLEGIATE ATHLETIC
ASSOCIATION, AKA The NCAA,
Defendant-Appellant,
and
ELECTRONIC ARTS, INC.;
COLLEGIATE LICENSING COMPANY,
AKA CLC,
Defendants.
Appeal from the United States District Court
for the Northern District of California
Claudia Wilken, District Judge, Presiding
Argued and Submitted February 15, 2018
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: THOMAS, Chief Judge, BYBEE, Circuit Judge, and QUIST,** District
Judge.
Defendant-appellant the National Collegiate Athletic Association (NCAA)
appeals the district court’s award of attorneys’ fees to the plaintiffs-appellees, a
class of former and current college football and men’s basketball players, under the
Clayton Act. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
The parties are familiar with the facts and proceedings, and we will not state
them except as necessary to explain our decision. The district court entered
judgment for the plaintiffs after a fourteen-day bench trial, holding that the
NCAA’s rules prohibiting student-athletes from receiving compensation for the use
of their names, images, and likenesses (NILs) were an unlawful restraint of trade
under Section 1 of the Sherman Act, 15 U.S.C. § 1. O’Bannon v. Nat’l Collegiate
Athletic Ass’n, 7 F. Supp. 3d 955 (N.D. Cal. 2014). We affirmed in part and
vacated in part. O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049 (9th
Cir. 2015).
While the appeal was pending, the plaintiffs moved for fees and costs under
the Clayton Act, 15 U.S.C. § 26, ultimately requesting $44,755,500.23 in fees and
**
The Honorable Gordon J. Quist, United States District Judge for the
Western District of Michigan, sitting by designation.
2
$5,201,566.97 in costs.1 The request was approved by a magistrate judge with
relatively minor reductions. After the issuance of this panel’s opinion and
supplementary briefing, the district court adopted the magistrate judge’s
recommendation in part and awarded the plaintiffs $40,794,245.89 as reasonable
attorneys’ fees and $1,540,195.58 in costs.2 The NCAA timely appealed.
We review for abuse of discretion, and “[w]e generally give broad deference
to the district court’s determinations on fee awards because of its ‘superior
understanding of the litigation and the desirability of avoiding frequent appellate
review of what essentially are factual matters.’” Rodriguez v. Disner, 688 F.3d
645, 653 (9th Cir. 2012) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)).
I
Under the Clayton Act, a court “shall award the cost of suit, including a
reasonable attorney’s fee” to any plaintiff who “substantially prevails” in an
antitrust action seeking injunctive relief. 15 U.S.C. § 26; Costco Wholesale Corp.
v. Hoen, 538 F.3d 1128, 1136 (9th Cir. 2008) (noting that “fee shifting under § 26
is mandatory”). The threshold determination of eligibility for attorneys’ fees “is a
1
The request excluded, to the extent possible, attorney work done solely for
individual damages claims, a proposed former athlete damages sub-class, the
drafting of jury instructions and preparation for voir dire, the settlement of the
claims against other defendants, and the preparation of the fee application.
2
The NCAA raised no arguments regarding the award of costs on appeal.
3
generous formulation”; to be a prevailing party, a plaintiff must only “succeed on
any significant issue in litigation which achieves some of the benefit the parties
sought in bringing suit.” Hensley, 461 U.S. at 433; see also Texas State Teachers
Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792–93 (1989) (“The touchstone
of the prevailing party inquiry must be the material alteration of the legal
relationship of the parties in a manner which Congress sought to promote in the fee
statute.”); Park ex rel. Park v. Anaheim Union High Sch. Dist., 464 F.3d 1025,
1036 (9th Cir. 2006) (explaining that “the general rule” is “that the degree of
success does not bear on the threshold question of eligibility for an attorney’s fees
award”). An enforceable judgment on the merits “create[s] the ‘material alteration
of the legal relationship of the parties’ necessary to permit an award of attorney’s
fees.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human
Servs., 532 U.S. 598, 604 (2001) (quoting Tex. State Teachers Ass’n, 489 U.S. at
792–93). A plaintiff “substantially prevails” under § 26 by achieving injunctive
relief. 15 U.S.C. § 26; see also Hensley, 461 U.S. at 435 n.11.
