Singleton v. Domino's Pizza, LLC
Filing
82
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 10/2/13. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
ADRIAN SINGLETON, et al.
:
v.
:
Civil Action No. DKC 11-1823
:
DOMINO’S PIZZA, LLC
:
MEMORANDUM OPINION
Presently pending and ready for resolution in this class
action arising under the Fair Credit Reporting Act (“FCRA”) are
unopposed motions filed by Plaintiffs (ECF Nos. 73, 74) seeking
an order that: (1) grants final approval of the Amended Class
Action
Settlement
Agreement
(“Amended
Settlement
Agreement”)
(ECF No. 67-1) between Plaintiffs and Defendant Domino’s Pizza
LLC (“Domino’s” or “Defendant”); (2) grants final certification
of the Settlement Classes pursuant to Federal Rule of Civil
Procedure 23; (3) approves a payment of $750,000.00 to class
counsel for their attorneys’ fees; (4) approves a payment of
$13,339.84
to
class
counsel
for
litigation
expenses;
(5)
approves a payment of $89,208.63 in administrative expenses to
Kurtzman
Carson
Consultants,
LLC
(“KCC”
or
“Settlement
Administrator”), an independent third party that will administer
the
Settlement
Agreement;
(6)
approves
incentive
payments
to
Adrian Singleton and Justin D’Heilly (“Named Plaintiffs”) in the
amount
of
$2,500
prejudice,
with
each;
the
interpretation,
and
court
(7)
to
dismisses
retain
enforcement,
and
this
action
jurisdiction
over
the
of
the
implementation
settlement agreement and the final order.
with
For the following
reasons, the motions will be granted, although the attorneys’
fees will be reduced.
I.
Background
The Named Plaintiffs are former employees of Domino’s.
On
July 1, 2011, Mr. Singleton filed this FCRA lawsuit against
Domino’s
as
a
putative
class
action.
(ECF
No.
1).
After
Domino’s moved to dismiss the complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6) on August 15, 2011 (ECF No. 13), the
Named
Plaintiffs
filed
an
amended
September 3, 2011 (ECF No. 19).
complaint
as
of
right
on
The amended complaint alleges
that Domino’s willfully violated the FCRA in two ways: (1) by
using
a
Form”)
“Background
containing
a
Investigation
liability
and
release
Consent”
to
form
procure
(“BIIC
consumer
reports on existing and prospective employees; and (2) by taking
adverse
employment
actions
against
existing
and
prospective
employees based, in whole or in part, on information contained
in a consumer report without first providing the individuals
with notice and a copy of the report.
(Id. ¶¶ 16-32).
Based on
these allegations, the amended complaint asserts the following
three counts under the FCRA: (1) failure to provide a copy of
2
consumer report in violation of the FCRA; (2) failure to make
proper disclosure in violation of the FCRA; and (3) failure to
obtain proper authorization in violation of the FCRA.
62-78).
Domino’s
On
behalf
employees
of
and
themselves
job
and
applicants,
a
putative
the
Named
(Id. ¶¶
class
of
Plaintiffs
sought a declaration that Domino’s committed multiple willful
violations of the FCRA; an award of statutory damages pursuant
to the FCRA; and reasonable attorneys’ fees and costs.
(Id. ¶¶
52-61, 79).
On September 26, 2011, Domino’s again moved to dismiss (ECF
No. 22), but the motion was denied on January 25, 2012.
Nos. 25 & 26).
(ECF
After Domino’s answered on February 8, 2012 (ECF
No. 34) and following the denial of the Named Plaintiffs’ motion
for
class
certification
without
prejudice
(ECF
No.
39),
the
parties jointly moved to stay the action pending mediation (ECF
No. 44).
Prior to the entry of the stay on August 13, 2012 (ECF
No. 45), the parties had engaged in limited written discovery,
including the exchange of initial disclosures and the issuance
of interrogatories and requests for production (see ECF No. 611, at 3).
On September 24, 2012, after Domino’s produced additional
documents, the parties engaged in all-day arms-length settlement
negotiations with the aid of a private mediator.
(Id.).
After
several extensions of the stay and further negotiations, the
3
parties prepared a Settlement Agreement on March 11, 2013 to
resolve this action on a class basis, subject to approval by the
court.
filed
(ECF No. 61-3).
an
unopposed
preliminarily
On that same day, the Named Plaintiffs
motion
approved
seeking
the
an
order
Settlement
that:
(1)
Agreement;
(2)
conditionally certified the three settlement classes proposed in
the Settlement Agreement; (3) appointed the Named Plaintiffs as
class representatives; (4) appointed Nichols Kaster, PLLP, as
class
counsel;
(5)
approved
the
form
and
method
of
notice
proposed in the Settlement Agreement; and (6) scheduled a final
fairness hearing.
(ECF No. 61).
On May 7, 2013, counsel for the parties appeared for a
hearing on Plaintiffs’ unopposed motion to address certain areas
of concern with the proposed Settlement, including: the periods
of
time
claims
encompassed
submission
by
the
process;
proposed
the
settlement
readability
of
classes;
the
the
proposed
short- and long-form notices; the need for the proposed notices
to distinguish between statutory and actual damages under the
FCRA; the documentation that will be needed to support any award
of
attorneys’
Plaintiffs;
fees
the
and
estimated
incentive
costs
awards
of
notice
for
the
and
Named
settlement
administration; the likelihood that the settlement funds will be
depleted
depending
beneficiaries
on
selected
estimated
by
the
response
parties;
4
rates;
and
the
the
cy
timeline
pres
for
distributing notice, submitting claims, raising objections, and
granting final approval and final certification.
(ECF No. 65).
After the May 7, 2013 hearing, the parties submitted an
Amended
Settlement
Agreement
and
renewed
very
basic
terms,
the
Amended
motion
for
(ECF. No. 67-1).1
preliminary approval of the settlement.
In
Settlement
their
Agreement
proposes
three settlement classes: an “Applicant Class,” a “Multiple MVR
Check
Class,”
“Settlement
and
an
Classes”)
“Adverse
(Id.
¶
Action
1).
Class”
The
(collectively,
Amended
Settlement
Agreement further provides that Domino’s will contribute $2.5
million
to
a
“Settlement
Fund”
to
be
distributed
–
after
deductions for a court-approved award of attorneys’ fees in an
amount up to thirty (30) percent of the total Settlement Fund,
litigation expenses, and settlement administration costs – in
pro
rata
amounts
among
the
members
of
the
three
proposed
settlement classes who submit a timely claim, subject to certain
caps.
(Id. ¶¶ 21-26).
Settlement
Classes
who
In exchange, the members of the proposed
do
not
1
exclude
themselves
from
the
The Amended Settlement Agreement includes the same key
terms as the original Settlement Agreement, except that it (1)
contains revised definitions of the three proposed Settlement
Classes that establish a definite end date for closure of the
classes; and (2) attaches amended versions of the short- and
long-form notices that address the court’s concerns regarding
readability and the need to distinguish between actual and
statutory damages under the FCRA. (See ECF No. 67-1).
5
settlement in a timely manner agree to release Domino’s from any
and all claims that relate directly or indirectly to the facts
that are, or could have been, alleged in the amended complaint,
including but not limited to any and all claims under the FCRA.
(Id. ¶ 29).
In consideration for a $2,500 incentive award to
each Named Plaintiff that is subject to court approval, the
Named Plaintiffs agree to a general release of Domino’s.
