CALIFORNIA CLASS ACTION LAW

Tag: Attorney’s fee

Second District Finds Actual Controversy in Declaratory Judgment Action Between Two Former Co-Counsel Relating to Distribution of Attorneys Fees

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In a dispute over the distribution of attorneys fees between two former co-counsel in a class action lawsuit, the Court of Appeal for the Second District reversed a trial court’s denial of relief in a declaratory action.  Leonard Carder, LLP v. Patten, Faith & Sandford, No. B221940, — Cal.Rptr.3d —-, 2010 WL 3961275 (Cal. Ct. App. 2d Dist. Oct. 12, 2010).

Plaintiff and appellant Leonard Carder, LLP filed a declaratory relief action against his former co-counsel Patten, Faith & Sandford (Patten) regarding the distribution of attorney fees awarded in a stipulated judgment in a class action lawsuit.  Id. *1.  The trial court entered a judgment denying all relief to Leonard Carder on the basis the complaint did not present a case or controversy and that jurisdiction had been reserved with the judge who approved the class action settlement.  Id. The Second District reversed, holding that the complaint did articulate a justiciable case or controversy, and the class action court specifically declined to retain exclusive jurisdiction over the distribution of attorney fees.  Id.

Background

Leonard Carder and Patten were appointed class counsel in an action tried in 2004 before the Honorable Howard J. Schwab, with the bulk of the work on behalf of the plaintiff class performed by Leonard Carder.  Id. The plaintiff class was determined to be entitled to an award of approximately $14.4 million.  A loadstar chart in support of the motion for attorneys fees  showed 11,414 hours worked by Leonard Carder and 673 by Patten.  Id. The loadstar chart justified total fees of $10,879,272 for Leonard Carder and $373,040 for Patten.  Id. Judge Highberger signed the parties’ stipulation to reasonable attorney fees and costs in the total amount of $12,475,000 to be paid within 45 days to Leonard Carder “as trustees for distribution to all counsel in accordance with the approved stipulation.” Id. The final provision in the stipulated judgment was that “[t]his court shall retain jurisdiction over the parties to enforce the terms of this Stipulated Judgment.”  Id. *2. Judge Highberger orally stated that if there were unresolved issues regarding distribution of the fees, “you’ll find some other forum to resolve them. They don’t automatically come to me as a matter of exclusive jurisdiction.”  Id. All counsel expressed agreement with the court’s statement regarding exclusive jurisdiction.  Id. Read the rest of this entry »

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Magistrate Judge Donna Ryu Approves Petition for Attorneys Fees of $287,589 From a $359,000 Total Settlement Fund

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United States Magistrate Judge Donna M. Ryu of the Northern District of California granted a petition for attorneys fees and costs in a FDCPA class action of up to $23,539.31 in costs and up to $287,589.25 in attorneys’ fees from a $359,000 total settlement fund.  Hunt v. Imperial Merchant Services, No. C-05-04993 DMR, 2010 WL 3958726, *1 (N.D. Cal. Oct. 7, 2010) (slip op.).

Plaintiffs filed a consolidated class action against Defendant Imperial Merchant Services, Inc., doing business as Check Recovery Systems (“IMS”), for violating the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. section 1692 et seq. Id. *1. Plaintiffs claimed that IMS’ practice of demanding 10% interest, in addition to a statutory service charge for dishonored checks, was not permitted by California law and was unlawful under the FDCPA. Id.

Plaintiffs obtained class certification, and the parties reached a class-wide settlement, which generated a $359,000 total settlement fund.  Id. Specifically, the settlement funds are to be used first to pay class notice costs incurred by Plaintiffs’ counsel as well as expenses for administering the class settlement.  Id. Next, the two class representatives will receive $2,000 each, and qualifying class members will be entitled to a pro rata share of the $100,000 Damages Class Fund, up to 100% of an individual class members’ damages. Id. The settlement funds are then be used to pay attorneys’ fees and expenses.  Id. And any remaining settlement funds are to be distributed to designated cy pres recipients. Id. Subject to the terms of the above plan of distribution, the court granted the motion for reimbursement of up to $287,589.25 in attorneys’ fees.  Id.