The district court entered judgment against the NCAA for violating the
Sherman Act and permanently enjoined it from prohibiting its member schools
from compensating the plaintiff class for the use of their NILs by awarding grants-
in-aid up to the full cost of attendance. The plaintiffs did not prevail on every
4
issue, but their enforceable judgment materially altered the legal relationship of the
parties and clearly demonstrates success on a significant issue. The prospective
injunctive relief obtained in this class action directly benefits the certified class and
can be enforced by the class.3 Neither the named plaintiffs nor any other individual
class member must prove they will personally receive a direct or material benefit
for plaintiffs to be entitled to attorneys’ fees.4 The plaintiffs substantially prevailed
in their antitrust action seeking injunctive relief, and accordingly are entitled to
attorneys’ fees under § 26.
II
Where a plaintiff achieves partial or limited success, the reasonableness of a
fee award under Hensley is determined through a two-step process. Webb v. Sloan,
330 F.3d 1158, 1168 (9th Cir. 2003). The court first determines if the successful
claims were related to the unsuccessful claims. Id. at 1168–69. The district court
determined that “[a]lthough Plaintiffs refined their theory of the case over the
course of the litigation, their abandoned claims ‘involve[d] a common core of facts
or [were] based on related legal theories.’” O’Bannon v. Nat’l Collegiate Athletic
3
The NCAA’s argument that the injunctive relief does not benefit the class
is foreclosed by our prior opinion. O’Bannon, 802 F.3d at 1070–71, 1074 n.18.
4
There is neither a legal nor a factual basis for the distinction the NCAA
attempts to draw between former student-athlete and current student-athlete
members of the class.
5
Ass’n, No. C 09-3329 CW, 2016 WL 1255454, at *4 (N.D. Cal. Mar. 31, 2016)
(second and third alterations in original) (quoting Hensley, 461 U.S. at 435). The
plaintiffs represented to the district court that they had, to the extent possible,
excised from their fee request hours spent on unrelated claims, and the district
court reduced additional hours it found were spent solely on claims against the
other defendants. Id. at *8–9. The motion for class certification does not, as the
NCAA contends, provide a clear dividing line between unsuccessful and successful
claims, and the class cannot be retroactively divided into sub-classes. The district
court did not abuse its discretion in determining that the claims for which fees were
sought were not “‘distinctly different’ both legally and factually.” Webb, 330 F.3d
at 1169 (quoting Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895, 901,
902 (9th Cir. 1995)).
The second consideration is whether “the plaintiff achieve[d] a level of
success that makes the hours reasonably expended a satisfactory basis for making a
fee award.” Hensley, 461 U.S. at 434. A plaintiff who did not achieve every goal
yet still “obtained excellent results . . . should recover a fully compensatory fee.”
Id. at 435. “It is an abuse of discretion for the district court to award attorneys’
fees without considering the relationship between the ‘extent of success’ and the
amount of the fee award.” McGinnis v. Kentucky Fried Chicken of Cal., 51 F.3d
6
805, 810 (9th Cir. 1994) (emphasis added) (quoting Farrar v. Hobby, 506 U.S.
103, 116 (1992)).
After supplemental briefing on the impact of our decision “on the overall
scope of Plaintiffs’ success,” the district court agreed with the magistrate judge that
the plaintiffs obtained excellent results in this litigation. The court “considered the
Ninth Circuit’s holding,” but concluded that even after partial vacatur of the
injunctive relief, “the finding of liability and the remaining injunctive relief are
together an excellent result.” O’Bannon, 2016 WL 1255454, at *4. The court
noted that “the decision obtained by Plaintiffs ‘is the first by any federal court to
hold that any aspect of the NCAA’s amateurism rules violate the antitrust laws, let
alone to mandate by injunction that the NCAA change its practices.’” Id. (quoting
O’Bannon, 802 F.3d at 1053).
