Bar Prep Antitrust Case Lawyers Can Seek Fees

PASADENA, Calif. (CN) — Lawyers who secured a $9.5 million settlement in a conspiracy case involving bar exam review courses will get a second chance to seek $2 million in attorneys' fees, the Ninth Circuit ruled Wednesday.

Lead plaintiff Stephen Stetson sued West Publishing, which offers BarBri prep courses, and Kaplan in 2008, claiming the two colluded to block competition in the market for bar review courses.

When he approved a $9.5 million settlement in 2013, U.S. District Judge Manuel Real slashed the attorneys' $1.9 million request for fees by 70 percent, finding they charged higher than market rates and billed for duplicative work.

Writing for a three-judge panel, U.S. Circuit Judge Milan Smith Jr. on Wednesday found Real failed to specify the kind of rates he relied on or why he reduced the attorneys' billable hours by 241.2 "as opposed to any other number of hours."

Lead class counsel D. Alan Harris of Harris & Ruble in Glendale, Calif., said the class attorneys were "gratified" with the Ninth Circuit's ruling.

"After nearly eight years of litigation, the Stetson case has achieved its principal goal: today, in each of the fifty states, Kaplan offers law school graduates bar exam preparation courses in competition with BarBri," Harris said.

Taking on a case of this magnitude involving nationwide antitrust conduct presents a substantial risk, Harris said, adding lawyers who take such risks should be entitled to just compensation.

In the 16-page ruling, Smith found awarding the attorneys $585,000 was "such a large disparity" compared to the $1.9 million request that it "requires a relatively specific articulation of the court's reasoning."

The attorneys sought reimbursement for hourly rates ranging from $125 to $800 per hour.

Real had concluded that $450 per hour was the reasonable rate for attorneys litigating the antitrust class action in Los Angeles at the time, but he didn't say whether that figure was based on current or historic rates.

Additionally, the district court judge never considered whether the attorneys were entitled to a risk multiplier or weighed the factors identified in the 1975 Ninth Circuit ruling Kerr v. Screen Extras Guild to inform his decision.

"Class counsel provided a detailed analysis of these factors," Smith wrote. "The district court briefly mentioned the factors and then, without any analysis, dismissed them."

Real also reduced the attorneys' $50,000 request for cost reimbursement to $20,500 based on "clearly erroneous findings of fact," Smith wrote.

Real said the attorneys failed to support their claim for expert fees, but the Ninth Circuit panel found counsel provided "almost two full pages" explaining how the experts' input was crucial and indispensable to their case.

Smith said the Ninth Circuit has reversed Real's denials and reductions of attorneys' fees three times in a related case. Because of that, the panel ordered that the case be assigned to a different judge on remand.

"In light of the history of this case and related litigation, it is clear to us that the district judge would have 'substantial difficulty in putting out of his ... mind' his previously expressed erroneous findings and conclusions and that 'reassignment is advisable to preserve the appearance of justice,'" Smith wrote.

Because the panel vacated the judge's ruling on attorneys' fees, it also denied a separate appeal by six objectors to the settlement, who sought their own attorneys' fees for getting class counsel fees reduced and increasing the award for class members."On remand, if the district court again reduces class counsel's fee award, it can determine — with specificity — the extent to which the objectors' arguments influenced its decision," Smith wrote.

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