` No. 22-15162
`
`D.C. No.
`4:16-cv-01135-
`JSW
`
`ORDER AND
`AMENDED
`OPINION
`
`
`
`
`
`
`
`
`
`
`
`Plaintiffs-Appellees,
`
` Defendant-Appellant.
`
`FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`DAVID LOWERY; VICTOR
`KRUMMENACHER; GREG
`LISHER; DAVID FARAGHER,
`individually and behalf of themselves
`and all others similarly situated,
`
`
`
` v.
`
`
`RHAPSODY INTERNATIONAL,
`INC., a Delaware corporation,
`
`
`
`
`Appeal from the United States District Court
`for the Northern District of California
`Jeffrey S. White, District Judge, Presiding
`
`Argued and Submitted December 9, 2022
`Pasadena, California
`
`Filed June 7, 2023
`Amended August 2, 2023
`
`
`
`
`
`Before: Milan D. Smith, Jr., Daniel P. Collins, and
`Kenneth K. Lee, Circuit Judges.
`
`
`
`
`
`
`
`2
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`Order;
`Opinion by Judge Lee
`
`SUMMARY*
`
`Copyright / Attorneys’ Fees
`
`
`
`
`
`
`
`
`
`The panel reversed the district court’s award of
`attorneys’ fees to plaintiffs’ counsel in a copyright action
`and remanded.
`Counsel filed a class action lawsuit on behalf of
`copyright holders of musical compositions and recovered a
`little over $50,000 for the class members from defendant
`Rhapsody International, Inc. (now rebranded as Napster), a
`music streaming service. The class members obtained no
`meaningful
`injunctive or nonmonetary relief
`in
`the
`settlement of their action. The district court nonetheless
`authorized $1.7 in attorneys’ fees under the “lodestar”
`method.
`Reversing, the panel held that the touchstone for
`determining the reasonableness of attorneys’ fees in a class
`action under Federal Rule of Civil Procedure 23 is the
`benefit to the class. Here, the benefit was minimal. The
`panel held that the district court erred in failing to calculate
`the settlement’s actual benefit to the class members who
`
`
`* This summary constitutes no part of the opinion of the court. It has
`been prepared by court staff for the convenience of the reader.
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`3
`
`submitted settlement claims, as opposed to a hypothetical
`$20 million cap agreed on by the parties.
`The panel held that 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. The panel recognized 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 was not such a case.
`The panel instructed that, 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 the “claims-made” class
`action settlement, the district 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 district 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.
`
`
`
`COUNSEL
`
`Karin Kramer (argued), Quinn Emanuel Urquhart &
`Sullivan LLP, San Francisco, California; William B. Adams,
`Quinn Emanuel Urquhart & Sullivan LLP, New York, New
`York; Thomas C. Rubin, Quinn Emanuel Urquhart &
`Sullivan LLP, Seattle, Washington;
`for Defendant-
`Appellant.
`
`
`
`4
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`Reuben A. Ginsburg (argued), Michelman & Robinson LLP,
`Los Angeles, California; Sanford L. Michelman, Michelman
`& Robinson LLP, Encino, California; Mona Z. Hanna and
`Jennifer A. Mauri, Michelman & Robinson LLP, Irvine,
`California; for Plaintiffs-Appellees.
`
`
`
`ORDER
`
`
`
`Judges Smith, Collins, and Lee have voted to deny
`Appellees’ Petition for Rehearing En Banc (Dkt. No. 36),
`filed June 21, 2023. The full court has been advised of the
`Petition for Rehearing En Banc, and no judge of the court
`has requested a vote. Appellees’ Petition for Rehearing En
`Banc is DENIED. No future petitions for rehearing or
`rehearing en banc will be accepted.
`The opinion filed June 7, 2023 (Dkt. No. 34) is amended,
`and the amended version has been filed concurrently with
`this order.
`
`
`
`OPINION
`
`
`LEE, Circuit Judge:
`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
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`5
`
`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.
`BACKGROUND
`I. Rhapsody faces hurdles navigating the pre-
`Music Modernization Act compulsory licensing
`copyright regime.