The district court acted well within its discretion in finding that the plaintiffs
achieved excellent results. The district court’s focus on the plaintiffs’ success in
achieving injunctive relief, as opposed to their failure to win damages, was entirely
appropriate, as the basis for the fee request was § 26. Under § 26, attorneys’ fees
are mandatory in antitrust cases achieving injunctive relief under a private attorney
general theory. See Sw. Marine, Inc. v. Campbell Indus., 732 F.2d 744, 746 (9th
Cir. 1984). Moreover, plaintiffs did not request fees for time devoted solely to
7
their damages claims. The district court also specifically acknowledged the
reversal of a portion of the injunctive relief it had ordered before concluding that
the plaintiffs achieved excellent results.
To the extent the district court adopted the magistrate judge’s reasoning, it
did not err despite our intervening opinion. While we emphasized the “limited
scope” of our decision, O’Bannon, 802 F.3d at 1079, the decision did not
undermine the magistrate judge’s findings on the plaintiffs’ success in this
litigation. The plaintiffs prevailed on their “core claim,” as characterized by the
magistrate judge, and won a permanent injunction prohibiting the NCAA from
enforcing a longstanding rule. The NCAA makes much of a supposed “all or
nothing” approach taken by the magistrate judge and the district court. But the
court considered its earlier rulings, its finding of liability, the ordered injunctive
relief, and the Ninth Circuit’s opinion in holding that the plaintiffs’ limited success
did not merit deviating from the lodestar method. It simply reached a conclusion
the NCAA does not like: that the award of injunctive relief against the NCAA in an
antitrust action brought by private parties is an “excellent result.”
Our review is for abuse of discretion, and we give broad deference to the
district court’s superior understanding of the litigation. Rodriguez, 688 F.3d at
653. The plaintiffs are entitled to mandatory attorneys’ fees under § 26. The
8
district court did not abuse its discretion in determining that the plaintiffs’ success
in achieving injunctive relief was an excellent result and therefore that their fee
request was a reasonable basis for the award of those fees.
III
The NCAA’s remaining arguments relate to the district court’s review and
partial adoption of the magistrate judge’s recommendation in determining a
reasonable award amount and its own review of the plaintiffs’ billing records.
The district court should “provide a concise but clear explanation of its
reasons for the fee award,” but the amount of a fee award ultimately is within the
district court’s discretion. Hensley, 461 U.S. at 437. “This is appropriate in view
of the district court’s superior understanding of the litigation and the desirability of
avoiding frequent appellate review of what essentially are factual matters.” Id.
Congress vested trial courts with the discretion to undertake [fee]
analyses because they are by their nature inexact. Reasonable people
may differ as to what number of hours was reasonable to spend on
this case. But once we are satisfied that the district court has
considered the appropriate factors for the appropriate reasons, our
reviewing function is finished.
Cunningham v. County of Los Angeles, 879 F.2d 481, 486 (9th Cir. 1988). “[I]n
cases where a voluminous fee application is filed in exercising its billing judgment
9
the district court is not required to set forth an hour-by-hour analysis of the fee
request.” Gates v. Deukmejian, 987 F.2d 1392, 1399 (9th Cir. 1992).
The district court’s detailed opinion reflects its thorough de novo review of
the plaintiffs’ attorneys’ billing records and the NCAA’s objections. The district
court provided numerous examples of billing entries to support and explain its
decisions on all of the objections, and its familiarity with the records is apparent.5
It was not required to discuss individually each of the tens of thousands of billing
entries to which the NCAA objected. The district court neither “accepted
uncritically plaintiff’s representations concerning the time expended on this case,
[nor] awarded the entire amount requested by plaintiff.” Sealy, Inc. v. Easy Living,
Inc., 743 F.2d 1378, 1385 (9th Cir. 1984). The district court conducted a careful
review of the records and made numerous deductions, in total reducing the award
recommended by the magistrate judge by an additional $3,628,610.
The district court’s award of reasonable attorneys’ fees and costs under the
Clayton Act was not an abuse of discretion.
AFFIRMED.
5
The district court did not clearly err in overruling or overruling in part the
NCAA’s objections to purported block billing, fees related to claims against the
other defendants, fees for media-related activities, or fees for soliciting clients.
10