In Re: Bank of America Corp. 1 2 In the 3

13‐2919
In Re: Bank of America Corp.
1
2
In the 3
United States Court of Appeals 4
For the Second Circuit 5
________ 6
7
A UGUST TERM , 2015 8
9
A RGUED: A UGUST 26, 2015 10
D ECIDED: MARCH 17, 2015 11
‐ 12
No. 13‐2919 13
14
F LANAGAN, L IEBERMAN, H OFFMAN & SWAIM , 15
Appellant, 16
17
v. 18
19
O HIO PUBLIC E MPLOYEES R ETIREMENT S YSTEM , S TATE TEACHERS 20
R ETIREMENT S YSTEM OF OHIO , 21
Movants‐Appellees, 22
23
v. 24
25
PUBLIC PENSION F UNDS , THE PUBLIC PENSION F UND G ROUP, S TEVEN J. 26
S KLAR , AS (IRA A CCOUNT B ENEFICIARY ), ON BEHALF OF HIMSELF AND 27
ALL OTHERS SIMILARLY SITUATED, R HONDA W ILSON, MICHAEL R. 28
B AHNMAIER, A LMA A LVAREZ , MARK A DAMS , E LIZABETH E AGEN, 29
V ERNON C. D AILEY , R ICHARD A DAME, ARLENE K AHN, 30
PETRA C HATMAN, S TICHTING PENSIOENFONDS ABP, G RANT 31
MITCHELL, NEW Y ORK S TATE TEACHERSʹ R ETIREMENT S YSTEM, PUBLIC 32
E MPLOYEESʹ R ETIREMENT A SSOCIATION OF C OLORADO , S TEVE R. 33
G RABER, INDIVIDUALLY AND AS ASSIGNEE OF CLAIMS OF THE SRG 2008 34
TRUST, S CHWAB SP500 INDEX FUND, S CHWAB 1000 INDEX F UND, 35
S CHWAB INSTITUTIONAL S ELECT SP500 F UND, S CHWAB D IVIDEND 36

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2 No. 13‐2919
E QUITY F UND, S CHWAB C ORE EQUITY F UND, S CHWAB PREMIER E QUITY 1
F UND, S CHWAB F UNDAMENTAL US L ARGE C OMPANY INDEX F UND, 2
S CHWAB TOTAL S TOCK MARKET INDEX F UND, S CHWAB SP500 INDEX 3
PORTFOLIO , S CHWAB MARKETTRACK G ROWTH , PORTFOLIO , SCHWAB 4
MARKETTRACK B ALANCED PORTFOLIO , S CHWAB INVESTMENTS , 5
S CHWAB CAPITAL TRUST, D R . SALOMON MELGEN, FLOR MELGEN, SFM 6
H OLDINGS L IMITED PARTNERSHIP , INTERNATIONAL F UND 7
MANAGEMENT S.A., D EKA INTERNATIONAL S.A. L UXEMBURG , D EKA 8
INVESTMENT G MBH, DI, A ARON K ATZ , JOEL K ATZ , JEREMY F INEBERG , 9
S YLVIA WEISSMANN, PARKER FAMILY INVESTMENTS L.L.C., JEFFREY R. 10
PARKER , THE 1997 JEFFREY R. PARKER F AMILY TRUST, D REW E. PARKER , 11
THE 1994 D REW E. PARKER F AMILY TRUST, K EITH D. PARKER , JULIE M. 12
S ORIN, THE 1991 JEFFREY R. PARKER F AMILY TRUST, THE 1994 JULIE P. 13
MANTELL F AMILY TRUST, MICHAEL A. PARKER , MARK D. W ENDER, 14
E LLIOT WENDER , PENINA WENDER , S TANLEY L. WENDER , R AZELLE M. 15
WENDER , JILL W. G OLDSTEIN, J ERRY E. F INGER , A MBASSADOR L IFE 16
INSURANCE C OMPANY , S ELECT INVESTORS E XCHANGE F UND, L.P., 17
R ICHARD F INGER , JEF F AMILY TRUST, 1976 R EAL E STATE TRUST, 18
WALTER F INGER , THE JERRY E. FINGER F AMILY TRUST D/T/D 19
12/28/1989, THE JERRY E. F INGER F AMILY TRUST, L EO R. JALENAK, 20
PEGGY E. JALENAK, KERS & C O ., R OBERT G EGNAS , 198 LOCHA D RIVE , 21
JUPITER, FL 33458‐7752, S TEVEN L. SHAPIRO , H ARVEY M. MITNICK, 22
NATHAN A. F RIEDMAN, B ONNIE F RIEDMAN, K ENNETH A. C IULLO , 23
JOANNA C IULLO , THOMAS P. DI NAPOLI , C OMPTROLLER OF THE S TATE 24
OF NEW YORK, AS ADMINISTRATIVE H EAD OF THE NEW Y ORK STATE 25
AND L OCAL R ETIREMENT S YSTEMS AND AS S OLE TRUSTEE OF THE NEW 26
Y ORK S TATE C OMMON R ETIREMENT F UND, S CHWAB FINANCIAL 27
S ERVICES FUND , 28
Plaintiffs‐Appellees, 29
30
v. 31
32
B ANK OF A MERICA C ORP ., G ARY A. C ARLIN, NELSON C HAI, K ENNETH 33
D. L EWIS , JOHN A. THAIN, WILLIAM B ARNET, III, F RANK P. B RAMBLE , 34
S R ., JOHN T. C OLLINS , G ARY L. C OUNTRYMAN, TOMMY R. F RANKS, 35
C HARLES K. G IFFORD , MONICA C. LOZANO , WALTER E. MASSEY , 36

