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Yamada v. Nobel Biocare Holding AG

United States Court of Appeals, Ninth Circuit

June 9, 2016

Jason M. Yamada, D.D.S., on behalf of himself and others similarly situated, Plaintiff-Appellee,
v.
Nobel Biocare Holding AG; Nobel Biocare AB; Nobel Biocare USA, LLC, Defendants-Appellants.

          Argued and Submitted February 12, 2016 -Pasadena, California

         Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding D.C. No. 2:10-cv-04849-MWF-PLA

          Eric Y. Kizirian (argued) and Michael K. Grimaldi, Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, California; Jeffry A. Miller, Lewis Brisbois Bisgaard & Smith LLP, San Diego, California, for Defendants-Appellants.

          Myron Moskovitz (argued), Piedmont, California; William M. Audet, and Jonas P. Mann, Audet & Partners, LLP, San Francisco, California, for Plaintiff-Appellee.

          Before: Marsha S. Berzon and John B. Owens, Circuit Judges, and Algenon L. Marbley, [*] District Judge

         SUMMARY[**]

         Attorneys' Fees

         The panel vacated the district court's order awarding class counsel more than $2.3 million in attorneys' fees, which the district court awarded based on the terms of a settlement agreement, California Code of Civil Procedure § 1021 under the substantial benefit theory, and the private attorney general theory under California Code of Civil Procedure § 1021.5; and remanded.

         Dr. Jason Yamada, a dentist, filed a class action complaint against defendants Nobel Biocare AG, and related entities, alleging defects in the NobelDirect implants.

         The lodestar method (calculated by multiplying the number of reasonable hours the prevailing party expended by a reasonable hourly rate for the region and for the attorneys' experience) may be used in certain class actions to calculate attorneys' fees. The court may adjust the lodestar figure by an appropriate upward or negative multiplier reflecting a host of "reasonableness" factors.

         The panel held that defendants did not waive their due process argument. The panel also held that the district court's use over defendants' objection of ex parte, in camera submissions to support its fee order violated defendants' due process rights. On remand, the panel held that the district court must allow defendants access to timesheets, appropriately redacted to remove privileged information, so they can inspect them and present whatever objections that they might have concerning the fairness and reasonableness of plaintiffs' fee request.

         The panel held that the district court's discount of the lodestar for lack of success was not erroneous because the district court concisely and clearly explained its reduction of the lodestar, and because there was sufficient support for its finding that plaintiffs' claims were related to a common goal. The panel also held that the district court's cross-check of the lodestar was entirely discretionary where, as here, classwide benefits were not easily monetized.

         ORDER

         The opinion filed on April 20, 2016 and appearing at 2016 WL 1579705 is hereby amended. The amended opinion will be filed concurrently with this order.

         The opinion is amended as follows:

On page 13, line 6 <normally> has been added. The sentence now reads: <Accordingly, we have previously held that an opposing party normally has a right to see the timesheets on which a district court relied in issuing a fee award.>
On page 15, line 5 <Here> has been added. The sentence now reads <Here, the Due Process Clause requires that opposing counsel have access to the timesheets relied on to support the fee order.>

         On page 15, footnote 7 has been added. Footnote 7 reads <This case is different from United States v. Eyraud, in which we held that the district court's denial of a defendant's request for access to the original billing invoices used for restitution purposes to determine compensable attorneys' fees did not violate her right to Due Process. 809 F.3d 462, 471 (9th Cir. 2015). Eyraud "had access to the [victim's] law firm's declaration describing the work it performed relating to Eyraud's fraud and the invoice summaries listing the amount of time that work took." Id. It was only to verify that those disclosed "documents accurately reflected the pertinent information contained in the privileged billing records, " the court examined the original in camera. Id. The court then confirmed that the summaries relating to work and time spent that had been extracted from the privileged material were accurate, i.e., "simply corroborative of what counsel already had seen." Id. With the accurate summaries in hand, we held that Eyraud was "able to challenge the legal basis for the court's order." Id. Thus, she had been "afforded adequate notice [of the facts] and a meaningful opportunity to be heard." Id. By contrast, here the court made an independent determination of appropriate fees, but it did not reveal the actual basis of its ruling or provide Nobel with access to the information used to reach that ruling. Thus, unlike Eyraud, Nobel was denied a meaningful opportunity to review and to litigate the merits of the award.>

         The parties may not file petitions for rehearing or rehearing en banc in response to the amended opinion. The mandate shall issue forthwith.

          OPINION

          MARBLEY, District Judge:

         Defendants-Appellants Nobel Biocare Holding AG, Nobel Biocare AB, and Nobel Biocare USA, LLC (collectively, "Nobel") appeal the district court's order awarding class counsel more than $2.3 million in attorneys' fees. Defendants appeal on four bases. First, they contend that the district court violated their due process rights by basing its fee order on an ex parte, in camera review of timesheets that they could not review or challenge. Second, they argue that the district court did not adequately discount the lodestar. Third, they assert that the district court's cross­check of the lodestar was flawed. Finally, they submit that the district court erred in awarding a multiplier based solely on the contingent risk factor of the litigation. Plaintiffs argue that Defendants have waived the first argument by failing to raise the issue timely or adequately.

         We find that Defendants have not waived their due process argument, and we vacate the district court's fee order and remand with instructions.

         BACKGROUND

         Named Plaintiff Dr. Jason Yamada, DDS is a Torrance, California-based dentist specializing in tooth implants. Dr. Yamada attended a promotional symposium in 2004 hosted by Nobel featuring their NobelDirect dental implants. Following the symposium, Dr. Yamada implanted dozens of NobelDirect implants into his patients but noticed that the implants failed at a rate he deemed unusually high. Just over a year after the implant's launch, two Swedish professors at the University of Gothenburg warned that the implants were causing bone loss, and they urged Nobel to withdraw the implants from the market. In response to those allegations, Nobel contacted the Swedish Medical Products Agency ("SMPA"), a government agency akin to the United States Food and Drug Administration, to investigate. In February of 2008, the SMPA formally closed its investigation with no adverse findings as to the implants' safety or efficacy. Nevertheless, at least a dozen of Dr. Yamada's patients' NobelDirect implants failed, which necessitated explant surgery-that is, removal of the implants-oral reconstruction, implant replacement, and continued monitoring. Dr. Yamada performed those necessary reparative surgeries at his own expense.

         On June 30, 2010, Dr. Yamada filed a class action complaint against Nobel alleging a defect in the NobelDirect implant. The complaint alleged causes of action for declaratory relief, implied indemnity, breach of express and warranty, and a violation of California Unfair Competition Law ...


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