30).
(Id. ¶
Any amounts remaining in the Settlement Fund after these
distributions shall be divided equally between Domino’s and a cy
pres charitable donation, half of which will be given to the
Center for Employment Opportunities and the other half to St.
Jude Children’s Research Hospital.
(Id. ¶ 28).2
On May 13, 2013, the court issued a memorandum opinion and
order (“the Preliminary Approval Order”) preliminarily approving
the
Settlement
within
the
Agreement
meaning
of
as
fair,
Fed.R.Civ.P.
reasonable,
Rule
and
23(e),
adequate
subject
further consideration at the final fairness hearing.
to
(ECF No.
69).
The Preliminary Approval Order conditionally certified the
three
Settlement
Classes,
appointed
Nichols
Kaster,
PLLP,
as
class counsel and KCC as Settlement Administrator, and provided
2
“[A] cy pres distribution is designed to be a way for a
court to put any unclaimed settlement funds to their ‘next best
compensation use, e.g., for the aggregate, indirect, prospective
benefit of the class.’” Klier v. Elf Atochem N. Am., Inc., 658
F.3d 468, 474 (5th Cir. 2011) (quoting Masters v. Wilhelmina
Model Agency, Inc., 473 F.3d 423, 436 (2nd Cir. 2007)).
6
that
completed
Claim
Forms
must
be
postmarked
on
or
before
August 26, 2013 and Opt-Out requests must be postmarked by July
27, 2013.
(ECF No. 67-1, at 51-52).
On June 27, 2013, KCC mailed 45,668 postcards to potential
class members, after removing duplicative entries in the member
list Domino’s provided.
filing
claims
and
(ECF No. 80 ¶ 6).
opting
out
expired,
By the time for
6,739
individuals
submitted Claim Forms and seven (7) individuals opted-out.
(Id.
¶ 19; see also ECF No. 78, at 19).
On September 16, 2013, Plaintiffs filed an unopposed motion
seeking final approval of the Amended Settlement Agreement (ECF
No. 73) and an unopposed motion for attorneys’ fees, litigation
expenses,
administrator
costs,
and
Named Plaintiffs (ECF No. 74).
incentive
awards
for
the
Although Domino’s continues to
deny vigorously the allegations of the amended complaint and any
liability under the FCRA, it agreed to the Amended Settlement
Agreement based on, inter alia, the expense and disruption posed
by further litigation.
Class counsel, in turn, represents that
the Amended Settlement Agreement is in the best interests of the
Named
Plaintiffs
and
considering
the
litigation,
including
the
members
substantial
the
risks
of
the
associated
possibility
prevail.
7
Settlement
that
with
Classes,
continued
Domino’s
might
II.
Analysis
The following issues remain: whether the Rule 23 Settlement
Classes should receive final certification; whether the Amended
Settlement
whether
Agreement
class
is
fair,
counsel’s
reasonable,
request
for
and
adequate;
attorneys’
fees
and
and
litigation expenses, as well as payment for administrative costs
to KCC and incentive payments to the Named Plaintiffs, should be
granted.
A.
Rule 23 Class Certification
A class action will be certified only if it meets the four
prerequisites identified in Rule 23(a) and also fits within one
of the three subdivisions of Rule 23(b).
The United States
Supreme Court has held that district courts must pay “undiluted,
even heightened attention” to class certification requirements
in the settlement context.
Amchem Prods., Inc. v. Windsor, 521
U.S. 591, 620 (1997) (internal quotation marks omitted); see
also Grice v. PNC Mortg. Corp. of Am., No. CIV.A.PJM-97-3084,
1998
WL
parties’
350581,
at
agreement,
*2
(D.Md.
class
May
21,
certification
1998)
must
(“Despite
be
scrutinized.”).
1.
Rule 23(a) Prerequisites
Rule 23(a) provides as follows:
(a)Prerequisites.
One or more members of a
class may sue or be sued as representative
parties on behalf of all members only if:
(1) the class is so numerous that joinder of
8
the
carefully
all members is impracticable; (2) there
questions of law or fact common to
class; (3) the claims or defenses of
representative parties are typical of
claims or defenses of the class; and (4)
representative
parties
will
fairly
adequately protect the interests of
class.
are
the
the
the
the
and
the
Based on a review of the parties’ submissions, the Rule 23
Settlement Classes meet the numerosity, commonality, typicality,
and adequacy requirements.
a.
Numerosity
Although
there
is
no
precise
threshold
for
determining
numerosity, see Gen. Tel Co. v. E.E.O.C., 446 U.S. 318, 330
(1980), the Rule 23 Settlement Classes, which consist of more
than 45,000 individuals (ECF No. 80 ¶ 10), is substantially
larger than other classes that have been certified in the Fourth
Circuit.
See, e.g., In re Kirschner Med. Corp. Sec. Litig., 139
F.R.D. 74, 78 (D.Md. 1997) (observing that a class size of 25 to
30 members raises a presumption that the numerosity requirement
is met).
Moreover, numerosity is satisfied where joinder of all
putative
class
members
would
prove
to
be
“impracticable.”
Hewlett v. Premier Salons Int’l Inc., 185 F.R.D. 211, 215 (D.Md.
1997) (explaining that practicability of joinder depends on a
variety
of
factors,
including
the
geographic
dispersion
putative class members and the size of their claims).
of
When a
class is large - as is the case here - the numbers alone may
9
allow the court to presume impracticability of joinder.
Id.;
see also Stanley v. Central Garden and Pet Corp., 891 F.Supp.2d
757, 770 (D.Md. 2012) (“Classes of as few as 25 to 30 have been
found
to
‘raise[]
impracticable.’”
the
presumption
(quoting
In
Litig., 139 F.R.D. at 78)).
re
that
joinder
Kirschner
Med.
would
Corp.
be
Sec.
Finally, the fact that Settlement
Class members are dispersed throughout the country (ECF No. 731, at 16) further militates against joinder.
b.
Commonality
To establish commonality, the party seeking certification
must “demonstrate that the class members have suffered the same
injury” and that their claims “depend upon a common contention.”
Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011)
(internal quotation marks omitted).
“That common contention,
moreover
that
must
be
of
such
a
nature
it
is
capable
of
classwide resolution – which means that determination of its
truth or falsity will resolve an issue that is central to the
validity
of
each
one
of
the
claims
in
one
stroke.”
Id.
“Factual differences among class members will not necessarily
preclude
legal
certification
theory.’”
‘if
Stanley,
the
class
891
members
F.Supp.2d
share
at
771
the
same
(quoting
Mitchell-Tracey v. United Gen. Title Ins. Co., 237 F.R.D. 551,
556 (D.Md. 2006)).
10
Here, there are numerous questions of law and fact common
to the Settlement Classes.
These include, but are not limited
to the following:3 (1) whether Domino’s violated the FCRA by
using the BIIC Form to obtain consent from prospective and/or
current
employees
purposes,
which
to
BIIC
procure
form
consumer
was
reports
allegedly
not
for
a
employment
“stand-alone
document” and included a liability release;4 (2) whether Domino’s
violated the FCRA by failing to provide employees with copies of
their
consumer
reports
and
pre-adverse
action
notice;
(3)
3
The relevant time period for the alleged violations is
July 1, 2009 through April 30, 2013, inclusive. (ECF No. 67-1,
at 4, Amended Settlement Agreement).
