Hofstetter v. Chase Home Finance LLC et al

Filing 263

ORDER GRANTING IN PART MOTIONS FOR ATTORNEY'S FEES, COSTS, AND PAYMENT TO CLASS REPRESENTATIVES by Judge Alsup granting in part and denying in part 246 Motion for Attorney Fees (whalc1, COURT STAFF) (Filed on 11/14/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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SHEILA I. HOFSTETTER and ROGER
MODERSBACH, as representatives of the
classes, and on behalf of the general public,

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Plaintiffs,

No. C 10-01313 WHA

ORDER GRANTING IN PART
MOTIONS FOR ATTORNEY’S
FEES, COSTS, AND PAYMENT
TO CLASS REPRESENTATIVES

v.

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CHASE HOME FINANCE, LLC,
JP MORGAN CHASE BANK, N.A., and
DOES 1–50, inclusive,

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Defendants.

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INTRODUCTION
In this class action involving flood-insurance requirements, class counsel request

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attorney’s fees, costs, and additional payments to the class representatives. For the following

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reasons, these requests are GRANTED as follows.

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STATEMENT
This is a class action challenging aspects of defendants’ practices regarding excessive and

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forced-placed flood insurance. In March 2011, four classes were certified to pursue class claims

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(Dkt. No. 178). A settlement agreement involving creation of a common fund in the amount

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of $9,625,000 was reached, and preliminary approval was granted in August 2011 (Dkt. No. 220).

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After the settlement agreement was reached, a class of inadvertently excluded class members was

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discovered, and a second settlement involving creation of a second common fund of $512,423.61

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was reached for this second group of class members (Dkt. No. 233). At the fairness hearing held

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on November 7, the first settlement was approved. A fairness hearing pertaining to the second

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settlement is scheduled for February 2012. Class counsel now request attorney’s fees, costs, and

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reimbursement for the class representatives.

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ANALYSIS
Class counsel request $3,208,333 in attorney’s fees; $230,000 in costs; and $2,500 for
each class representative. Each of these requests will be addressed in turn.

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A court must ensure that attorney’s fees and costs awarded to class counsel are “fair,

STANDARD OF REVIEW.

reasonable, and adequate.” Staton v. Boeing Co., 327 F.3d 938, 963–64 (9th Cir. 2003).

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For the Northern District of California

United States District Court

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Attorney’s fees to be paid from a common fund, as we have here, are consistent with the

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“American Rule” (i.e., that each party pays for its own litigation expenses), and “a litigant or a

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lawyer who recovers a common fund for the benefit of persons other than himself or his client is

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entitled to a reasonable attorney’s fee from the fund as a whole.” Boeing Co. v. Van Gemert,

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444 U.S. 472, 478 (1980).

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Courts in the Ninth Circuit use two different approaches to gauge the reasonableness of a

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requested fee when there is a common fund. The first is the “lodestar” calculation, which may

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include a “risk multiplier” to enhance fees in certain circumstances. The Ninth Circuit also

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allows a calculation of fees based on a percentage of the common fund. A benchmark percentage

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is 25 percent. Powers v. Eichen, 229 F.3d 1249, 1256 (9th Cir. 2000).
COSTS.

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2.

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Class counsel also request $230,000 in out-of-pocket costs. Counsel provided detailed

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documentation of how these costs were incurred. While the figure is high, it is explained by large

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amounts attributed to expert fees, costs associated with class notice and settlement mailings, and

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travel. Counsel, however, rounded up their total. This order awards only the costs documented,

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which total $229,978.34. Accordingly, class counsel’s request for costs is GRANTED IN PART.

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3.

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Class counsel request $3,208,333 in attorney’s fees. This amount represents

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ATTORNEY’S FEES.

approximately 32 percent of the common fund and nearly three times the lodestar.
The lodestar provided by counsel is approximately $1.1 million, and a careful review of

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the documentation submitted with counsel’s motion shows that lodestar to be reasonable.

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Granting the requested amount of attorney’s fees would apply a multiplier of approximately 2.9.

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While counsel’s performance in this action was above average, such a large award would be

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unreasonably high. Instead, this order awards attorney’s fees in the amount of two times the

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loadstar, or $2,250,142.50. This figure also represents approximately 23 percent of the total net

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For the Northern District of California

United States District Court

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fund after deduction of costs.
This award, however, must be divided proportionally between the two settlement funds.

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Accordingly, $2,136,402.94 will come from the larger common fund, and — pending its final

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approval — $113,739.56 will come from the smaller common fund. Additionally, only half of the

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fees from each of these settlements may be collected upon final approval of the respective

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settlement agreements. The other half will be paid when counsel certify that all class members’

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checks have been issued and either cashed or expired, no problems with the distribution have

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been reported for a period of 30 days, and there is nothing left to do.

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EXTRA PAYMENTS FOR CLASS REPRESENTATIVES.

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Finally, counsel request $2,500 each for class representatives Sheila Hofstetter and Roger

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Modersbach for time invested in the class action on behalf of absent class members. The amount

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requested is reasonable in light of the exceptional services rendered by the class representation, so

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this request is GRANTED.

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CONCLUSION

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For the foregoing reasons, class counsel’s requests for attorney’s fees and costs are

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GRANTED IN PART. Class counsel are awarded $2,250,142.50 in attorney’s fees. Of this

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amount, $2,136,402.94 will be deducted from the larger settlement fund already approved,

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and $113,739.56 will come from the smaller settlement fund, pending its final approval. Half of

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the fees from each settlement may be collected up front, and half will be withheld until all class
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members are paid and there is no more work to be done. This order awards $229,978.34 in costs.

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Class counsel’s request for $2,500 each for class representatives Hofstetter and Modersbach

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is GRANTED.

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IT IS SO ORDERED.

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Dated: November 14, 2011.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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For the Northern District of California

United States District Court

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