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Southern District Denies Class Certification on Adequacy of Counsel Grounds

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The Southern District of California in Soto v. Diakon Logistics (Delaware), Inc., Civil No. 08cv33-L(AJB), 2010 WL 3420779 (S.D. Cal. Aug. 30, 2010) denied class certification for, inter alia, failure to include in plaintiffs’ counsel’s declaration a statement that counsel are free from conflicts of interest and failure to address all the issues the court must consider for appointment of class counsel. Read the rest of this entry »

Ninth Circuit Holds That Deadline for Objection to Class Action Fee Award Must Be Set for Date After Plaintiff’s Counsel Files Fee Motion

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The Ninth Circuit Court of Appeals yesterday clarified the timing of objections to class counsel’s fee requests under Fed. R. Civ. Proc. Rule 23(h), holding that objectors must be given a deadline to object after plaintiff’s fee application is submitted.  The litigation in In re Mercury Interactive Corp. Securities Litigation, No. 08-17372, — F.3d —-, 2010 WL 3239460 (9th Cir. Aug. 18, 2010), which involved stock option backdating, settled early on, at the motion to dismiss stage.

A settlement class was certified, the settlement of $117.5 million in cash was approved, and attorneys’ fees of 25% ($29.375 million) were awarded pursuant to the settlement agreement.  No objections were made to the settlement itself, but two objections were made to the proposed attorneys’ fees.  Id. *2.  The court described lead counsel’s fee application as follows: Read the rest of this entry »

Northern District Approves 28.9% Fee Award in Wage and Hour Class Action Settlement

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Judge Jeffrey S. White approved a wage and hour class action settlement of a non-reversionary $1.8 million, inclusive of $520,000 in attorneys fees, in Ozga v. U.S. Remodelers, Inc., No. C 09-05112 JSW, 2010 WL 3186971 (N.D. Cal. Aug. 9, 2010).

Plaintiff filed a class action in the Alameda Superior Court on February 17, 2009, alleging that Defendant U.S. Remodelers Inc. violated the California Labor Code and violated California Industrial Welfare Commission Wage Orders by: (1) requiring its Installer employees to work substantial amounts of time without compensation; (2) regularly failing to provide Installers with meal and rest periods; and (3) refusing to reimburse expenses that Installers incurred in the performance of their work duties, including travel expenses and equipment costs.

Defendant removed the action to this Court, and Plaintiff subsequently moved to remand.  But before the hearing on the motion to remand, the parties reached a settlement, which was facilitated, in part, by a mediation that occurred on October 1, 2009, before Michael Loeb.  The parties also engaged in some discovery, and Class Counsel interviewed a number of Settlement Class members.

The Court finds that the terms of the Settlement are fair, adequate and reasonable. As noted, the settlement was reached after the parties engaged in discovery, conducted a meditation, and continued to engage in arms-length negotiations. The parties agreed to a Settlement payment of $1,800,000.00, none of which will revert to the Defendant. The overall reaction to the settlement has been positive. The Claims Administrator has received 156 claim forms from the 270 Class Members. (Id., ¶¶ 20-21.) Neither the Claims Administrator nor the Court received any objections to the Settlement. No Class Member appeared at the final approval hearing to object. According to the Claims Administrator, assuming the Court were to grant in full Plaintiff’s motion for attorneys’ fees and costs and service awards, approximately $1,108,917.72 would be available to distribute Class Members who submitted timely claim forms, for an average award of just over $7,000. (Id. ¶¶ 16-18.)

The Court approved costs to be paid to the Claims Administrator of $10,000.00 from the Settlement Fund.

Attorneys Fees, Costs, and Service Awards

Plaintiff brought an unopposed fee application, seeking $600,000.00 in attorneys’ fees, $11,274.89 in costs, and $10,000.00 in service awards to him and to class member Boris Moskovich.

Plaintiff’s counsel sought an award of attorneys’ fees based on the percentage method, asking for 33 1/3% of the Settlement Fund.  The court agreed to depart from the 25% benchmark.  See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (noting that 25% is benchmark and “usual” range of awards is 20-30%); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998) (stating that 25% is benchmark).  But the court would not vary from the benchmark to the degree requested by counsel.

The Court concludes that counsel did achieve an excellent result for the class, that the reaction to the settlement has been overwhelmingly positive, and that Plaintiff faced significant risk in prosecuting this case given the uncertain state of California law in similar wage and hour cases. The Court also recognizes that other courts have awarded settlement fees of up to 33 1/3% in such cases. However, the parties reached this settlement quickly and did not engage in any motion practice. See, e.g., Navarro v. Servisair, 2010 WL 1729538 (N.D. Cal. Apr. 27, 2010) (finding that proposed award of 30% of settlement fund unjustifiably departed from benchmark based in part on speed with which parties reached a settlement). Moreover, the requested percentage would amount to award that is more than double the fees actually incurred by counsel. Compare Vasquez v. Coast Valley Roofing, Inc., 266 F.R.D. 482, 491 (E.D. Cal. 2010) (awarding 33 1/3% of settlement fund which was “significantly less” than asserted lodestar).