The conduct at issue,
however, ceased by October 25, 2009 for job applicants and by
April 9, 2012 for current employees, when Domino’s reprogrammed
the software which automated the process for sending the adverse
action notices. (See ECF No. 70, at 4, 7, Hr’g. Tr.).
4
15 U.S.C. § 1681b(b)(2)(A)(i) provides that:
[e]xcept as provided in subparagraph (B),
[which
covers
application
by
mail,
telephone,
computer,
or
other
similar
means,] a person may not procure a consumer
report, or cause a consumer report to be
procured
for
employment
purposes
with
respect to any consumer, unless -- (i) a
clear and conspicuous disclosure has been
made in writing to the consumer at any time
before the report is procured or caused to
be procured, in a document that consists
solely of the disclosure, that a consumer
report
may
be
obtained
for
employment
purposes.
(emphasis added). Plaintiffs allege that the BIIC form did not
actually qualify as a “standalone document” because it was part
of the company’s employment application and contained a
liability release. (ECF No. 19 ¶ 71).
11
whether Domino’s violated the FCRA by procuring or causing to be
procured
employees’ motor vehicle records based on a BIIC form
containing a liability release; and (4) whether Domino’s acted
willfully.
whether
The
legal
Domino’s
issue
willfully
common
to
violated
all
the
class
FCRA
by
members
the
is
alleged
conduct.
See Serrano v. Sterling Testing Systems, Inc., 711
F.Supp.2d
402,
411
(E.D.Pa.
2010)
(finding
commonality
where
class members sought statutory damages under the FCRA and the
case turned on whether Defendant’s alleged conduct was willful).
Based
on
the
foregoing,
the
Rule
23(a)(2)
commonality
requirement is satisfied.
c.
Typicality
The
United
States
Supreme
Court
has
noted
that
“[t]he
commonality and typicality requirements of Rule 23(a) tend to
merge.”
Gen. Tel. Co. v. Falcon, 457 U.S. 147, 158 n.13 (1982).
To “show typicality the claims of class members must be fairly
encompassed by the class representative’s claims.”
F.Supp.
2d
at
770.
The
typicality
requirement
Stanley, 891
focuses
on
“whether a sufficient relationship exists between the injury to
the named plaintiff and the conduct affecting the class, so that
the court may properly attribute a collective nature to the
challenged conduct.”
F.R.D.
211,
217
Hewlett v. Premier Salons Int’l, Inc., 185
(D.Md.
1997).
As
discussed
in
Hewlett,
a
plaintiff’s claim may factually differ and still be “typical” of
12
class
member
claims,
if
“it
arises
from
the
same
event
or
practice or course of conduct that gives rise to the claims of
other class members, and if his or her claims are based on the
same
legal
theory.”
Id.
(quotations
omitted).
The
representative’s claim need not “be perfectly identical [to] or
perfectly aligned” with the claims of class members, so long as
any variation does not “strike[] at the heart of the respective
causes of actions.”
Id. at 467.
Both of the Named Plaintiffs’ claims are typical.
Mr.
D’Heilly, who worked as a delivery driver in one of Domino’s
Minnesota
stores,
application packet.
completed
the
BIIC
(ECF No. 19 ¶ 34).
form
as
part
of
the
Domino’s terminated him
in October 2009; Mr. D’Heilly’s general manager advised him that
he could no longer work as a delivery driver “because something
had come up on a background check relating to his motor vehicle
history.”
information
(Id. ¶ 48).
regarding
Mr. D’Heilly received no additional
his
termination,
and
Domino’s
provided him with a copy of the background check.
never
Similarly,
Mr. Singleton applied to work as a delivery driver at one of the
company’s Maryland stores and completed the BIIC form as part of
the application package.
Mr. Singleton then began work, but
several weeks into his employment, he learned that a “potential
issue” had arisen with his employment application and that he
had not been scheduled to work any additional hours.
13
(Id. ¶
28).
Mr. Singleton subsequently submitted a second employment
application, but did not receive any work.
days
later,
entitled
Mr.
“FCRA
Singleton
Letter
received
2,”
a
withdrawing
Instead, several
letter
the
from
Domino’s,
employment
offer
based, at least in part, on information Domino’s obtained from
Mr. Singleton’s consumer report.
letter
indicated
that
Mr.
(Id. at 50).
Singleton
Although the
“previously
should
have
received a copy of [his] consumer report,” Mr. Singleton had not
previously received a copy of the referenced report and Domino’s
never provided him with the information from the consumer report
that influenced its employment decision.
allegations
that
Defendant
willfully
The Named Plaintiffs’
violated
the
FCRA
arise
from a unified practice or course of conduct by Domino’s, and
like the other class members, Named Plaintiffs seek statutory
damages for the alleged violations.
Ultimately, “as goes the
claim of the [Named Plaintiffs,] so go the claims of” the Rule
23 Settlement Classes.
Deiter v. Microsoft Corp., 436 F.3d 461,
466 (4th Cir. 2006).
d. Adequacy
Finally,
Rule
23(a)(4)
requires
“representative
parties
[who] will fairly and adequately protect the interests of the
class.”
Representation
is
adequate
if:
(1)
the
named
plaintiff’s interests are not opposed to those of other class
members,
and
(2)
the
plaintiff’s
14
attorneys
are
qualified,
experienced, and capable.
Mitchell-Tracey v. United Gen. Title
Ins. Co., 237 F.R.D. 551, 558 (D.Md. 2006).
Here,
the
Named
Plaintiffs’
those of the class members.
interests
are
aligned
with
Specifically, the Named Plaintiffs
share an interest with class members in establishing Domino’s
policies during the relevant period and showing that Domino’s
willfully violated the FCRA by using the BIIC form that included
both
disclosure
and
authorization
information
related
retrieval of consumer reports and a liability release.
to
Further,
Named Plaintiffs seek to show that Domino’s willfully violated
the FCRA by failing to provide employees with copies of their
consumer reports and pre-adverse action notices.
Finally, as
noted in the Preliminary Approval Order (ECF No. 69, at 11), the
attorneys at Nichols Kaster, PLLP are qualified, experienced,
and competent, as evidenced by their background in litigating
class-action cases involving FCRA violations.
(see ECF No. 75-
1).
Accordingly, the Rule 23 Settlement Class satisfies each of
the Rule 23(a) prerequisites.
2.
Rule 23(b) Requirements
Plaintiffs
invoke
Rule
23(b)(3),
which
permits
a
class
action to be maintained only if it can be concluded that: (1)
“questions of law or fact common to class members predominate
over any questions affecting only individual members,” and (2)
15
“a
class
action
is
superior
to
other
available
methods
for
fairly and efficiently adjudicating the controversy.”
The
predominance
inquiry
focuses
on
whether
liability
issues are subject to class-wide proof or require individualized
and
fact-intensive
determinations.
Cuthie
v.
Fleet
Reserve
Ass’n, 743 F.Supp.2d 486, 499 (D.Md. 2010).
Deciding whether
common
ones
questions
qualitative,
predominate
rather
than
over
individual
quantitative,
inquiry.
involves
Gunnells
a
v.
Healthplan Servs., Inc., 348 F.3d 417, 429 (4th Cir. 2003).
As set forth above, common questions among the Rule 23
Settlement
Classes
predominate.