`Rhapsody International (now rebranded as Napster)
`offers music for digital streaming. Rhapsody—like other
`online music services such as Apple Music or Spotify—must
`pay royalties both to the owners of the copyrighted musical
`compositions (as in this case) and to the owners of the
`copyright
`in
`the particular sound recording of
`that
`
`
`
`6
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`composition. See Johnson v. Copyright Royalty Bd., 969
`F.3d 363, 367–68 (D.C. Cir. 2020).
`Before 2018, Rhapsody had two paths to get a license to
`play (or “copy and distribute” in copyright parlance)
`copyrighted music: (1) it could directly negotiate a voluntary
`license from the copyright owner, or (2) it could obtain a
`“compulsory license” through the procedures set by the
`Copyright Act. See 17 U.S.C. § 115 (2010) (amended 2018).
`This compulsory licensing scheme required Rhapsody to
`serve a “notice of intention” on the copyright owner within
`thirty days after copying the work and before distributing it–
`–or, if the copyright owner could not be identified, to file
`that notice with the Copyright Office. Id. § 115(b)(1).
`But
`this compulsory
`licensing
`system became
`unworkable in the digital music streaming era. Rhapsody
`and other streaming services offer not only popular songs but
`also millions of other, often obscure, copyrighted songs.
`They thus struggled to serve or file a notice of intention for
`every one of the millions of works available on their
`services. See generally Kenneth J. Abdo & Jacob M. Abdo,
`What You Need to Know About the Music Modernization
`Act, Ent. & Sports Law., Winter 2019, at 5, 6.
`In early 2016, David Lowery and other named plaintiffs
`sued Rhapsody on behalf of a putative class of copyright
`owners whose musical compositions were played on the
`streaming service. The plaintiffs asserted that Rhapsody had
`infringed their copyrights by reproducing and distributing
`their musical compositions without obtaining a voluntary or
`compulsory license to do so.
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`7
`
`II. The legal landscape begins to shift in the
`copyright world.
`By the time the plaintiffs sued, Rhapsody had been
`negotiating with the National Music Publishers Association
`(NMPA)
`to resolve
`the same copyright conundrum
`stemming from the antiquated compulsory licensing system.
`Rhapsody and the NMPA eventually reached a settlement.
`To receive payment under that settlement, copyright owners
`had to waive their right to make claims in this lawsuit against
`Rhapsody. Otherwise, the copyright holders would be
`double-dipping and receiving compensation from two
`settlements.
`By April 2018, Rhapsody had informed the plaintiffs in
`this lawsuit about this NMPA settlement. It advised them
`that copyright holders of around 98% of the musical works
`available on its streaming service had opted to participate in
`the NMPA settlement, “effectively decimating” the putative
`class in this lawsuit. In other words, it became clear by April
`2018 that this lawsuit would not yield much compensation,
`even if the plaintiffs prevailed.
`III. Rhapsody and the plaintiffs agree on a
`settlement that results in barely $50,000 in
`monetary relief to the class.
`The parties devoted significant hours and resources to
`this case, but they focused on reaching a settlement rather
`than substantively litigating the claims. Within weeks after
`the plaintiffs filed their complaint, the parties stayed the
`litigation to pursue settlement. Except for a handful of
`discovery disputes and a motion to dismiss that was never
`decided, settlement talks dominated the parties’ dealings.
`
`
`
`8
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`In January 2019, Rhapsody and the plaintiffs finally
`executed a settlement agreement. Rhapsody denied liability
`for copyright infringement but agreed to pay class members
`for musical compositions played on its streaming service. In
`turn, the plaintiffs agreed that Rhapsody would pay a
`maximum of $20 million on class members’ claims. But
`probably because the NMPA settlement had gutted the
`potential class, very few class members submitted claims for
`this settlement. In the end, Rhapsody paid only $52,841.05
`to satisfy class members’ claims.
`The settlement agreement also required Rhapsody to
`establish an Artist Advisory Board with an annual budget of
`at least $30,000 to advance both parties’ goals of protecting
`artists’ rights and promoting Rhapsody’s business.
`The agreement did not require Rhapsody to make any
`other changes
`to
`its
`licensing practices:
`the Music
`Modernization Act (MMA) took care of that. See 17 U.S.C.
