Alexander et al v. FedEx Ground Package System, Inc. et al

Filing 247

ORDER by Judge Edward M. Chen Granting 185 Final Approval and Plaintiffs' Motion for Attorney's Fees (REDACTED/PUBLIC VERSION). (emcsec, COURT STAFF) (Filed on 6/15/2016)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

Plaintiffs,

8
9
10
11

Case No. 05-cv-00038-EMC

DEAN ALEXANDER, et al.,

REDACTED/PUBLIC VERSION

v.
FEDEX GROUND PACKAGE SYSTEM,
INC., et al.,

Docket No. 185, 204

Defendants.
12
For the Northern District of California

United States District Court

ORDER GRANTING FINAL
APPROVAL AND PLAINTIFFS’
MOTION FOR ATTORNEY'S FEES

13

Previously, the Court conditionally granted Plaintiffs’ motion for final approval and

14

deferred ruling on Plaintiffs’ motion for fees, costs, and incentive awards. See Docket No. 215

15

(order). The Court has now received updated information from Plaintiffs regarding the response

16

rate as well as additional information related to fees. See, e.g., Docket Nos. 234, 243-44

17

(supplemental declarations). Having reviewed that information, the Court hereby rules as follows.

18
19

I.

FINAL APPROVAL

It appears that one late claim was submitted (i.e., past the May 27, 2016, claims filing

20

date). That claim is worth approximately $148,000. See Docket No. 244 (2d Supp. Myette Decl.

21

¶ 13). It is not clear from the papers submitted whether the parties have agreed to credit that

22

claim. Assuming that the parties have not so agreed, the Court hereby orders that that claim be

23

deemed valid. At best, the claim was submitted only a few days late, and the Court sees no

24

prejudice to any party or class member in recognizing the claim.

25

Accordingly, final approval is now granted outright. Plaintiffs have made additional

26

efforts to reach out to nonclaiming class members. After those additional efforts, 98% of the net

27

settlement fund is being claimed. See Docket No. 244 (2d Supp. Myette Decl. ¶ 12). There are

28

only approximately 100 people who have not filed claims. See Docket No. 244 (Ross Decl. ¶ 7).

1

All reasonable efforts to contact these individuals have been exhausted.
II.

2

FEES, COSTS, AND INCENTIVE AWARDS

The Court grants the incentive awards requested by Plaintiffs – i.e., $10,000 to each

3
4

original named Plaintiff and $1,500 to Plaintiff Marjorie Pontarolo. The incentive awards are

5

reasonable given the time and effort each individual invested in the litigation, which has lasted

6

more than ten years.
The remaining issue for the Court is fees/costs. Plaintiffs have asked to be awarded 22%

7
8

of the global settlement fund – i.e., $49.83 million. 1 As the Court previously noted, fee awards in

9

megafund cases present difficult questions.

10

“[W]hen a common fund is extraordinarily large, the application of a
benchmark or standard percentage may result in a fee that is
unreasonably large for the benefits conferred.” In re Copley
Pharm., Inc., 1 F. Supp. 2d 1407, 1413 (D. Wyo. 1998). “‘[A]bsent
unusual circumstances, the percentage will decrease as the size of
the fund increases’[]. This sliding scale . . . is explained in part by
economies of scale. It is not one hundred fifty times more difficult
to prepare, try, and settle a $150 million case than it is to try a $1
million case.” Id. “‘[I]n many instances the increase [in recovery]
is merely a factor of the size of the class and has no direct
relationship to the efforts of counsel.’” In re Prudential Ins. Co.
America Sales Practice Litig. Agent Actions, 148 F.3d 283, 339 (3d
Cir. 1998).

12
For the Northern District of California

United States District Court

11

13
14
15
16
17
18

Docket No. 215 (Order at 14).
Although a percentage award in a megafund case can be 25% or even as high as 30-40%,

19
20

typically the percentage award in such a case is substantially less than the 25% benchmark

21

applicable to typical class settlements in this Circuit. See, e.g., Ramah Navajo Chapter v. Jewell,

22

No. 90 CV 957 JAP/KBM, 2016 U.S. Dist. LEXIS 27624, at *64 (D.N.M. Mar. 2, 2016) (noting

23

that, “[i]n mega fund cases, courts in other districts have awarded between 10% and 15% of a

24

mega fund,” but acknowledging that “[s]ome courts . . . have awarded percentage fees of more