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3 No. 13‐2919
THOMAS J. MAY , PATRICIA E. MITCHELL, THOMAS M. R YAN, O. TEMPLE 1
S LOAN, JR ., MEREDITH R. SPANGLER , ROBERT L. TILLMAN, JACKIE M. 2
WARD, MERRILL LYNCH & C O ., INC., NEIL A. C OTTY , JOE L. PRICE , 3
B ANC OF A MERICA S ECURITIES L.L.C., MERRILL LYNCH , PIERCE, 4
F ENNER & S MITH INCORPORATED, B ANK OF A MERICA, J. S TEELE 5
A LPHIN, AMY WOODS B RINKLEY , B ARBARA J. D ESOER, L IAM E. MCG EE , 6
TIMOTHY J. MAYOPOULOS , B RIAN T. MOYNIHAN, B RUCE L. 7
H AMMONDS , R ICHARD K. S TRUTHERS , BANK OF A MERICA 8
C ORPORATION C ORPORATE B ENEFITS C OMMITTEE D EFENDANTS , B ANK 9
OF A MERICA C OMPENSATION AND B ENEFITS C OMMITTEE D EFENDANTS , 10
K EITH T. BANKS , TERESA B RENNER, C AROL T. C HRIST, A RMANDO M. 11
C ODINA, VIRGIS W. COLBERT, GREGORY CURL , JOHN D. F INNEGAN, 12
G REGORY F LEMING , F OX‐PITT K ELTON COCHRAN CARONIA WALLER 13
(USA) L.L.C., J.C. F LOWERS & C O ., L.L.C., JUDITH MAYHEW JONAS , 14
PETER K RAUS , A ULANA L. PETERS, JOSEPH W. PRUEHER, A NN N. R EESE, 15
MICHAEL R OSS , CHARLES O. R OSSOTTI , PETER S TINGI , THOMAS K. 16
MONTAG , B ANK OF A MERICA C ORPORATION, K ENNETH D. D AVIS , 17
MARTIN I. F INEBERG , K ENNETH A. L EWIS , MERRILL LYNCH & CO ., 4 18
WORLD F INANCIAL C NETER , NEW Y ORK, NY 10080, JOSEPH L. PRICE , 19
Defendants‐Appellees. 20
________ 21
22
Appeal from the United States District Court 23
for the Southern District of New York. 24
No. 09 MD 2058 – P. Kevin Castel, Judge. 25
________ 26
27
Before: WALKER , JACOBS , and L IVINGSTON, Circuit Judges. 28
________ 29
30
Petitioner‐appellant Flanagan, Lieberman, Hoffman & Swaim 31
(“Flanagan”) appeals from the decision of the United States District 32
Court for the Southern District of New York (Castel, J.) denying the 33
law firm’s request for attorneys’ fees drawn from a settlement fund 34

