In Re South Dakota Microsoft Antitrust Litigation

MEIERHENRY, Justice

(dissenting).

[¶ 85.] I dissent because there has been no showing that the trial court abused its discretion. When reviewing an attorney fee award, our determination is not “whether we would have made the same ruling, but whether ‘a judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion.’ ” DeVries v. DeVries, 519 N.W.2d 73, 75 (S.D.1994) (citation omitted). Here, the majority opinion disregards the deferential standard of review and substitutes its ruling for that of the trial court.

[¶ 86.] Even though our prior class action suits give little guidance on how to calculate attorney fees, they clearly set forth the standard of review, which is, abuse of discretion — the most deferential standard of review. As we recently reiterated in Wald v. Stanley,

“Abuse of discretion is the most deferential standard of review available with the exception of no review at all.” “We determine that an abuse of discretion occurred only if no judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion.” An abuse of discretion is “a fundamental error of judgment, a choice outside the reasonable range of permissible choices, a decision, which, on full consideration, is arbitrary or unreasonable.”

2005 SD 112, ¶ 8, 706 N.W.2d 626, 629 (citations omitted).

Allocation of Time to South Dakota Case

[¶ 87.] Despite the lack of an itemized statement for every service rendered in this litigation, the trial court did not “guess” at the amount of services. Only after a thorough analysis did the trial court accept the twenty-percent allocation for South Dakota’s share of the Microsoft litigation. The majority claims that without time charges specifically allocated to the South Dakota litigation, it is “almost impossible to make a conscientious and detailed inquiry into the validity of the representation.” See supra ¶ 35. To the contrary, the trial court conscientiously reviewed the time devoted to the South Dakota case. Judge Wilbur specifically found that the twenty percent allocation was rea*112sonable. She based the percentage on counsel’s involvement as lead counsel in four state actions and the federal multidis-trict litigation. Her finding was as follows:

Mr. Barnow is lead class counsel in four states (South Dakota, Kansas, Wisconsin and Michigan), has had minimal involvement in four other states (North Carolina, West Virginia, Minnesota and Maine) and is the state lead counsel in the [multidistrict litigation] proceedings. He was directly involved in the coordinated discovery efforts that provided substantial benefits to both the South Dakota Settlement Class and Microsoft. He was also admitted pro hac vice in this case and was appointed and served first as Class counsel and then as Settlement Class counsel.

Further, coordination with other state actions was required by two pretrial orders that Microsoft supported.

[¶ 88.] The majority determines that only one-eighth of the fees allocated to the South Dakota litigation should have been allowed since the South Dakota litigation was one of eight cases in which the plaintiffs’ attorneys served as class counsel. The majority does so, however, without citing any evidence in the record which indicates that the trial court’s determination was clearly erroneous. By finding that one-eighth is a more appropriate allocation than one-fifth, the majority is merely substituting its ruling for that of the trial court. The trial court’s finding of a twenty percent allocation was not unreasonable.

Hourly Rate for Local Counsel

[¶ 89.] The majority opinion also questions the fees approved for local counsel because “no evidence was provided by Plaintiffs in the record, other than their billing statements, to support a finding that the rates requested were the prevailing local rates in South Dakota for this type of litigation.” See supra ¶ 47. The evidence in -the record, however, shows that the trial court was faced with conflicting evidence. The billing statements show that Plaintiffs’ local attorneys charged between $100 and $300 per hour. Plaintiffs’ local counsel Moreno, who charged $800 per hour, also submitted an affidavit supporting his rate. Moreno stated that “[t]he principle focus of [his] practice is, and has been for several years, in the area of class action litigation.” Further, Plaintiffs submitted evidence which indicated that a local attorney received $220 per hour as local counsel for a prescription drug indirect purchaser class action for work performed from 1999 to 2001.

[¶ 90.] In opposition to Plaintiffs request for fees, Microsoft submitted the affidavit of Robert C. Riter, Jr., a local attorney. According to Riter, the prevailing hourly rate for attorneys in the area with experience similar to that of Plaintiffs’ local attorneys was $150 to $175 per hour, whereas attorneys with specialized experience would charge $250 to $300 per hour. Riter, however, “[did] not believe that any of [Plaintiffs’] local attorneys principally practice in the specialized area of class action litigation.”