The
“Applicant
Class”
would
have to show that Domino’s violated the FCRA by procuring or
causing to be procured a consumer report based on a BIIC form
that
prospective
applicants
liability release.
complete,
which
form
contained
a
The “Multiple MVR Check Class” would have to
show that Domino’s procured or caused to be procured during
their
employment
records
based
a
on
consumer
the
BIIC
report
form
containing
which
motor
contained
a
vehicle
liability
release.
Finally, the “Adverse Action Class” would need to
establish
that
Domino’s
took
an
adverse
employment
action
against prospective and current employees without sending a preadverse action notice and/or copy of the consumer report on
which the adverse action was taken.
All class members seek
statutory damages for the alleged FCRA violations, and would
16
need to establish willfulness in order to recover under the
FCRA.
Thus, the dispositive issue here is whether Domino’s
alleged conduct constituted willful violations of the FCRA.
The
predominance requirement is met.
With respect to the superiority prong of Rule 23(b)(3),
four factors generally should be considered:
(i) the strength of the individual class
members’
interest
in
controlling
the
prosecution
and
defense
of
a
separate
action, (ii) the extent and nature of
existing litigation already begun by or
against
class
members,
(iii)
the
desirability
or
undesirability
of
concentrating the litigation in the single
forum selected by the class plaintiffs, and
(iv) the likely difficulties in managing the
class action.
Lloyd v. Gen. Motors Corp., 275 F.R.D. 224, 228 (D.Md. 2011).
Here,
each
certification.
of
these
factors
weighs
in
favor
of
final
There is no evidence that class members have
separately initiated litigation against Domino’s for the same
alleged violations.
class
members
individually,
amount
of
There is also no indication that the absent
would
prefer
particularly
statutory
in
damages
to
light
prosecute
of
available
the
under
this
relatively
the
FCRA.
action
modest
See
Amchem Prods. V. Windsor, 521 U.S. 591, 617 (1997) (“The policy
at the very core of the class action mechanism is to overcome
the problem that small recoveries do not provide the incentive
for any individual to bring a solo action prosecuting his or her
17
rights.”).
In
any
event,
if
any
class
members
wished
to
initiate individual lawsuits, they had the choice to opt out,
which seven individuals did here after receiving notices of the
instant lawsuit.
Further, concentrating litigation of the class
members’ claims in the Southern Division of the District of
Maryland
is
business
desirable
in
manageability
given
Maryland.
concerns
that
(ECF
are
Domino’s
No.
19,
irrelevant
certified only for settlement purposes.
U.S.
at
620.
On
balance,
the
regularly
at
when
a
conducts
4).
class
Finally,
is
being
See Amchem Prods., 521
superiority
requirement
is
satisfied.
In sum, because the Rule 23 Settlement Classes satisfy the
requirements
of
both
Rule
23(a)
and
23(b)(3),
final
certification will be granted.
B.
Final Approval of the Settlement Agreement
Pursuant to Rule 23(e), a settlement agreement that binds
members of a class action can only be approved upon a “finding
that it is fair, reasonable, and adequate.”
“The ‘fairness’
prong is concerned with the procedural propriety of the proposed
settlement agreement, while the ‘adequacy’ prong focuses on the
agreement’s substantive propriety.”
In re Am. Capital S’holder
Derivative Litig., Civ.Nos.11-2424 PJM, 11-2428 PJM/AW, 11-2459
PJM, 11-2459 RWT, 2013 WL 3322294, at *2 (D.Md. June 28, 2013).
18
1.
Fairness
In evaluating the fairness of a proposed settlement, the
following
factors
must
be
considered:
(1)
the
presence
or
absence of collusion among the parties; (2) the posture of the
case
at
the
time
settlement
is
proposed;
(3)
the
extent
of
discovery that has been conducted; and (4) the circumstances
surrounding the negotiations and the experience of counsel.
In
re Mid-Atl. Toyota Antitrust Litig., 564 F.Supp. 1379, 1383-84
(D.Md. 1983).
the
danger
The fairness inquiry serves to protect against
that
counsel
might
“compromis[e]
a
suit
inadequate amount for the sake of insuring a fee.”
for
an
Id. at 1383
(internal quotation marks omitted).
Here, each of the fairness factors weighs in favor of final
approval.
Agreement
The
is
mediation.
a
record
indicates
product
(See
ECF
of
No.
that
good
75,
the
faith
at
2).
Amended
negotiations
In
Settlement
following
particular,
class
counsel represents that in the weeks leading up to mediation,
“the
parties
also
exchanged
lengthy
formal
mediation
briefs
setting forth their views on the merits of Plaintiffs’ case,
including
the
parties’
respective
certification, the merits, and damages.”
day
mediation
on
September
24,
2012,
positions
(Id.).
the
on
class
After an all-
parties
“exchanged
approximately 100 emails, 8 drafts of the term sheets, 9 drafts
of the settlement agreement, 11 drafts of the notice documents,
19
and
participated
in
settlement terms.”
numerous
(Id.).
phone
calls
regarding
the
As class counsel represents, “even
after the monetary terms of the Settlement were decided, the
parties continued to vigorously negotiate all aspects of the
settlement, from the language to be included in the notices to
the
content
Settlement
of
the
Class
[Interactive
members
would
Voice
hear
Response]
when
(ECF No. 73-1, at 26).5
administrator.”
they
script
that
contacted
the
Moreover, nothing in
the record hints of collusion.
With
reached
respect
the
discovery.
Plaintiffs
to
Amended
the
posture
Settlement
of
the
case,
Agreement
the
after
parties
exchanging
For instance, the parties litigated the case since
filed
the
complaint
on
July
1,
2011,
exchanged
initial disclosures, participated in a Rule 16 conference with
the
court,
and
interrogatories
“Defendant
and
requests
had
for
responded
production
to
and
Plaintiffs’
had
produced
more than 600 pages of documents, which Plaintiffs reviewed.”
(ECF No. 75 ¶ 2).
briefs
before
positions.
As noted above, both parties also exchanged
mediation
setting
forth
their
respective
Furthermore, the parties negotiated settlement in
mediation after Defendant filed a motion to dismiss, which was
fully briefed, and which the court denied.
5
(ECF No. 25).
It
By the time the Settlement was negotiated, Domino’s was no
longer using the allegedly offending forms and practices. (See
ECF No. 70, at 9, Hr’g. Tr.).
20
appears that all parties had a clear view of the strengths and
weaknesses
of
their
respective
positions,
and
sufficient
information about the claims and defenses at the time they began
exploring the possibility of settlement.
noted,
the
declarations
and
resumes
Finally, as has been
submitted
by
Plaintiffs’
attorneys establish that they are qualified, experienced, and
competent.
(See ECF Nos. 75 & 75-1).
2.
Adequacy
The
adequacy
prong
requires
consideration
of:
(1)
the
relative strength of the plaintiff’s case on the merits and
probability of success at trial; (2) the anticipated duration
and expense of additional litigation; (3) the solvency of the
defendants
and
the
likelihood
of
recovery
on
a
litigated
judgment; and (4) the degree of opposition to the settlement.
In re Mid-Atl. Toyota, 564 F.Supp. at 1384.
The purpose of the
adequacy analysis is to “weigh the likelihood of the plaintiff’s
recovery
on
settlement.”
the
merits
against
the
amount
offered
in
Id. (internal quotation marks omitted).