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4 No. 13‐2919
in a consolidated securities class action. Two of the lead plaintiffs in 1
the class action had retained Flanagan shortly before the 2
consolidation of the action and, after the appointment of several 3
other firms as co‐lead counsel, Flanagan had continued to work as 4
non‐lead counsel. The district court held that Flanagan was not 5
entitled to its requested fee because, contrary to the contentions of 6
the class’s lead plaintiffs, Flanagan’s efforts had not provided a 7
benefit to the class. We conclude that the district court analyzed 8
Flanagan’s request under an incorrect standard. Accordingly, we 9
VACATE the district court’s orders denying Flanagan’s fee request 10
and REMAND the case for further proceedings consistent with this 11
opinion. 12
________ 13
14
K EVIN P. PARKER (Michelle M. Carreras, Evan M. 15
Janush, Arthur Miller, on the brief), The Lanier 16
Law Firm, P.C., Houston, TX, for Appellant. 17
________ 18
19
JOHN M. WALKER , JR ., Circuit Judge: 20
Petitioner‐appellant Flanagan, Lieberman, Hoffman & Swaim 21
(“Flanagan”) appeals from the decision of the United States District 22
Court for the Southern District of New York (Castel, J.) denying the 23
law firm’s request for attorneys’ fees drawn from a settlement fund 24
in a consolidated securities class action. Two of the lead plaintiffs in 25

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5 No. 13‐2919
the class action had retained Flanagan shortly before the 1
consolidation of the action and, after the appointment of several 2
other firms as co‐lead counsel, Flanagan had continued to work as 3
non‐lead counsel. The district court held that Flanagan was not 4
entitled to its requested fee because, contrary to the contentions of 5
the class’s lead plaintiffs, Flanagan’s efforts had not provided a 6
benefit to the class. We conclude that the district court analyzed 7
Flanagan’s request under an incorrect standard. Accordingly, we 8
VACATE the district court’s orders denying Flanagan’s fee request 9
and REMAND the case for further proceedings consistent with this 10
opinion. 11
BACKGROUND 12
In April 2009, the Ohio Public Employees Retirement System 13
and the State Teachers Retirement System of Ohio (collectively, 14
“Ohio Lead Plaintiffs”) hired Flanagan to represent them in an 15
action against Bank of America, Merrill Lynch, and several officers 16
and directors of the two companies. Ohio Lead Plaintiffs’ action was 17
one of twenty‐eight separate securities lawsuits alleging the 18
insufficiency of public disclosures made in connection with the 19
companies’ merger. On April 14, 2009, Flanagan and the Ohio 20
Attorney General, acting on behalf of Ohio Lead Plaintiffs and as 21
their statutory legal counsel, executed a retention agreement. Ohio 22
Lead Plaintiffs also retained the law firms of Bernstein, Litowitz, 23

