In sum: “This case will likely make the average person shake her head in disbelief: the plaintiffs’ lawyers filed a class action lawsuit on behalf of copyright holders of musical compositions and ended up recovering a little over $50,000 for the class members. The lawyers then asked the court to award them $6 million in legal fees. And the court authorized $1.7 million in legal fees – more than thirty times the amount that the class received. We reverse and remand. The touchstone for determining the reasonableness of attorneys’ fees in a class action is the benefit to the class. It matters little that the plaintiffs’ counsel may have poured their blood, sweat, and tears into a case if they end up merely spinning wheels on behalf of the class. What matters most is the result for the class members. Here, the benefit from this litigation was minimal: the class received a measly $52,841.05 and obtained no meaningful injunctive or nonmonetary relief. On remand, the district court should rigorously evaluate the actual benefit provided to the class and award reasonable attorneys’ fees considering that benefit. In determining the value of this claims-made class action settlement, the court should consider its actual or anticipated value to the class members, not the maximum amount that hypothetically could have been paid to the class. The court should also consider engaging in a cross-check analysis to ensure that the fees are reasonably proportional to the benefit received by the class members.”
In the course of its opinion, the Court also implicitly rejects the notion that fees do not have to be proportionate where the authority for the fees is not simply Rule 23, but a substantive fee-shifting provision: “True, we have held that attorneys’ fees awarded in civil rights cases need not be strictly proportional to monetary damages. Even though damages in civil rights cases are often small, we have held that these lawsuits can provide considerable benefit to society through nonmonetary relief such as ending institutional civil rights abuses or clarifying standards of constitutional conduct. Civil rights fee-shifting provisions thus ensure that lawyers would be willing to represent persons with legitimate civil rights grievances. In other words, civil rights cases can provide significant nonmonetary and injunctive relief to plaintiffs. But the policies served by the Copyright Act are more complex, more measured, than simply maximizing the number of meritorious suits for copyright infringement. Therefore, because the goals and objectives of the statutes are not completely similar, the Supreme Court has rejected an analogy to a civil rights fee-shifting statute when interpreting the Copyright Act’s fee-shifting provision. We do the same here. District courts awarding attorneys’ fees in class actions under the Copyright Act must still generally consider the proportion between the award and the benefit to the class to ensure that the award is reasonable. We recognize that a fee award may exceed the monetary benefit provided to the class in certain copyright cases, such as when a copyright infringement litigation leads to substantial nonmonetary relief or provides a meaningful benefit to society. But this is not such a case.”
Lowery v. Rhapsody International, No.22-15162, 2023 U.S.App.LEXIS 19948 (9th Cir. Aug. 2, 2023).