Here, the adequacy factors, on balance, counsel in favor of
final approval of the Settlement Agreement.
Defendant’s
Plaintiffs
motion
would
to
dismiss
prevail
proceed is uncertain.
on
the
(ECF
No.
merits
if
The court denied
25),
the
but
case
whether
were
to
Genuine disputes exist regarding whether
any FCRA violations Plaintiffs allege could be deemed willful
21
and Plaintiffs’ ultimate success on their FCRA claims turns on
whether
they
can
show
that
Domino’s
acted
willfully
onerous task with a highly uncertain outcome.”
--
“an
Domonoske v.
Bank of America, N.A., 790 F.Supp.2d 466, 474 (W.D.Va. 2011).
Defendant
continues
violations;
to
although
deny
liability
Plaintiffs
may
for
any
believe
alleged
that
FCRA
Domino’s
conduct violated the FCRA, “there is always a risk that the
Court
or
a
jury
will
disagree,”
and
instead
determine
that
Domino’s did not act “willfully” within the meaning of the FCRA.
Serrano, 711 F.Supp.2d at 416.
Even
if
Plaintiffs
were
to
overcome
the
liability
obstacles, moreover, there are also risks in proving damages at
trial.
“The determination of damages [in an FCRA case] - like
the determination of liability – is a complicated and uncertain
process, often involving conflicting opinions.”
Id. at 416.
Here, the statutory range for FCRA violations is between $100 to
$1,000 per class member.
See 15 U.S.C. § 1681n(a).
Even if the
Plaintiffs were to prevail on their FCRA claims at trial, it is
far from certain that a jury would award the maximum of $1,000
to each Class member, especially “given the statutory factors
that have to be taken into account in making such an award,
including frequency and persistence of noncompliance with the
statute, nature of the noncompliance, and the extent to which
noncompliance was willful or negligent.”
22
Id. at 417.
Further,
this
case
involves
allegations
of
technical
FCRA
violations,
which creates the risk that even if a jury awarded the minimum
requisite
statutory
damages,
i.e.,
$100
to
each
of
the
individual class members, the court may find remitter/reduction
appropriate.
See
Klingensmith
v.
Max
&
Erma’s
Restaurants,
Inc., No. 07-0318, 2007 WL 3118505, at *5 (E.D.Pa. 2007).
Furthermore,
absent
final
approval
of
the
Amended
Settlement Agreement, litigation of this dispute could prove to
be long and expensive.
In particular, the likely next steps in
this case – e.g., additional discovery and dispositive motions –
would
require
substantial
time
by
the
parties’
attorneys.
Although there is nothing to indicate that Defendant would be
unable to satisfy a judgment if one were ultimately entered, it
is not clear how long it might take to resolve this lawsuit.
On
balance, the risks, delays, and costs associated with further
litigation weigh in favor of granting final approval of the
Amended Settlement Agreement.
Lastly,
there
has
Settlement Agreement.
been
no
opposition
to
the
Amended
On June 27, 2013, KCC, the settlement
administrator, mailed notice forms to 45,668 individuals, the
best
notice
23(c)(2)(B).
practicable
under
the
circumstances.
See
Rule
The notice forms informed each class member, in
clear and concise language, of the basis for this lawsuit; the
definition of the Rule 23 Settlement Classes; the procedure for
23
receiving
payment
or
opting
out
of
the
Amended
Settlement
Agreement; the key terms of the Amended Settlement Agreement,
including potential recoveries; the process for objecting to the
Amended Settlement Agreement; and the date, time, and place of
the
final
notice
fairness
complied
hearing.
with
Thus,
Fed.R.Civ.P.
the
forms
23(c)(2)
and
&
method
23(e).
of
The
postmark deadline for filing objections or opt-out requests was
August 26, 2013.
(ECF No. 69, at 15).
counsel
any
received
Agreement.
objections
to
Neither the court nor
the
Amended
Seven individuals decided to opt-out.
at 19 – 26).
Settlement
(ECF No. 78,
One class member appeared at the September 23,
2013 final fairness hearing, but did not object.
The fact that
only seven individuals opted out and no one filed objections
further
supports
final
approval
of
the
Amended
Agreement as fair, adequate, and reasonable.
Settlement
Furthermore, the
Amended Settlement Agreement is a good result for the class
members when considered in light of the disputed liability, the
difficulty
in
proving
willfulness
in
an
FCRA
case,
and
the
statutory cap on damages.
C.
Attorneys’ Fees, Litigation Expenses, Administrative
Costs, and Incentive Awards
Finally, Plaintiffs seek attorneys’ fees in the amount of
$750,000; reimbursement of litigation expenses in the amount of
$13,339.84;
administrative
expenses
24
for
KCC,
the
Settlement
Administrator, in the amount of $89,208.63; and incentive awards
to each Named Plaintiff in the amount of $2,500.
(ECF No. 74).
For the following reasons, the court will grant this motion in
part.
1.
Attorneys’ Fees
“It is for the district court in the first instance to
calculate an appropriate award of attorney’s fees.”
Carroll v.
Wolpoff & Abramson, 53 F.3d 626, 628 (4th Cir. 1995).
Rule 23
permits a court to award “reasonable attorney’s fees . . . that
are
authorized
by
Fed.R.Civ.P. 23(h).
law
or
by
the
parties’
agreement.”
The court must determine the best method of
calculating attorneys’ fees to appropriately compensate class
counsel.
There
are
two
primary
methods
of
calculating
attorneys’ fees: (1) the “percentage of recovery” or “percentage
of the fund” method; and (2) the “lodestar” method.
Whitaker v.
Navy Federal Credit Union, No. RDB 09-cv-2288, 2010 WL 3928616,
at *4 (D.Md. Oct. 4, 2010).
With either method, the goal is to
make sure that counsel is fairly compensated.
The United States
Court of Appeals for the Fourth Circuit has not decided which of
the general approaches to adopt, although the “current trend
among the courts of appeal favors the use of a percentage method
to calculate an award of attorneys’ fees in common fund cases.”
Goldenberg v. Marriott PLP Corporation, 33 F.Supp.2d 434, 438
(D.Md.
1998);
see
also
Strang
25
v.
JHM
Mortgage
Sec.
Ltd.
Partnership,
890
F.Supp.
499,
503
(E.D.Va.
1995)
(“the
percentage method is more efficient and less burdensome than the
traditional
lodestar
method,
and
offers
a
more
measure of compensation for common fund cases.”).
reasonable
“[U]sing the
percentage of fund method and supplementing it with the lodestar
cross-check . . . take[s] advantage of the benefits of both
methods.”
246,
261
In re The Mills Corp. Securities Litig., 265 F.R.D.
(E.D.Va.
2009).6
Accordingly,
in
this
case,
the
“percentage of recovery” method cross-checked by the “lodestar”
method
is
the
appropriate
method
for
reviewing
the
proposed
attorneys’ fees under Rule 23(h).
a.
“Percentage of Recovery” or “Percentage of the Fund”
Method
The
United
States
Supreme
Court
has
“recognized
consistently that a litigant or a lawyer who recovers a common
fund for the benefit of persons other than himself or his client
is entitled to a reasonable attorney’s fee from the fund as a
whole.”
Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).
Under the “percentage of recovery” or “percentage of the fund”
6
“Using the percentage method, cross-checked by the
lodestar method reduces the risk that the amount of the fee
award either overcompensates counsel in relation to the class
benefits obtained or undercompensates counsel for their work.”