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6 No. 13‐2919
Berger & Grossman (“BLB&G”) and Kaplan, Fox & Kilsheimer 1
(“Kaplan Fox”). 2
On June 30, 2009, the United States District Court for the 3
Southern District of New York (Chin, J.) consolidated the twenty‐ 4
eight separate actions into a single class action lawsuit. The district 5
court then appointed a group of Lead Plaintiffs that included Ohio 6
Lead Plaintiffs. The district court also appointed BLB&G; Kaplan 7
Fox; and Kessler, Topaz Meltzer & Check as Co‐Lead Counsel. All 8
Lead Plaintiffs (including Ohio Lead Plaintiffs) had executed 9
retainer agreements with their respective counsel (including Co‐ 10
Lead Counsel and Flanagan) that included an identical fee schedule. 11
The fee schedule capped total attorneys’ fees for the actions at a 12
specific percentage of class recovery; the fee schedule was set forth 13
in a grid, such that the percentage compensation was graduated 14
according to settlement amount and status of the case at the time of 15
resolution. 16
Flanagan’s involvement with the case continued after the 17
appointment of Lead Plaintiffs and Co‐Lead Counsel. Flanagan 18
devoted 7,576.25 hours to the suit (for which the firm later sought 19
$3,417,283.75 in fees) and advanced $12,843.28 in expenses. At the 20
request of Co‐Lead Counsel, Flanagan performed discovery work; 21
assisted in the selection and preparation of expert witnesses; and 22
provided analysis of legal developments, strategy, discovery 23

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7 No. 13‐2919
matters, and trial matters. Flanagan also attended all mediations, 1
mock trials, focus groups, and trial and settlement strategy sessions. 2
The firm, however, never filed a notice of appearance in the case. 3
Lead Plaintiffs ultimately agreed to settle their claims for 4
$2,425,000,000. On February 19, 2013, with the prior approval of 5
Lead Plaintiffs, Co‐Lead Counsel filed a request that “Plaintiffs’ 6
Counsel” be awarded attorneys’ fees in an amount representing 7
6.56% of the settlement fund less Plaintiffs’ Counsel’s expenses 8
(amounting to $158,549,766.46 in total fees), as well as 9
reimbursement of $8,082,828.32 in litigation expenses. As support 10
for the requested percentage, Co‐Lead Counsel affirmed that 11
Plaintiffs’ Counsel had expended 193,547 hours in the litigation, 12
amounting to a lodestar value of $88,307,135; the requested fees 13
yielded a multiplier of 1.8 on the lodestar. The fee request explicitly 14
defined “Plaintiffs’ Counsel” to include Flanagan. The request also 15
included Flanagan’s hours and expenses in its hour and expense 16
totals. 17
On April 5, 2013, the district court (Castel, J.) conducted a 18
hearing on the fee request. Max Berger, an attorney from BLB&G 19
who represented Co‐Lead Counsel, confirmed that “all five lead 20
plaintiffs have approved the fee request” and that “the request was 21
authorized under the fee grid in the retainer agreements entered into 22
in this action with the lead plaintiffs.” App. 167. Berger told the 23

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8 No. 13‐2919
district court that “lead plaintiff’s counsel functioned exceedingly 1
well together . . . [a]nd everybody contributed materially to the 2
litigation.” App. 172. After the district court questioned Flanagan’s 3
entitlement to any fee, Berger defended Flanagan’s specific 4
contributions. 5
The district court denied the portion of the fee request 6
pertaining to Flanagan’s fees and expenses. The district court noted 7
that it was not contesting that Flanagan may have done “valuable 8
work” in the litigation and explicitly declined to challenge 9
Flanagan’s claims regarding the quantity and nature of that work. 10
The district court, however, concluded that Flanagan’s efforts had 11
not provided a benefit to the class. In doing so, the district court 12
emphasized that (a) Flanagan had never been appointed class 13
counsel, (b) Flanagan had not filed a notice of appearance in the 14
case, and (c) Ohio Lead Plaintiffs did not mention Flanagan in 15
declarations they submitted in support of the fee request. The 16
district court also ordered that Co‐Lead Counsel could not share any 17
portion of their own fees with Flanagan without permission from 18
the court. 19
On April 8, 2013, the district court entered an order that 20
awarded Co‐Lead Counsel attorneys’ fees in the amount of 21
$152,414,235.89, plus interest, and litigation expenses in the amount 22
of $8,069,985.04. The order reiterated that Co‐Lead Counsel could 23