`§ 115(d) (2018). While the parties litigated this case,
`Congress altered the legal landscape for licensing of
`copyrighted musical compositions when it enacted the
`MMA in October 2018. Recognizing the cumbersome
`nature of the compulsory licensing system, the MMA allows
`digital music providers to obtain a blanket license. Id. One
`blanket license allows them to copy and distribute all
`musical compositions available for compulsory licensing.
`Id. § 115(d)(1)(B)(i). No longer must they scamper to obtain
`thousands or millions of compulsory licenses.
`IV. The district court awards over $1.7 million in
`attorneys’ fees.
`Under Rule 23 of the Federal Rules of Civil Procedure,
`parties must seek the court’s approval of a class action
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`9
`
`settlement as well as any request for attorneys’ fees for class
`counsel. Fed. R. Civ. P. 23(e), (h).
`Our circuit allows two ways to determine attorneys’ fees
`awards in class actions: (1) the “lodestar” method and (2) the
`“percentage-of-recovery” method. In re Hyundai & Kia
`Fuel Econ. Litig., 926 F.3d 539, 570 (9th Cir. 2019) (en
`banc). Under the lodestar method, the court multiplies the
`number of hours reasonably spent on the case by a
`reasonable hourly rate. Id. Though the lodestar amount is
`presumptively reasonable, the court can then apply a positive
`or negative multiplier to that amount to ratchet the attorneys’
`fees up or down, depending on various factors. Id. at 571–
`72. By contrast, the percentage-of-recovery approach
`provides attorneys a percentage of the total settlement fund
`or amount claimed by the class. Id. at 570. The typical
`benchmark for the percentage-of-recovery approach is 25%,
`but a court can—as in the lodestar method—adjust that
`benchmark up or down. Id.
`Here, the plaintiffs’ counsel calculated their fee request
`using the lodestar method and arrived at an approximately
`$2.1 million figure. They then requested a 2.87 multiplier,
`claiming that they achieved “exceptional” results in a
`“difficult” and “complex” case. In all, the plaintiffs’ counsel
`asked the court to award them over $6 million in attorneys’
`fees.
`The district court tasked the magistrate judge with
`evaluating the fees request. The magistrate judge first
`reduced the lodestar to $1.7 million, noting that almost 20%
`of the hours spent on the case were unreasonable or
`improperly block-billed. She then rejected the requested
`2.87 multiplier, and instead applied a negative 0.5 multiplier
`to the lodestar, given the minor benefit to the class. She
`
`
`
`10
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`the class action settlement provided
`that
`concluded
`$358,903.77 in benefit to the class: besides the $52,841.05
`paid to the class members, the magistrate judge included
`settlement administration costs of $251,400.72, class
`representative
`enhancement
`awards
`and
`travel
`reimbursements of $11,500, the Artist Advisory Board’s
`annual budget of $30,000, and litigation costs of $13,162.
`After applying the negative 0.5 multiplier, the magistrate
`judge recommended awarding about $860,000 in fees to the
`plaintiffs’ counsel.
`The district court accepted the magistrate judge’s
`lodestar calculation of $1.7 million but rejected her
`recommendation to apply a 0.5 negative multiplier. Stating
`that “no bright-line rule” exists to determine whether the
`“lodestar should be cross-checked against the claimed
`amount (here, $52,841.05) or the total amount of the cap
`placed on possible recovery (here, $20,444,567),” the
`district court declined to place a value on the benefit to the
`class. Instead, it concluded that it would apply no
`multiplier—positive or negative—to the lodestar amount,
`balancing two competing factors: “In an effort to find a sum
`that adequately reimburses Plaintiffs’ counsel for the work
`they performed, but without
`the claimed amount
`[$52,841.05] coming even close to the agreed-upon cap for
`the settlement [$20 million], the Court finds that no
`multiplier at all would be the most appropriate measure.”
`With that, the district court awarded over $1.7 million in
`attorneys’ fees.
`This appeal followed. We have jurisdiction under 28
`U.S.C. § 1291.