In re Heartland Payment Systems, Inc. Customer Data Sec. Breach
Litig., 851 F.Supp.2d 1040, 1073 (S.D.Tex. 2012); see also In re
Royal Ahold N.V. Securities & ERISA Litig., 461 F.Supp.2d 383,
385 (D.Md. 2006) (“both are useful tools for trial courts to use
to inform and calibrate a judgment as to a fair and reasonable
. . . fee award.”).
26
method, the court awards attorneys’ fees as a percentage of the
common fund used to pay class members’ damages and claims.
Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984).7
See
An attractive
aspect of the “percentage of recovery” method is its resultsdriven nature which “ties the attorneys’ award to the overall
result
achieved
attorneys.”
rather
than
the
hours
expended
by
the
Jones v. Dominion Res. Servs., 601 F.Supp.2d 756,
759 (S.D.W.Va. 2009).
The
Fourth
Circuit
has
not
yet
identified
factors
for
district courts to apply when using the “percentage of recovery”
method.
District
courts
in
this
circuit
have
analyzed
the
following seven factors: (1) the results obtained for the class;
(2)
the
quality,
skill,
and
efficiency
of
the
attorneys
involved; (3) the risk of nonpayment; (4) objections by members
of the class to the settlement terms and/or fees requested by
counsel; (5) awards in similar cases; (6) the complexity and
duration of the case; and (7) public policy;.
The Kay Company
v. Equitable Production Co., 749 F.Supp.2d 455, 464 (S.D.W.Va.
2010); Jones, 601 F.Supp.2d at 760; Domonoske, 790 F.Supp.2d at
475; The Mills Corp., 265 F.R.D. at 261.
7
Importantly, “fee
“The [common-fund] doctrine provides that a private
plaintiff, or plaintiff’s attorney, whose efforts create,
discover, increase, or preserve a fund to which others also have
a claim, is entitled to recover from the fund the costs of his
litigation, including attorneys’ fees.”
In re Cendant Corp.
rd
Securities Litig., 404 F.3d 173, 187 (3 Cir. 2005).
27
award reasonableness factors ‘need not be applied in a formulaic
way’ because each case is different, ‘and in certain cases, one
factor may outweigh the rest.’”
In re AT&T Corp., 455 F.3d 160,
166 (3d Cir. 2006) (quoting In re Rite Aid Corp. Sec. Litig.,
396 F.3d 294, 301 (3rd Cir. 2005)).
i. Results Obtained for the Class
As mentioned above, a major advantage of the “percentage of
recovery” method is that it considers the results that class
counsel actually obtained for the class as opposed to the number
of hours they expended.
See Hensley v. Eckerhart, 461 U.S. 424,
436 (1983); see also McKnight v. Circuit City Stores, Inc., 14
Fed.Appx. 147, 149 (4th Cir. 2001) (“the most critical factor in
calculating a reasonable fee award is the degree of success
obtained.”); Fed.R.Civ.P. 23(h) advisory committee notes to 2003
amendments
(explaining
that
the
“fundamental
focus”
in
determining a common fund attorneys’ fee award “is the result
actually achieved for class members”).
As class counsel highlights in the memorandum supporting
its request for attorneys’ fees, the Settlement Classes obtained
considerable value and benefit from the settlement.
Domino’s
has consented to a common fund of $2.5 million to be distributed
pro rata (on a per-claim basis) by check to the 6,739 Settlement
Class members who timely submitted claims.
28
(ECF No. 74-1, at
11; see also ECF No. 80 ¶ 19).8
While this is not a “megafund”
case, class counsel nevertheless achieved a substantial value on
behalf of the classes.
See, e.g., Serrano, 711 F.Supp.2d at 408
(finding that class counsel in an FCRA case - where claimants
also sought statutory damages - achieved a substantial value in
establishing
a
settlement
fund
of
$975,000,
for
recovery of $1,000 to each claiming class member).
a
maximum
Pursuant to
the Amended Settlement Agreement, recovery for members of the
“Applicant Class” and “Adverse Action Class” is capped at $250
per Plaintiff, and recovery for members of the “Multiple MVR
Check Class” is capped at $200 per Claimable MVR Check.
No.
67-1
¶
22).9
Without
discounting
for
the
(ECF
requested
attorneys’ fees, litigation expenses, administrator costs, and
incentive
awards,
each
“Applicant
Class”
and
“Adverse
Action
Class” claim will be worth approximately $204.63, each “Multiple
MVR Class” claim will be worth approximately $163.70, and the
average gross recovery per claimant is approximately $370.97.
(ECF
No.
80
¶
20).
Assuming
the
court
grants
all
of
the
8
The Amended Settlement Agreement provides that shares of
the “Applicant Class” and “Adverse Action Class” shall be
weighted at 1.25 times each share of the “Multiple MVR Check
Class” for purposes of calculating individuals’ recoveries.
(ECF No. 67-1, at 16).
9
The Amended Settlement Agreement provides that these
amounts cannot be exceeded regardless of the amounts awarded for
attorneys’ fees, litigation expenses, incentive awards, and
administration costs.
29
requested
fees,
on
the
other
hand,
the
potential
declines by approximately thirty-four (34) percent.
recovery
(Id. ¶ 21).
Specifically, each “Applicant Class” claim and “Adverse Action
Class” claim will then be worth approximately $134.43, and each
“Multiple
MVR
Class”
$107.55,
for
an
claim
average
approximately $243.72.
will
then
gross
(Id.).
be
worth
recovery
approximately
per
claimant
of
As class counsel notes, however,
this is still an impressive result considering settlements in
comparable
cases.
8:08cv01283,
ECF.
See,
No.
e.g.,
58,
LaValle
v.
Stipulation
Chexsystems,
and
Agreement
No.
of
Settlement (C.D.Cal. Oct. 5, 2011) (“Settlement Class Members
who submit a Valid Claim will be eligible to receive a one-time
payment of $82.00 per [claim]”); Phillips v. Accredited Home
Lenders Holding Co., No. 2:06cv00057, ECF No. 51, ¶ 4, Judgment
and Order of Dismissal (C.D.Cal. July 17, 2008) (“[t]he relief
negotiated by the Parties includes a payment of $10.00” on a
claims-made basis).
The fact that no objections have been filed
further suggests that the result achieved is a desirable one.
ii. Quality,
Involved
Skill,
and
Efficiency
of
the
Attorneys
As noted above, Plaintiffs’ attorneys are experienced and
skilled
consumer
class
action
litigators
favorable result for the Settlement Classes.
who
achieved
a
Counsel exchanged
initial disclosures with Defendant; participated in mediation;
30
served interrogatories and requests for production of documents
on
Defendant;
fully
briefed
a
motion
to
dismiss;
reviewed
approximately 600 pages of documents; prepared mediation briefs;
and
participated
mediator.
also
an
all-day
mediation
(ECF No. 75 ¶ 2, Drake Decl.).
reached
strengths
in
a
and
favorable
weaknesses
settlement
of
the
with
Commc’ns
Sec.
Litig.,
618
private
Plaintiffs’ attorneys
after
respective
evaluating
the
positions
and
negotiating with sophisticated defense attorneys.
Warner
a
F.Supp.
735,
See In Re
749
(S.D.N.Y.
1985) (quality of opposing counsel is a factor to be considered
in
evaluating
Lead
Counsel’s
performance).
