In Henry IV, Shakespeare has the braggart Glendower claim that "I can call spirits from the vasty deep." Glendower’s equally pompous cousin Hotspur replies with "[w]hy, so can I, or so can any man. But will they come when you do call for them?"
Indeed.
Today the Second Circuit upheld the vast depth of district courts’ discretion in awarding fees to class counsel under the Private Securities Litigation Reform Act. Counsel for a class of Nortel Networks investors asked for an award equal to 8.5 percent of a settlement that exceeded $1 billion in cash and stock. A similar securities fraud case against the same company, counsel pointed out, resulted in an eight percent award. Plus the lead plaintiff, a public pension fund, strongly supported the 8.5 percent request. But the district court allowed only three percent — about $34 million on almost $17 million in time.
The Second Circuit summoned the spirit of Broad Discretion. The panel admitted it had "little doubt" about the chintziness of the award and conceded that the disparity in the awards from the two cases against Nortel "troubled" their honors. But the district court did offer an analysis of the relevant factors. Pretty much therefore, the court concluded, "the fee award here does not fall outside the bounds of the district court’s discretion." In re Nortel Networks Corp. Securities Litig., No. 07-0757-cv, slip op. at 9 (2d Cir. Aug. 19, 2008).