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9 No. 13‐2919
not share their award “with any person not associated with Co‐Lead 1
Counsel’s law firms, absent an order from the Court.” App. 201. 2
On April 11, 2013, the district court entered a further order 3
denying any fee award or reimbursement to Flanagan. Citing Victor 4
v. Argent Classic Convertible Arbitrage Fund L.P., which held non‐lead 5
counsel entitled to reasonable attorneys’ fees for work completed 6
prior to the appointment of a lead plaintiff if such work conferred “a 7
substantial benefit to the class,” 623 F.3d 82, 87 (2d Cir. 2010), the 8
district court explained that Flanagan was not entitled to its fee 9
because “th[e] record does not establish that services rendered by 10
[Flanagan] were for the benefit of the class.” App. 207‐209. 11
On July 3, 2013, the district court denied Flanagan’s motion 12
for reconsideration, noting that “while [Flanagan] undoubtedly did 13
work pertaining to the litigation, it has not identified any 14
meaningful contribution that was not covered by lead counsel.” 15
App. 255. On August 1, 2013, Flanagan filed a notice of appeal from 16
the district court’s April 8, April 11, and July 3 orders. 17
DISCUSSION 18
The Second Circuit reviews a district court’s decision to grant 19
or deny an award of attorneys’ fees for abuse of discretion, 20
reviewing de novo any rulings of law. Union of Needletrades, Indus. & 21
Textile Emps. AFL‐CIO, CLC v. INS, 336 F.3d 200, 203 (2d Cir. 2003). 22
Here, Flanagan argues that the district court made an error of law 23

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10 No. 13‐2919
when it applied Victor and rejected Lead Plaintiffs’ contentions that 1
Flanagan’s contributions to the class entitled the firm to its 2
requested fee. Flanagan argues that the proper standard for 3
assessing Flanagan’s fee application is not the “substantial benefit” 4
test outlined in Victor but rather a standard of deference to lead 5
plaintiffs, as outlined by the Third Circuit in In re Cendant 6
Corporation Securities Litigation, 404 F.3d 173, 199 (3d Cir. 2005) 7
(“Cendant II”). Since the firm’s fee request was based on work 8
completed after the appointment of lead plaintiff and Victor only 9
defines the standard for requests based on non‐lead counsel’s work 10
prior to such appointment, Flanagan argues that the Second Circuit 11
should apply Cendant II’s analytical framework. We decline to adopt 12
a categorical reading of Victor to the effect that its standard is only 13
relevant for work done before the appointment of a lead plaintiff. 14
Under the circumstances presented in this case, however, we agree 15
that the district court should have applied a standard of deference to 16
lead plaintiff’s determination. 17
I. The Victor Standard 18
Under the “common fund doctrine,” attorneys whose work 19
produces a common fund benefitting a group of plaintiffs may 20
receive reasonable attorneys’ fees from that fund. Victor, 623 F.3d at 21
86. This doctrine frequently applies in the context of a class action 22
lawsuit. Id. 23

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11 No. 13‐2919
Under the Private Securities Litigation Reform Act of 1995 1
(“PSLRA”), 15 U.S.C. § 78u‐4, the district court appoints the lead 2
plaintiff of a class action and that plaintiff, in turn, selects lead 3
counsel, subject to approval of the court. 15 U.S.C. §§ 78u‐ 4
4(a)(3)(B)(i), 78u‐4(a)(3)(B)(v). The district court then acts “as a 5
fiduciary who must serve as a guardian of the rights of absent class 6
members.” Goldberger v. Integrated Res., Inc., 209 F.3d 43, 52 (2d Cir. 7
2000) (quoting City of Detroit v. Grinnell Corp., 560 F.2d 1093, 1099 (2d 8
Cir. 1997); see In re “Agent Orange” Prod. Liab. Litig., 818 F.2d 216, 221 9
(2d Cir. 1987) (acknowledging “the court’s role as guardian of class 10
rights in relation to settlement review”). Congress enacted the 11
PSLRA to reduce the frequency of meritless and abusive securities 12
lawsuits. See Amgen Inc. v. CT Ret. Plans & Trust Funds, 133 S. Ct. 13
1184, 1200 (2013); Simon DeBartolo Grp., L.P. v. Richard E. Jacobs Grp., 14
Inc., 186 F.3d 157, 166‐67 (2d Cir. 1999). Among the PSLRA’s 15
provisions designed to mitigate abusive lawsuits are limitations on 16
attorneys’ fees. 15 U.S.C. § 78u‐4(a)(6); see Amgen Inc., 133 S. Ct. at 17
1200. 18
In Victor, the Second Circuit set forth certain standards for 19
allocating attorneys’ fees to non‐lead counsel under the PSLRA. 20
Victor, 623 F.3d at 86‐7. Victor held, as noted above, that non‐lead 21
counsel are entitled to reasonable attorneys’ fees for work completed 22
prior to the appointment of a lead plaintiff if such work conferred “a 23