Class
counsel
clearly expended considerable time on this matter, reportedly
working approximately 627.52 hours on this case.
3).
(ECF. No. 75-
The considerable hours counsel spent on this case appear
to have been essential to the favorable result obtained.
The
fact that settlement was reached relatively quickly – short of
two years from the filing of the complaint on July 1, 2011 –
further indicates the attorneys’ skills and efficiency.
iii. Risk of Nonpayment
“In determining the reasonableness of an attorneys’ fee
award, courts consider the relative risk involved in litigating
the specific matter compared to the general risks incurred by
attorneys
Jones,
601
taking
on
F.Supp.2d
class
at
actions
762.
The
31
on
a
risk
contingency
undertaken
basis.”
by
class
counsel is evaluated by, among other things, the presence of
government action preceding the suit, the ease of proving claims
and
damages,
and,
if
the
case
resulted
in
settlement,
relative speed at which the case was settled.
the
Id.; see also
Strang, 890 F.Supp. at 503 (finding that risks to plaintiffs’
counsel were minimized by settlement within six-months from the
filing of the complaint and consequently reducing the percentage
award from 30% to 25% of the Settlement Fund).
Despite the attorneys’ skill and experience in litigating
FCRA
class
here,
actions,
although
litigation.
been
there
this
is
a
existed
reality
some
in
risk
the
of
vast
non-recovery
majority
of
Class counsel contends that the case may not have
profitable
at
all,
given
that
counsel
took
it
on
a
contingency basis and the difficulties of proving willfulness in
an FCRA case.
that
the
risk
controlling
provision
recognizes
(ECF No. 74-1, at 18-19).
of
nonpayment
was
authority
concerning
legal
governing
that
“stand-alone”
attorneys
Counsel further argues
amplified
by
the
lack
relevant
documents.
undertaking
the
class
The
of
FCRA
court
actions
bear
substantial risks, but there is no evidence that class counsel
undertook greater risk in this case than in any typical class
action
where
plaintiffs
seeking
damages
for
unlawful
have the burden of establishing statutory violations.
conduct
See Lyle
v. Food Lion, Inc., 954 F.2d 984, 989 (4th Cir. 1992) (finding
32
that the risk of counsel not being compensated in a case taken
on a contingent fee basis, standing alone, was not a sufficient
ground
for
enhancing
the
lodestar
fee).
“As
any
judge
or
experienced attorney realizes, the vast majority of cases, even
extremely complicated ones, settle . . . [because] parties are
rational actors who will settle when they feel that it is in
their own economic best interest.”
Loudermilk Services, Inc. v.
Marathon Petroleum Co. LLC, 623 F.Supp.2d 713, 722 (S.D.W.Va.
2009).
In Jones v. Dominion Resources Services, Inc., the court
found that “the usual risks of nonpayment associated with class
actions
were
largely
dissipated
settlement negotiations.”
once
the
parties
601 F.Supp.2d at 763.
entered
Here too, on
August 10, 2012, just over a year after Plaintiffs initiated
this lawsuit, the parties filed a joint motion to stay pending
settlement
Services,
negotiations.
623
F.Supp.2d
(ECF
at
No.
723
44);
see
also
(“Plaintiffs’
Loudermilk
counsel
could
always maintain some leverage in settlement negotiations because
of
the
high
potential
value of the case.”).
verdict
and
Defendants’
corresponding
Although the risk of no recovery was
certainly present here, the likelihood of settlement and the
initiation of settlement negotiations relatively early in the
litigation
experienced
process
by
greatly
class
reduced
counsel.
the
risk
Accordingly,
33
it
of
nonpayment
appears
that
class counsel experienced lower risk in the pursuit of this case
than the risk present in other class actions.
iv. Objections
As noted above, class members were notified directly of the
proposed settlement terms in the Amended Settlement Agreement,
including an explanation of the attorneys’ fee request.
ECF No. 71-2, at 8).
No one filed objections to either the
settlement terms or the proposed attorneys’ fees.
no
class
member
objected
September 23, 2013.
(See
at
the
final
Furthermore,
fairness
hearing
on
The lack of objections tends to show that
at least from the class members’ perspective, the requested fee
is
reasonable
for
the
services
achieved by class counsel.
provided
and
the
benefits
Nevertheless, the court must still
determine the reasonableness of the requested fee applying the
remaining factors.
v. Awards in Similar Cases
Attorneys’ fees awarded under the “percentage of recovery”
method are generally between twenty-five (25) percent and thirty
(30)
percent
(“MCL”),
§
of
the
14.121;
fund.
see
also,
Manual
e.g.,
for
In
re
Complex
Pac.
Litigation
Enters.
Sec.
Litig., 47 F.3d 373, 379 (9th Cir. 1995) (25% with adjustments up
to 33% for complexity, risk, and nonmonetary results).
While
the Fourth Circuit has not yet addressed this issue, several
courts
have
established
benchmarks,
34
subject
to
upward
or
downward adjustment depending on the facts of the class actions.
“The Ninth and Eleventh Circuit generally use a 25% benchmark
for common-fund cases.”
Customer
Data
Sec.
(S.D.Tex. 2012).
In re Heartland Payment Systems, Inc.
Breach
Litig.,
851
F.Supp.2d
1040,
1080
The Second and Third Circuits, on the other
hand, have not relied on rigid benchmarks, and instead consider
the
specific
circumstances
of
each
case
based
on
factors
enunciated in Johnson v. Ga. Highway Express, Inc., 488 F.2d
714, 717-19 (5th Cir. 1974).
See, e.g., Goldberger v. Integrated
Res., Inc., 209 F.3d 43, 51-52 (2d Cir. 2000); Third Circuit
2001
Task
Temp.L.Rev.
rigid
689,
adherence
percentage
case,
Force
fee,
remains
Report
705
to
on
Selection
(2001)
a
superior
(recommending
‘benchmark’”
tailored
to
to
of
the
any
and
Class
that
reasonable fee for class counsel.”).
courts
concluding
realities
other
Counsel,
means
of
of
the
74
“avoid
that
“a
particular
determining
a
“In fact, cases generating
comparatively smaller funds can require a higher percentage fee
award, due to the perception that large percentages of very
large settlements lead to windfalls for attorneys.”
Serrano,
711 F.Supp.2d at 420; see also In re Prudential Ins. Co. of Am.
Sales Practice Litig. Agent Actions, 148 F.3d 283, 339 (3d Cir.
1998)
(noting
inverse
relationship
smaller percentage award).
35
of
large
settlement
to
In
considering
awards
in
similar
cases,
courts
look
cases of similar size, rather than similar subject matter.
to
See
In re Cendant Corp. PRIDES Litig., 243 F.3d 722, 737 (3rd Cir.
2001); The Mills Corp., 265 F.R.D. at 263-64 (“comparing the
size of the fund and percentage of the award in other cases to
the
present
reference.”).
case
.
.
.
provides
a
valuable
point
of
Fees awarded under “the percentage-of-recovery”
method in settlements under $100 million have ranged from 15% to
40%.
See Stoner v. CBA Information Services, 352 F.Supp.2d 549,
553 (E.D.Pa. 2005).
Cases involving comparable funds to the
$2.5 million settlement fund here have resulted in awards of
attorneys’ fees in the ranges of 25% to 28% of the common fund.