25

than 15% in mega fund cases,” e.g., 30 and 31 1/3%); Vizcaino v. Microsoft Corp., 290 F.3d 1043,

26
1

27
28

At the hearing on final approval and fees, Plaintiffs confirmed that the fees awarded would be
apportioned with all attorneys who worked on or contributed to the Alexander case, i.e., not just
the Leonard Carder firm but also other firms who worked on or contributed to Alexander via the
MDL (e.g., the MDL Omnibus work).
2

1

1052-53 (9th Cir. 2002) (identifying cases ranging between $53 and $198 million in value, with

2

percentages ranging from 2.8 to 40%; approximately half of those cases had percentages less than

3

25%). Indeed, Judge Koh has found there is “persuasive evidence that ‘the median attorney’s fee

4

award in a sample of 68 ‘megafund’ class action settlements over a 16-year period was 10.2%.”

5

In re High-Tech Emple. Antitrust Litig., No. 11-CV-02509-LHK, 2015 U.S. Dist. LEXIS 118052,

6

at *50 (N.D. Cal. Sept. 2, 2015) (also citing a study where the mean award was 12%). Notably,

7

Judge Koh rejected evidence from a different study indicating that the mean and median fee

8

percentages awarded were 17.8% and 19.5%. See id. at *48-50 (noting that the “study spanned

9

just two years” and “the sample size in the . . . study is only eight”). This data suggests that a
proposed award of 22%, while not without precedent, is well above the typical range in a

11

megafund case.

12
For the Northern District of California

United States District Court

10

For the reasons noted above, in megafund cases, the lodestar cross-check assumes

13

particular importance. In the instant case, the bulk of counsel’s efforts took place in conjunction

14

with the MDL. Plaintiffs argue that a portion of the MDL Omnibus work should be attributed to

15

the Alexander case, which is a fair contention. The question is what percentage. Originally,

16

Plaintiffs asserted that 25-30% of the MDL Omnibus work should be allocated to Alexander. This

17

estimate was “based on a qualitative analysis of the portion of the MDL omnibus work that would

18

have been performed in the Alexander case had it been litigated as a stand-alone matter.” 2 Docket

19

No. 234 (Ross Decl. ¶ 11); see also Docket No. 185 (Mot. at 19) (“Counsel estimates that between

20

25% and 30% of the Omnibus work in the MDL was reasonable and necessary to the litigation of

21

Alexander.”). Under that analysis, Plaintiffs asserted a then-lodestar of between $12.4 to $14

22

million. 3
However, in supplemental briefing filed pursuant to a Court order, Plaintiffs maintained

23
24

that it was actually fair to allocate

of the MDL Omnibus work to the Alexander case because

25
2

26

Although the Ross declaration has been filed under seal, this portion of the declaration does not
contain any confidential information.

27

3

28

Portions of the following two paragraphs shall be maintained under seal. Consistent with the
Court’s prior sealing order, Plaintiffs shall apply to the Court to lift this sealing (which should be
on or about June 15, 2016). See Docket No. 233 (order).
3

1
2
3

Under this analysis, the asserted lodestar is

4
5
6

approximately $19.3 million.
This change is significant. The more that can be allocated from the MDL, the greater the

7

lodestar in Alexander, which in turn reduces the multiplier requested. More specifically, under

8

Plaintiffs’ original calculations (i.e., 25-30% of the MDL Omnibus work being allocated),

9

Plaintiffs sought a multiplier in the range of 3.5 to 4. See Docket No. 185 (Mot. at 18). With a

10

12
For the Northern District of California

United States District Court

11

allocation of the Omnibus work, the multiplier is reduced to 2.59. See Docket No. 234 (Ross
Decl. ¶ 18).
The Court acknowledges that Plaintiffs’ assertion of the

re-allocation arose, in part,

13

based on the Court’s order deferring ruling on fees. See Docket No. 215 (Order at 16) (“Plaintiffs

14

could provide additional information as to how much of the Omnibus work has been allocated to

15

other cases (i.e., to ensure that counsel will not get double recovery) and the size of the respective

16

recoveries in the other case which grew out of the MDL, including how much the proposed

17

recovery in the Alexander (i.e., California) case was compared to all other cases in the MDL.”).

18

However, the Court views the

19

25-30% – reflecting the amount of work that would need to have been done in Alexander – and

20

concludes that the 25-30% original allocation is the most reasonable and accurate approach. This

21

assessment of the lodestar is based on what time in the MDL was reasonable and necessary for the

22

Alexander case.