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12 No. 13‐2919
substantial benefit on the class.” Id. at 86. Victor, however, did not 1
address the framework for analyzing a fee request from non‐lead 2
counsel for work completed after the appointment of lead plaintiff, 3
nor the narrower question presented by this case of what framework 4
should apply when that request is part of a general fee allocation 5
that complies with an ex ante agreed‐upon percentage‐of‐the‐fund 6
cap. 7
II. The Cendant II Standard 8
In Cendant II, the Third Circuit held that the district court 9
must afford a “presumption of correctness” to a lead plaintiff’s 10
decision not to award fees to non‐lead counsel for its work 11
performed after lead plaintiff’s appointment. 404 F.3d at 199. In 12
reaching this determination, the Third Circuit relied broadly on the 13
proposition that, whereas courts bear the responsibility for 14
determining non‐lead counsel’s fees for work performed prior to the 15
appointment of lead plaintiff, post‐appointment “the primary 16
responsibility for compensation shifts from the court to that lead 17
plaintiff.” Id. at 197. There are important distinctions between 18
Cendant II and the present case – in particular that Flanagan asks us 19
to afford a presumption of correctness to lead plaintiff’s decision to 20
award fees rather than to deny such fees. Nevertheless, we agree 21
that Cendant II’s presumption of correctness, rather than Victor’s 22
“substantial benefit” test, properly applies in the circumstances here, 23

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13 No. 13‐2919
where a fee request emanates from non‐lead counsel for work 1
completed after lead plaintiff’s appointment and lead plaintiffs 2
advocate for non‐lead counsel to receive a portion of a previously‐ 3
capped percentage‐of‐the‐fund award. 4
Cendant II’s approach recognizes that lead plaintiffs and their 5
counsel are better positioned than the court to “determine how 6
much non‐lead counsel’s efforts, as opposed to lead counsel’s 7
independent work, contributed to the final work product” and to 8
“attach a dollar value to that contribution.” Id. at 201 n.17; see Victor, 9
623 F.3d at 90 (“[L]ead counsel is typically well‐positioned to weigh 10
the relative merit of other counsel’s contributions . . . .”). Cendant II’s 11
approach also aligns with the PSLRA’s conception of the lead 12
plaintiff as the driver of and decisionmaker for the class action. See 13
Cendant II, 404 F.3d at 197 (noting the responsibility the PSLRA 14
places on the lead plaintiff to select and retain representation for the 15
entire class); see also S. Rep. No. 104‐98, at 10 (1995) (explaining that 16
the lead plaintiff “should drive the litigation”). 17
To be sure, the circumstances of this case are different from 18
those in Cendant II because Cendant II involved a lead plaintiff’s 19
contention that non‐lead counsel was not entitled to fees. Id. We 20
adopt the standard articulated in Cendant II in the circumstances of 21
this case (where lead plaintiffs and lead counsel seek to compensate 22
other counsel as part of a capped percentage‐of‐the‐fund recovery). 23