Thus the court found that an award of  $520,000.00 was reasonable.

The court found counsels’ requests for costs in the amount of $11,274.89 reasonable.

The court also approved service awards in the amount of $10,000.00 for the lead plaintiff and for a class member.

By CHARLES H. JUNG

Northern District Approves $4.5 Million Settlement Against RadioShack, With $1.5 Million in Fees, and $5,000 Incentive Payments to Each Lead Plaintiff

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Magistrate Judge Edward M. Chen (whose confirmation to the Northern District of California bench has unfortunately been stalled for far too long) approved the class settlement and attorney fee application in Stuart v. RadioShack Corp., 2010 WL 3155645, No. C-07-4499 EMC (N.D. Cal. Aug. 9, 2010).

This class action was initiated in state court in June 2007, alleging that RadioShack had improperly failed to reimburse its employees for expenses they incurred in using their personal vehicles to perform inter-company transfers (“ICSTs”). Plaintiffs claimed for reimbursement pursuant to California Labor Code § 2802 and for a violation of California Business & Professions Code.  Subsequently Plaintiffs added a claim for recovery of penalties under the California Labor Code Private Attorneys General Act (“PAGA”).  The case was removed in August 2007. And in February 2009, Judge Chen granted the motion for class certification, certifying a class consisting of “all persons employed by RadioShack within the State of California, at any time from June 3, 2003, to the present, who drove their personal vehicles to and from RadioShack stores to carry out ICSTs and who were not reimbursed for mileage.”  On October 1, 2009–nine days before trial was scheduled to begin–the parties reached a settlement.

Under the Settlement Agreement, RadioShack will pay a total of $4.5 million for the release by the class, as an all-inclusive sum (proceeds to be distributed to the class, attorney’s fees and litigation expenses, costs of claim administration, incentive payments to the class representatives, and the PAGA award to the state), without reversion of any of the $4.5 million to RadioShack.

After attorney’s fees, litigation expenses, costs of claim administration, incentive payments, and the PAGA award to the state have been deducted from the $4.5 million, the remainder for distribution to the class members and/or donation to charity is $2,796,563.31.

Each class member’s award “depends on the number of weeks that the class member worked.”

The Court found that, importantly, “the amount available to the class after deductions for, e.g., fees and costs–i.e., $2,796,563.31–is not far off what the class might be awarded if it were to prevail on the merits after a trial.” Id. *4.

Plaintiffs’ counsel asked for an award of $1.5 million  (i.e., one-third of the total settlement amount), plus litigation expenses which total $78,436.69.

The Court has reviewed the expenses and determined that they are reasonable. The Court notes that the sum is not excessive given that this litigation has been ongoing for more than three years.

Attorneys Fees Application

The attorneys presented a fee application claiming $1.5 million as a lodestar for fees–excluding work performed in preparing for final approval and any post-judgment work that may be needed.  The $1.5 million sum represents 2,116.69 hours of work over a period of more than three years, at hourly rates of the billing attorneys ranging from $600 to $1,000.

After reviewing the billing records submitted by counsel as well as the declarations regarding the hourly rates of counsel, the court found that the number of hours was reasonable given the length of the lawsuit and the vigorous disputes over the course of the litigation (e.g., regarding RadioShack’s defense that it had no duty to reimburse until an employee made a request for reimbursement).

The court did express some “concerns about the $1,000 hourly rate” claimed by one of the attorneys.  “Based on the Court’s experience, this is an inordinately large hourly rate, even if the Court were to assume that [the attorney] has fifty years of experience.”  But the Court concluded that “given the 2,116.69 hours incurred, the average hourly rate for a fee award of $1.5 million total is $708, an amount that the Court deems appropriate, particularly when no multiplier is being sought on top of the lodestar.”

Compared to the percentage of the fund, the court noted that “the total settlement amount to be paid by RadioShack (with no possibility of reversion), the fee award represents one-third of the settlement amount.”  The court found that this was “well within the range of percentages which courts have upheld as reasonable in other class action lawsuits.”

The court also approved an incentive award of $5,000 for each of the two class representatives, for a total of $10,000.  The Court concluded that the incentive payments were appropriate and reasonable.  “Although the class representatives did not enter this litigation until late in the proceedings, due consideration must be given to the fact that they were willing and ready to go to trial.”  The court noted that if the “class representatives had asked for a larger sum, the Court might well have reached a different conclusion, but the $5,000 sought for each representative was viewed as “relatively modest.”

By CHARLES H. JUNG