23

as simply supportive of Plaintiffs’ original allocation of

As noted above, the 25-30% allocation results in a claimed lodestar in the range of $12.4 to

24

$14 million. In performing the lodestar cross-check, however, the Court applies the more

25

conservative lodestar figure proposed by Plaintiffs – $12.4 million. It does so for several reasons.

26

First, it is not clear that substantial billing judgments were exercised by firms other than Leonard

27

Carder. Moreover, the allocation of the MDL Omnibus work turns in part on judgment; it is a soft

28

number. Having reviewed the nature and description of the MDL Omnibus work (which included,
4

1

e.g., over 100 depositions of FedEx officers and employees), the Court concludes that the more

2

conservative estimate is appropriate.
Based on the $12.4 million lodestar, Plaintiffs are asking for a multiplier of approximately

3

warranted for several reasons. First, a more typical multiplier for a megafund case is less 3 or less.

6

See, e.g., Vizcaino, 290 F.3d at 1051 n.6 (in cases where the common fund is $50-200 million, in a

7

majority of cases, the multiplier was in the 1.5-3.0 range); In re Cendant Corp. Prides Litig., 243

8

F.3d 722, 742 (3d Cir. 2001) (indicating that lodestar multiplier of 1.35 to 2.99 common in

9

megafunds over $100 million). Second, Plaintiffs’ lodestar is calculated on current billing rates

10

which compensates in part for the delay and length of this litigation. Third, as indicated above,

11

the size of the lodestar has been influenced by the number of attorneys involved in this case. 4

12
For the Northern District of California

4 to get to the requested $49.93 million in fees. The Court concludes that this multiplier is not

5

United States District Court

4

Rigorous billing judgment should be exercised where multiple counsel are involved; the risk of an

13

inflated lodestar, even where the Court takes the most conservative estimate proffered by the

14

Plaintiffs, counsels caution in applying an extraordinary multiplier. Finally, Plaintiffs’ counsel

15

will likely receive additional fee awards as the other cases stemming from the MDL are resolved.
Nevertheless, the Court concludes that a multiplier at the high end of the range – i.e., 3 – is

16
17

proper. The instant case involves compelling circumstances. For example, Plaintiffs’ counsel

18

have vigorously litigated this case for approximately 11 years, including in MDL proceedings, and

19

counsel undertook a sizeable risk, having to appeal the case after losing on summary judgment

20

before ultimately prevailing. In addition, Plaintiffs have incurred substantial additional fees/costs

21

since the motion for final approval was brought. Finally, and most importantly, Plaintiffs’ counsel

22

provided a high quality of representation and obtained excellent results. Notably, no objection to

23

the fee request was filed.
Applying a multiplier of 3 to the $12.4 million lodestar, the Court awards $37.2 million in

24
25

fees. 5 This represents 16.4% of the common fund, consistent with the higher end of awards in

26
4

27

Forty-five law firms were involved in the MDL proceedings; three firms were designated co-lead
counsel, and three additional firms served on the steering committee.

28

5

Even if the enhanced lodestar of $19.3 million is used, the award reflects a multiplier of nearly 2,
5

1

megafund cases as discussed above and well within the range of reasonableness.
III.

2

PROPOSED ORDER

3

For the foregoing reasons, the Court grants final approval and grants fees/costs and

4

incentive awards as itemized above. Plaintiffs shall immediately submit a revised proposed order,

5

see Docket No. 245 (proposed order), for the undersigned’s signature.
A courtesy copy of the sealed order is being provided to the parties, as well as to the

6
7

following objectors: Henrik Zohrabians and Rafick El-Hani and El-Hani Services, Inc.

8

(collectively, “El-Hani”). Consistent with the terms of the protective order previously agreed to,

9

see Docket No. 240 (stipulation and order), Mr. Zohrabians and El-Hani shall not disclose the
confidential information in this order while the Court’s sealing order of April 28, 2016, remains in

11

effect.

12
For the Northern District of California

United States District Court

10

This order disposes of Docket Nos. 185 and 204.

13
14

IT IS SO ORDERED.

15
16
17
18

Dated: June 15, 2016
______________________________________
EDWARD M. CHEN
United States District Judge

19
20
21
22
23
24
25
26
27
28

a number within the typical range in megafund cases.
6