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14 No. 13‐2919
We need not decide whether that standard applies in this Circuit 1
under the circumstances presented in Cendant II (where class 2
representatives and class counsel argue that other counsel is not 3
entitled to fees that, if paid, would diminish class members’ 4
recovery) or under any other post‐appointment circumstances (for 5
example, where lead plaintiffs and counsel advocate payment of fees 6
to other counsel that would be expected to reduce payments to class 7
members; or where they seek to deny fees to other counsel and those 8
fees would come out of class counsel’s pockets).1 9
Here, Lead Plaintiffs and Lead Counsel argued that 10
Flanagan’s contributions merited the fee denied by the district court. 11
A lead plaintiff is unlikely to argue in favor of a fee award to an 12
undeserving attorney, given that the fee award reduces the lead 13
plaintiff’s recovery. 14
Moreover, Lead Plaintiffs and Co‐Lead Counsel included 15
Flanagan in a request for a capped percentage of class recovery – 16
one to which all Lead Plaintiffs and all counsel had agreed ex ante. 17
Had Flanagan (and its hours of work) not been included in such 18
1 We expressly reject Cendant II’s suggestion that one reason for
deferring to the discretion of lead plaintiffs and lead class counsel is that
they will often be “repeat players in the securities class action business”
and will therefore seek to “maintain good relations with the rest of the
securities plaintiffs’ bar.” Cendant II, 404 F.3d at 199. This seems to be
backwards. These considerations should not bear upon the decisions of a
fiduciary and invite corruption.

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15 No. 13‐2919
request, it seems highly likely that Co‐Lead Counsel would have 1
applied for the same 6.56% of the settlement fund, in accordance 2
with the retainer agreements. The lodestar multiplier used as a 3
check on the percentage recovery would have been slightly higher, 4
but Co‐Lead Counsel presumably would have expected the district 5
court to award the requested fee nonetheless given the relatively low 6
overall percentage and the result obtained for the class. In these 7
circumstances, the request that a portion of the percentage be 8
awarded to Flanagan is best viewed as one that was expected to 9
diminish Co‐Lead Counsel’s recovery, as opposed to that of class 10
members. It is therefore unlikely that Co‐Lead Counsel would have 11
argued in favor of this fee award had Flanagan been underserving.2 12
Furthermore, lead plaintiffs and lead counsel are also bound by a 13
fiduciary duty to the class and would breach that duty by arguing 14
that the class’s recovery should be reduced by undeserved 15
attorneys’ fees. 16
The presumption of correctness is also rebuttable. We agree 17
with Cendant II that even when the presumption of correctness 18
2 Because the district court excised the portion of the percentage fee
request that it attributed to Flanagan, an award to Flanagan at this
juncture would effectively diminish class recovery vis‐à‐vis the result of
the district court’s orders, but this should be disregarded because the
expectations of lead counsel and lead plaintiffs at the time the request was
made matter in determining whether deference to that request was
appropriate.

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16 No. 13‐2919
applies, it may be refuted through a prima facie showing that the 1
proposed fee is either procedurally improper, because the lead 2
plaintiff (a) breached fiduciary duties by proposing an allocation 3
motivated by an interest other than the best interest of the class or 4
(b) breached fiduciary duties by failing to “carefully consider and 5
reasonably investigate” non‐lead counsel’s fee request, or that the 6
proposed fee allocation is substantively improper because it was 7
clearly excessive in light of the actual contributions and reasonable 8
expectations of non‐lead counsel. Id. at 200. As to the latter 9
question—whether the fee is clearly excessive—we note that the 10
common‐fund inquiry from Victor, whether non‐lead counsel 11
conferred “a substantial benefit on the class,” Victor, 623 F.3d at 87, 12
remains highly relevant. Further, we note in passing that failure to 13
file a notice of appearance can indeed be relevant to this latter 14
inquiry: the filing of a notice of appearance serves to keep a district 15
court apprised of which counsel are contributing to the litigation of a 16
class action suit, which in turn facilitates the court as serving as a 17
“guardian of class rights.” In re “Agent Orange,” 818 F.2d at 221. 18
We further highlight an important distinction between 19
Cendant II and this case that bears on the process of rebutting a 20
presumption of correctness. In Cendant II, in which lead plaintiffs 21
sought to deny a fee award to non‐lead counsel, non‐lead counsel 22
served as a natural party to seek to rebut the presumption: thus, the 23