[¶ 91.] The trial court, in its discretion, resolved this dispute in favor of Plaintiffs. It found that “[t]he fees requested by Plaintiffs’ counsel, while perhaps higher than the rates generally charged in South Dakota for some types of legal services, are not unreasonable in a case of this nature, especially when compared to what Microsoft paid its own attorneys for work in the same case.” Trial courts regularly determine what constitutes reasonable attorney’s fees in a wide variety of cases. Here the trial court had the opportunity to observe the work of plaintiffs’ local counsel in this “rare and exceptional case” and was in the best position to evaluate the attor-*113nej^s expertise. Although additional evidence of prevailing rates would have bolstered plaintiffs’ fee request, the trial court’s determination was within the range outlined in the affidavit submitted by Microsoft. The award is supported by the record and not “outside the range of permissible choices.” Further, the use of Microsoft’s attorney’s fees merely as a cross check for Plaintiffs’ local and out-of-state attorney’s fees should not constitute an abuse of discretion.

Multiplier of Two to Lodestar

[¶ 92.] In determining that the trial court erroneously applied a multiplier to the lodestar calculation, the majority opinion again substitutes its judgment for that of the trial court. The majority asserts that the settlement here achieved no “exceptional success,” while the trial court found otherwise. In reaching its conclusion, the majority assesses the value of the benefit by assuming that five percent of the vouchers will be redeemed. The majority suggests that the trial court made its determination based on the $9.33 million face value of the voucher settlement. The trial court’s findings concerning the multiplier, however, never mention $9.33 million. Rather, the trial court considered several factors and found that this was a “rare and exceptional case” meriting a multiplier of two. The trial court found as follows:

17. Having considered the arguments raised by counsel for both parties for and against a multiplier, the Court finds that this is a “rare and exceptional case ” that warrants a multiplier or enhancement of two.
18. The Memoranda Microsoft submitted and the arguments it made at the Final Approval hearing support the Court’s determination that this case, and the settlement reached in it, were truly exceptional and are in a class by themselves; when measured against other civil cases filed in South Dakota state courts over the years. The fact that Plaintiffs typically prevail in a small percentage of private antitrust cases that proceed to judgment, further underscores the exceptional nature of the present case and the multi-mil-lion dollar settlement that Plaintiffs’ counsel were able to negotiate with Microsoft.
19.Based on the factors and authorities discussed in the preceding numbered paragraph, and those referred to herein and in its Decision, the Court finds that a multiplier of two is appropriate in this case. Plaintiffs’ counsel’s efforts have resulted in substantial success. Counsel’s quality of representation has been superior and the results they have obtained are exceptional. Counsel have pursued the case vigorously but efficiently and have saved themselves, as well as Microsoft, thousands of dollars in litigation costs. The results achieved are the product of creative lawyer-ing. Counsel have faced and had to overcome novel and difficult questions and have displayed exceptional skill in presenting the issues and their arguments. They have endured the risk of not being compensated at all and the attendant delay in receiving payment for their services. Because of the enormous amount of time they spent working on the case, counsel have been precluded or at least limited in their ability to take on other employment. And, time limitations imposed by court-ordered deadlines, hearings and other circumstances have affected counsel’s other work. Finally, pursuing and *114ultimately obtaining a successful settlement against a multi-billion dollar Fortune 500 company has been a tall task legally and economically, and has created obvious disincentives for companies, like Microsoft, to seek out representation from Plaintiffs’ counsel for future matters.

(emphasis added). The trial court’s decision is not clearly against reason and evidence.

Reasonableness of Fees

[¶ 93.] Most importantly, the trial court recognized that no matter how attorney’s fees are calculated, they must be reasonable. The majority opinion completely disregards the trial court’s complete and thorough analysis of the factors set forth in Crisman and Kelley. Further, the majority fails to consider determinations reached by other courts on this exact issue. As the trial court noted,

The recent California decision in Microsoft I-V Cases, J.C.C.P. No. 4106 (Cal.Super.Ct. Sept. 9, 2004) clearly supports the $2.064 million attorney fee award in this case. There, the California court, in awarding $101 million in fees based on a multiplier of two, held that the expenditure of more than $51 million in attorney time was reasonable in obtaining the voucher settlement.... Significantly, in a number of other state cases, Microsoft agreed to pay attorney fees of between 12% and 20% of the face value of the voucher settlement. In the Montana case, Microsoft agreed to pay $1.476 million in fees and costs, when, unlike the case at bar, there'were no contested hearings or appeals. Moreover, in West Virginia, Microsoft agreed to pay $4.125 million in fees and costs even though the legal work there was far less than occurred here.

(emphasis added). In light of the analysis undertaken by the trial court and the decisions rendered by other courts in other jurisdictions, I question how the majority can find the trial court’s award unreasonable. This should not be a de novo review. “[A] judicial mind, in view of the law and the circumstances” in this case, “could reasonably have reached [the] conclusion” arrived at by the trial court. DeVries, 519 N.W.2d at 75 (citation omitted). The trial court did not abuse its discretion. I would affirm.

[¶ 94.] TUCKER, Circuit Judge, joins this dissent.