UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT DAVID LOWERY; VICTOR No. 22-15162 KRUMMENACHER; GREG LISHER; DAVID FARAGHER, D.C. No. individually and behalf of themselves 4:16-cv-01135- and all others similarly situated, JSW

Plaintiffs-Appellees, ORDER AND AMENDED v. OPINION RHAPSODY INTERNATIONAL, INC., a Delaware corporation,

Defendant-Appellant.

Appeal from the United States District Court for the Northern District of California Jeffrey S. White, District Judge, Presiding

Argued and Submitted December 9, 2022 Pasadena, California

Filed June 7, 2023 Amended August 2, 2023

Before: Milan D. Smith, Jr., Daniel P. Collins, and Kenneth K. Lee, Circuit Judges. 2 LOWERY V. RHAPSODY INTERNATIONAL, INC.

Order; Opinion by Judge Lee

SUMMARY *

Copyright / Attorneys’ Fees

The panel reversed the district court’s award of attorneys’ fees to plaintiffs’ counsel in a copyright action and remanded. Counsel filed a class action lawsuit on behalf of copyright holders of musical compositions and recovered a little over $50,000 for the class members from defendant Rhapsody International, Inc. (now rebranded as Napster), a music streaming service. The class members obtained no meaningful injunctive or nonmonetary relief in the settlement of their action. The district court nonetheless authorized $1.7 in attorneys’ fees under the “lodestar” method. Reversing, the panel held that the touchstone for determining the reasonableness of attorneys’ fees in a class action under Federal Rule of Civil Procedure 23 is the benefit to the class. Here, the benefit was minimal. The panel held that the district court erred in failing to calculate the settlement’s actual benefit to the class members who

* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. LOWERY V. RHAPSODY INTERNATIONAL, INC. 3

submitted settlement claims, as opposed to a hypothetical $20 million cap agreed on by the parties. The panel held that district courts awarding attorneys’ fees in class actions under the Copyright Act must still generally consider the proportion between the award and the benefit to the class to ensure that the award is reasonable. The panel recognized that a fee award may exceed the monetary benefit provided to the class in certain copyright cases, such as when a copyright infringement litigation leads to substantial nonmonetary relief or provides a meaningful benefit to society, but this was not such a case. The panel instructed that, on remand, the district court should rigorously evaluate the actual benefit provided to the class and award reasonable attorneys’ fees considering that benefit. In determining the value of the “claims-made” class action settlement, the district court should consider its actual or anticipated value to the class members, not the maximum amount that hypothetically could have been paid to the class. The district court should also consider engaging in a “cross-check” analysis to ensure that the fees are reasonably proportional to the benefit received by the class members.

COUNSEL Karin Kramer (argued), Quinn Emanuel Urquhart & Sullivan LLP, San Francisco, California; William B. Adams, Quinn Emanuel Urquhart & Sullivan LLP, New York, New York; Thomas C. Rubin, Quinn Emanuel Urquhart & Sullivan LLP, Seattle, Washington; for Defendant- Appellant. 4 LOWERY V. RHAPSODY INTERNATIONAL, INC.

Reuben A. Ginsburg (argued), Michelman & Robinson LLP, Los Angeles, Californ