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17 No. 13‐2919
adversarial process could serve to protect the interests of the class 1
and ensure that fee awards reflected the contribution of the relevant 2
parties. In contrast, in this case, where non‐lead counsel, lead 3
counsel, and lead plaintiffs all seek the same outcome, there is no 4
natural party with incentive to make a prima facie showing 5
rebutting the presumption of correctness. 6
In Cendant I, the Third Circuit addressed a similar situation, 7
noting that “there is an arguable tension between the presumption 8
of reasonableness accorded the arrangement between the Lead 9
Plaintiff and properly selected counsel and the duty imposed on the 10
Court by the Reform Act, 15 U.S.C. § 78u‐4, to insure ‘[t]hat total 11
attorneys’ fees and expenses awarded by the court to counsel for the 12
plaintiff class shall not exceed a reasonable percentage of the 13
amount of any damages and prejudgment interest actually paid to 14
the class.’” In re Cendant Corp. Litig., 264 F.3d 201, 283 (3d Cir. 2001) 15
(“Cendant I”). 16
In light of this tension, we observe that the district court must 17
be mindful that it must act “as a guardian of the rights of absent 18
class members,” Goldberger, 209 F.3d at 52, in assessing whether a 19
presumption of correctness has been properly refuted and then, if 20
indeed it has, determining on its own the appropriate fee allocation. 21
That role may require more where, as here, no natural party may 22

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18 No. 13‐2919
step forward seeking to rebut a presumption of correctness or argue 1
against a fee allocation. 2
In this case, the district court should have afforded a 3
rebuttable presumption of correctness to Lead Plaintiffs’ proposed 4
allocation of fees to Flanagan. Lead Plaintiffs consistently 5
maintained, in submissions before the court and through statements 6
made by Co‐Lead Counsel, that Flanagan’s fee was reasonable both 7
with respect to the amount of work done and in light of the firm’s 8
overall contribution to the class. While the district court is still 9
tasked with overseeing the compensation decisions of Lead 10
Plaintiffs, those decisions were nonetheless entitled to greater 11
deference than they received. 12
III. Sharing Prohibition 13
We are also troubled by the district court’s order prohibiting 14
Co‐Lead Counsel from sharing their fees with Flanagan. While we 15
appreciate the district court’s understanding of its role as guardian 16
of class rights, we note that if Lead Counsel were to share with 17
Flanagan a portion of their own awarded fee, such an arrangement 18
would not reduce class recovery at all. Where, as here, there has 19
been no suggestion of corruption or collusion by class counsel, we 20
can see no reason to interfere in any decision Co‐Lead Counsel 21
might make to share their own portion of fees with a law firm that 22
produced work at Co‐Lead Counsel’s behest. 23

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19 No. 13‐2919
IV. Abuse of Discretion 1
Because we hold that the standard set forth in Cendant II 2
applies to fee applications from non‐lead counsel for work 3
completed after the appointment of lead plaintiff and lead counsel 4
where the fee to non‐lead counsel is one part of a capped percentage 5
of a common fund, we have no reason to address Flanagan’s 6
alternative argument that, even if Victor provides the proper 7
standard, the district court misapplied that standard. 8
With Lead Plaintiffs’ and Co‐Lead Counsel’s support, 9
Flanagan seeks compensation for work completed after the 10
appointment of Lead Plaintiff and Co‐Lead Counsel. We remand 11
this matter to the district court for a reevaluation of Flanagan’s 12
entitlement to this compensation under the standard of deference 13
articulated in this opinion. 14
CONCLUSION 15
For the reasons stated above, we VACATE the district court’s 16
orders denying Flanagan’s fee request and REMAND for further 17
proceedings consistent with this opinion. 18

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