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`11
`
`STANDARD OF REVIEW
`We review a district court’s attorneys’ fees award for
`abuse of discretion and the factual findings supporting such
`an award for clear error. Kim v. Allison, 8 F.4th 1170, 1178
`(9th Cir. 2021).
`
`ANALYSIS
`The district court’s fee award is not reasonable under
`Rule 23, given that the $1.7 million fee award is more than
`thirty times larger than the amount paid to class members.
`On remand, the district court must justify any fee award it
`makes by comparing it to the benefit provided to the class.
`In evaluating the benefit to the class, the district court must
`disregard the illusory $20 million settlement cap and focus
`instead on the approximately $50,000 paid to class members,
`along with any other benefits to the class. We also
`encourage the court to cross-check the fees against the
`benefit to the class and ensure that the fees are reasonably
`proportional to that benefit. That this is a copyright case
`makes little difference––attorneys’ fees awarded under the
`Copyright Act must still be reasonably proportional to the
`benefit to the class.
`I. The district court erred in approving $1.7
`million
`in
`fees because
`this award
`is
`unreasonable given the small benefit to the
`class.
`District courts must ensure that attorneys’ fees awards in
`class action cases are reasonable. In re Bluetooth Headset
`Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011). When
`evaluating reasonableness, a district court must mainly
`consider the benefit that class counsel obtained for the class.
`Id. at 941–42. It must also provide an adequate explanation
`
`
`
`12
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`for a fee award to facilitate appellate review, detailing “how
`it weighed the various competing considerations” supporting
`the award. Stanger v. China Elec. Motor, Inc., 812 F.3d 734,
`739 (9th Cir. 2016). In particular, district courts awarding
`fees must expressly consider the value that the settlement
`provided to the class, including the value of nonmonetary
`relief, and explain how that justifies the fee award. In re
`Bluetooth, 654 F.3d at 943–45.1
`A. The district court must calculate the settlement’s
`actual value
`to
`the class
`to assess
`the
`reasonableness of the fees.
`The district court erred in failing to calculate the class
`action settlement’s benefit to the class members. It
`acknowledged the glaring disparity between the amount paid
`to the class ($52,841.05) and the hypothetical settlement cap
`($20 million), but did not resolve which number to consider,
`concluding instead that “there is no bright-line rule”
`governing this question.
`We hold that courts must consider the actual or
`realistically anticipated benefit to the class—not the
`maximum or hypothetical amount—in assessing the value of
`a class action settlement. In Kim, we held that a district court
`
`1 We recognize that assigning a precise dollar amount to the class benefit
`may prove difficult where—unlike here—the relief obtained for the class
`is “primarily injunctive in nature and thus not easily monetized.” See In
`re Bluetooth, 654 F.3d at 941. In such cases, the district court’s
`assessment of the litigation’s success will have to be more contextual
`than in a case like this one in which the fees-to-results ratio is readily
`calculated. See id. at 941–42; cf. Roes, 1–2 v. SFBSC Mgmt., LLC, 944
`F.3d 1035, 1055 (9th Cir. 2019) (holding that, where the value of
`injunctive relief is too difficult to quantify, courts should exclude it from
`a common-fund calculation and instead consider it as a factor when
`determining what percentage of the fund is an appropriate award).
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`13
`
`must compare the reasonableness of a fee award against the
`amount anticipated to be paid based on existing claims
`(which was $45,000 in that case), not the maximum payable
`amount (which was $6 million). 8 F.4th at 1181–82. We
`thus reversed a fee award because “the district court should
`have considered the amount of anticipated monetary relief
`based on the timely submitted claims,” rather than the
`maximum amount that the defendant would have paid if all
`class members had submitted claims. Id. at 1181.
`On remand, the district court should disregard the
`theoretical $20 million settlement cap and instead start with
`the $52,841.05 that the class claimed. This rule is especially
`important when the class redemption rate is low. The
`plaintiffs’ counsel had to know that the redemption rate—
`and thus the ultimate class recovery—would be extremely
`low here: there was no realistic possibility that the actual
`payout to class members would approach anywhere near $20
`million, given that the NMPA settlement foreclosed many
`class members from making claims here. Any other
`approach would allow parties to concoct a high phantom
`settlement cap to justify excessive fees, even though class
`members receive nothing close to that amount. District
`courts have the responsibility to guard against such an
`outcome. See Chambers v. Whirlpool Corp., 980 F.3d 645,
`658–59 (9th Cir. 2020).
