INTERNATIONAL PRECIOUS METALS CORPORATION et al. v. WILLIAMWATERS et al.on petition for writ of certiorari to the united states court ofappeals for the eleventh circuitNo. 99-1560. Decided June 5, 2000 The motion of Lester Brickman, et al., for leave to file abrief as amici curiae is granted. The petition for a writ ofcertiorari is denied.Statement of Justice O'Connor respecting the denial of thepetition for a writ of certiorari. This case involves an award of attorney's fees that, by anymeasure, is extraordinary. Respondents brought a securitiesclass action, alleging that petitioners had fraudulentlysolicited and stimulated excessive trading of commoditiesoptions. The parties ultimately settled the suit, wherebypetitioners agreed to create a $40 million "reversionary fund"for the class plaintiffs. Under the terms of the settlement, theportion of the fund not claimed by class members and not paid torespondents in attorney's fees and expenses was to revert topetitioners. After the parties reached their agreement, the District Courtapproved respondents' application for attorney's fees in theamount of $13,333,333, or one-third of the reversionary fund.The figure was unrelated to the amount actually claimed by classplaintiffs. As it later turned out, the actual distribution toclass members was $6,485,362.15. Accordingly, the fee awardapproved by the District Court was more than twice the amount ofthe class' actual recovery. The Court of Appeals affirmed theaward, holding that the District Court had not abused itsdiscretion. See 190 F. 3d 1291, 1293 (CA11 1999). In Boeing Co. v. Van Gemert, 444 U. S. 472 (1980), we upheldan award of attorney's fees in a class action where the award wasbased on the total fund available to the class rather than theamount actually recovered. Id., at 480-481. We had no occasionin Boeing, however, to address whether there must at least besome rational connection between the fee award and the amount ofthe actual distribution to the class. The approval of attorney'sfees absent any such inquiry could have several troublingconsequences. Arrangements such as that at issue here decoupleclass counsel's financial incentives from those of the class,increasing the risk that the actual distribution will bemisallocated between attorney's fees and the plaintiffs'recovery. They potentially undermine the underlying purposes ofclass actions by providing defendants with a powerful means toenticing class counsel to settle lawsuits in a manner detrimentalto the class. And they could encourage the filing of needlesslawsuits where, because the value of each class member'sindividual claim is small compared to the transaction costs inobtaining recovery, the actual distribution to the class willinevitably be minimal. The Courts of Appeals have differed intheir approaches to the problem. Compare Strong v. BellSouthTelecommunications, Inc., 137 F. 3d 844, 852 (CA5 1998) (DistrictCourt did not abuse its discretion in basing fee award on actualpayout rather than reversionary fund), with Williams v. MGM-PatheCommunications Co., 129 F. 3d 1026, 1027 (CA9 1997) (benchmarkfor fee award is 25% of entire fund, and District Court abusedits discretion in basing award on actual distribution to class). Although I believe this issue warrants the Court's attention,this particular case does not present a suitable opportunity forits resolution. As part of their settlement, the parties agreedthat respondents would apply for attorney's fees in an amount upto one-third of the reversionary fund, and petitioners expresslypledged not to "directly or indirectly oppose [respondents']application for fees." App. to Pet. for Cert. G-36. Moreover,according to the District Court's order approving the settlement,petitioners' counsel represented to the court that "the feeapplication specifically contemplated by the [settlement], i.e.$13,333,333 … was reasonable and that its reasonablenesswas supported by his experience in other class actions." Id., atS-4. Consequently, petitioners appear to have waived any rightto challenge the reasonableness of the fee award in this case. Itherefore agree with the Court's decision to deny the petitionfor a writ of certiorari. Nonetheless, I believe the importanceof the issue counsels in favor of granting review in anappropriate case.