`The plaintiffs cannot rely on Boeing Co. v. Van Gemert,
`444 U.S. 472 (1980), to argue that the hypothetical $20
`million settlement cap supports the district court’s fee award.
`In Boeing, the Supreme Court held that a fee award to class
`counsel could be calculated based on the entire settlement
`fund––even if part of the fund went unclaimed––because the
`defendant had been held liable for a “sum certain” of about
`$3 million no matter how many class members exercised
`
`
`
`14
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`their right to make a claim. Id. at 478–79 & n.5. But the
`Court suggested that this holding would not apply if the
`amount of the defendant’s liability had been “contingent
`upon the presentation of individual claims.” Id. at 479 n.5.
`Here, Rhapsody is not liable for any “sum certain” but
`only for the claims submitted. The settlement agreement
`established Rhapsody’s willingness to pay up to $20 million
`if necessary to satisfy class members’ claims. But Rhapsody
`never agreed to pay class members a penny more than the
`amount that class members claimed. Because Rhapsody’s
`monetary liability remained contingent upon the amount
`claimed by the class, we join the Seventh Circuit in holding
`that Boeing does not govern a case like this one in which the
`defendant “did not surrender a sum certain that inured to the
`collective benefit of the class.” See Camp Drug Store, Inc.
`v. Cochran Wholesale Pharm., Inc., 897 F.3d 825, 832 &
`n.22 (7th Cir. 2018).2
`
`
`2 The plaintiffs’ counsel cite Williams v. MGM-Pathe Communications
`Co., 129 F.3d 1026 (9th Cir. 1997), to argue that we should consider the
`potential $20 million maximum recovery, not the actual amount claimed,
`in determining attorneys’ fees. But the objection in Williams was that,
`where unclaimed amounts from a settlement fund would “be returned to
`the defendants,” basing attorneys’ fees on the total fund “would amount
`to prohibited fee shifting.” Id. at 1027. We rejected that objection,
`because we concluded that such fee-shifting was contemplated by the
`parties’ settlement agreement: the defendants “knew, because it was in
`the settlement agreement, that the class attorneys would seek to recover
`fees based on the entire . . . fund.” Id. We did not address in Williams
`whether such a fee was “reasonable”; indeed, there is no mention of the
`“reasonableness” of the fees anywhere in our brief opinion in that case.
`Here, in contrast to Williams, the parties did not agree to the sort of
`arrangement that the parties did in Williams. And here, we are squarely
`presented with the question of the reasonableness of the fee award.
`Moreover, our subsequent caselaw precludes reading Williams as
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`15
`
`In short, on remand the district court should value the
`settlement by starting off with the $52,841.05 payment to the
`class members, not the hypothetical $20 million cap.3
`B. On remand, the district court should consider
`cross-checking its lodestar calculation to ensure
`that it is reasonably proportional to the benefit
`provided to the class.
`We have “encouraged courts to guard against an
`unreasonable result by cross-checking their [attorneys’ fees]
`calculations against a second method.” In re Bluetooth, 654
`F.3d at 944–45 (comparing fees calculated using the lodestar
`method against a reasonable fee amount calculated using the
`percentage-of-recovery method). A cross-check can “assure
`that counsel’s fee does not dwarf class recovery.” Id. at 945
`(quoting In re Gen. Motors Corp. Pick-Up Truck Fuel Tank
`Prods. Liab. Litig., 55 F.3d 768, 821 n.40 (3d Cir. 1995)). If
`the cross-check reveals that a contemplated fee award
`exceeds 25% of the benefit to the class, the court should take
`
`
`establishing the sort of “mechanical or formulaic approach” that the
`plaintiffs’ counsel advocate here, which would frequently produce an
`“unreasonable” fee award. See Allen v. Bedolla, 787 F.3d 1218, 1224
`n.4 (9th Cir. 2015) (quoting In re Bluetooth, 654 F.3d at 944). Indeed,
`our recent case authority has emphasized that disregarding a low claims
`rate would result in unreasonable fee awards that are “disproportionate
`to the class benefit.” Kim, 8 F.4th at 1181 (making this observation in
`the context of settlement approval).
`3 Unlike the magistrate judge, the district court did not expressly
`consider whether or how to include settlement administration costs, the
`Artist Advisory Board, and class representative travel reimbursements
`and enhancement awards in its calculation of the benefit to the class. Nor
`do the parties address those issues in their argument before this court.
`We thus do not decide how the district court should treat these costs on
`remand.
`
`
`
`16
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`a hard and probing look at the award because this disparity
`may suggest that the fee amount is unreasonable. See id.;
`Johnson v. MGM Holdings, Inc., 943 F.3d 1239, 1242 (9th
`Cir. 2019).
`Here, no matter the final valuation of the settlement, the
`$1.7 million lodestar amount will greatly exceed 25% of the
`value of the settlement. Indeed, it will be multiple times the
`settlement’s value. And that is a major red flag that signifies
`that lawyers are being overcompensated and that they
`achieved only meager success for the class. See In re
`Bluetooth, 654 F.3d at 942 (stating that district courts should
`“award only that amount of fees that is reasonable in relation
`to the results obtained” (quoting Hensley v. Eckerhart, 461
`U.S. 424, 440 (1983))).
`Except in extraordinary cases, a fee award should not
`exceed the value that the litigation provided to the class. Cf.
`Pearson v. NBTY, Inc., 772 F.3d 778, 782 (7th Cir. 2014)
`(Posner, J.) (“[T]he presumption should . . . be that
`attorneys’ fees awarded to class counsel should not exceed a
`third or at most a half of the total amount of money going to
`class members and their counsel.”). No rational person
`would spend, say, $1 million in legal fees—and endure the
`hassles and headaches of litigation—to recover only relief
`that is a small fraction of that amount. Likewise, it is
`unreasonable to award attorneys’ fees that exceed the
`amount recovered for
`the class, absent meaningful
`nonmonetary relief or other sufficient justification.
`It does not matter that class action attorneys may have
`devoted hundreds or even thousands of hours to a case. The
`key factor in assessing the reasonableness of attorneys’ fees
`is the benefit to the class members. See In re Bluetooth, 654
`F.3d at 942. Here, the benefit to the class is meager. Not
`
`
`
`
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`17
`
`only that, class counsel harbored little realistic probability
`that they would recover substantial compensation for the
`class. It was clear by April 2018 that Rhapsody’s NMPA
`settlement would likely gut the putative class here so that
`this lawsuit would yield only minimal financial recovery
`(and the plaintiffs never argued that their lawsuit somehow
`precipitated the NMPA settlement). And it was obvious that
`no meaningful nonmonetary relief would be possible by
`October 2018 at the latest when Congress passed the MMA.
`In short, an award of $1.7 million in attorneys’ fees is
`unreasonable and not proportional to the benefit received by
`the class.
`II. Even if the district court awards fees under the
`Copyright Act, it must consider whether the
`award is proportional to the benefit to the class.
`The plaintiffs try to wave away our case law on
`reasonable attorneys’ fees by arguing that courts have
`recognized that fees do not have to be proportional to the
`monetary recovery in some cases.
`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.” Gonzalez v. City of
`Maywood, 729 F.3d 1196, 1209–10 (9th Cir. 2013). Civil
`rights fee-shifting provisions thus “ensure that lawyers
`would be willing to represent persons with legitimate civil
`rights grievances.” See City of Riverside v. Rivera, 477 U.S.
`561, 578–79 (1986) (plurality opinion). In other words, civil
`
`
`
`18
`
`LOWERY V. RHAPSODY INTERNATIONAL, INC.
`
`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.”
`Fogerty v. Fantasy, Inc., 510 U.S. 517, 526 (1994).
`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. Id.
`at 522–25.
`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.
`CONCLUSION
`We reverse the district court’s attorneys’ fees award of
`$1.7 million. On remand, the district court should determine
`the class action settlement’s actual value to the class
`members and then award attorneys’ fees proportional and
`reasonable to the benefit received by the class.
`REVERSED AND REMANDED.
`
`