See In re SPX Corp. ERISA Litig. (W.D.N.C. 2007) (28% of the
fund awarded, where the fund was $3.6 million); Smith v. Krispy
Kreme Doughnut Corp., 2007 WL 119157, at *3 (M.D.N.C. 2007) (26%
of the fund awarded where the fund was $4,750,000); Mason v.
Abbot Labs. (N.D.W.Va. 2001) (25% of the fund awarded where the
fund was $1,705,200); Braun v. Culp, Inc. (M.D.N.C. 1985) (25%
of the fund awarded where the fund was $1.5 million).
Mills Corp., 265 F.R.D. at 264.
See The
Furthermore, a recent study in
the Journal of Empirical Studies found that for class recoveries
in the range of $1.1 and $2.8 million, the mean attorneys’ fee
percentage award from 1993-2008 was approximately 27.1%, and the
median was 26.4%.
See Theodore Eisenberg & Geoffrey P. Miller,
36
Attorney Fees and Expenses in Class Action Settlements: 19932008,
7
J.Emp.L.Studies
248,
265
T.7
(June
2008);
see
also
Loudermilk Services, 623 F.Supp.2d at 723 (recognizing that a
one-third
considering
attorneys’
that
fee
class
is
presumptively
counsel
“has
far
reasonable,
more
control
but
of
litigation in the class action context than when litigating for
an individual” and that the “potential reward for plaintiffs’
counsel in class action litigation is much higher than when an
attorney litigates for an individual,” a twenty-five percent fee
was more appropriate and near the average awarded by courts in
similar litigation).
Thus, an award of twenty-five (25) percent falls within the
range of awards deemed fair and reasonable by courts within the
Fourth
Circuit
in
recent
similar
cases
involving
settlement
funds of comparable sizes.10
10
Class counsel offers a number of cases to support its
request for attorneys’ fees in the amount of thirty (30) percent
of the common fund, but on balance, a twenty-five (25) percent
reward is more appropriate here.
Notably, class counsel’s
suggestion to use a thirty (30) percent benchmark exceeds what
other circuit courts applying the “percentage of the recovery
method” have found appropriate. See Goldenberg v. Marriott PLP
Corporation, 33 F.Supp.2d 434, 438 (D.Md. 1998) (“[t]he Ninth
Circuit, for example, has established a 25% benchmark for such
awards.”); see also In re Bluetooth Headset prods. Liab. Litig.,
654 F.3d 935, 941 (9th Cir. 2011) (“Where a settlement produces a
common fund for the benefit of the entire class, . . . courts
typically calculate 25% of the fund as the ‘benchmark’ for a
reasonable fee award, providing adequate explanation in the
record
for
any
‘special
circumstances’
justifying
a
departure.”).
In any event, as indicated above, fee awards in
37
vi. The Complexity and Duration of the Litigation
The
‘complexity
and
duration’
element
suggests
that
recovery in the amount of twenty-five (25) percent of the common
fund is more appropriate here.
“In evaluating the complexity
and duration of the litigation, courts consider not only the
time between filing the complaint and reaching settlement, but
also the amount of motions practice prior to settlement, and the
amount and nature of discovery.”
Jones, 601 F.Supp.2d at 761;
see also In re Cendant, 243 F.3d at 736-36.
Cases such as this
one where discovery is informal and does not involve conflicts
over
privilege
or
access
to
documents
are
considered
less
complex and time consuming.
Id.; see also In re Merrill Lynch
Tyco
249
Research
2008).
laws
Sec.
Litig.,
F.R.D.
124,
137-38
(S.D.N.Y.
Cases are considered more complex when the applicable
are
new,
changing,
or
unclear.
See
Goldenberg,
33
F.Supp.2d at 439 (finding that the case was “fairly complex,
requiring analysis of several complicated financing arrangements
and tax shelter opportunities in the context of a business and
regulatory climate in flux.”).
In a settlement context, courts
consider whether negotiations were “hard fought,” “complex,” or
“arduous.”
In re Merrill Lynch, 249 F.R.D. at 138.
similar cases is but one factor courts consider in determining
the reasonableness of the requested fees.
38
The instant litigation was not especially protracted, nor
was it overly complex.
Class counsel argues that this case was
complex because it implicated novel legal issues and required
proof of willful conduct, which is a difficult threshold to
overcome under the FCRA to recover statutory damages.
(ECF No.
74-1,
did
at
actually
issues
25-26).
have
to
through
negotiations
Moreover,
contends.
importantly,
litigate
trial,
just
this
But
as
over
case
these
a
may
not
be
counsel
potentially
the
year
class
parties
after
as
difficult
entered
this
suit
complex
as
not
legal
settlement
was
class
filed.
counsel
For instance, in Domonoske v. Bank of America, N.A.,
also a class action lawsuit arising under the FCRA, plaintiffs
alleged
that
defendant
willfully
failed
to
prepare
and
mail
credit score disclosures to plaintiffs “as soon as reasonably
practicable” pursuant to Section 1681g(g) of the FCRA.
F.Supp.2d
at
469.
Notably,
the
court
rejected
790
plaintiff’s
request for an award of twenty-five (25) percent of the common
fund, despite finding that the settlement produced a favorable
result
for
the
class,
there
were
relatively
few
objections,
class counsel was experienced in consumer advocacy, and that
there was substantial risk of nonpayment given the difficulty of
proving willfulness in an FCRA case.
Id. at 475.
The court
found an eighteen (18) percent of the common fund award to be
more appropriate despite recognizing that it was at the low end
39
of recoveries in attorney’s fees, “due to the lack of complexity
and the brevity of discovery in [the] case.”
Id. at 476; see
also Carroll, 53 F.3d at 630 (finding no abuse of discretion in
the court’s conclusion that the fees awarded in a consumer case
should bear some rational relationship to the nature of the
defendant’s violation).
Furthermore,
straightforward.
discovery
Class
in
counsel
this
case
highlights
was
that
relatively
the
parties
exchanged initial disclosures, and Defendant produced 600 pages
of documents which Plaintiff reviewed, (ECF No. 75 ¶ 2), but
there is no evidence that discovery was particularly challenging
or
that
class
documents.
See
counsel
had
to
fight
Jones,
601
F.Supp.2d
for
at
access
762
to
(finding
these
that
discovery was straightforward where class counsel reviewed over
118,000 pages of documents); see also Domonoske, 790 F.Supp.2d
at 476 (noting that discovery was brief where class counsel
obtained fewer than 10,000 pages of written discovery).
case also involved limited motions practice.
This
See Jones, 601
F.Supp.2d at 762 (finding motions practice to be minimal where
the parties only briefed two motions over the course of one
year).
of
Accordingly, the foregoing considerations weigh in favor
reducing
the
attorneys’
fees
percent of the common fund.
40
amount
to
twenty-five
(25)
vi. Public Policy
“The most frequent complaint surrounding class action fees
is
that
they
are
artificially
high,
with
the
result
(among
others) that plaintiffs’ lawyers receive too much of the funds
set aside to compensate victims.”
Report on Contingent Fees in
Class Action Litigation, 25 Rev.Litig. 459, 466 (2006).
in
assessing
fees,
the
the
court
reasonableness
must
strike
of
the
the
requested
appropriate
Thus,
attorneys’
balance
between
promoting the important public policy that attorneys continue
litigating class action cases that “vindicate rights that might
otherwise
go
perception
unprotected,”
that
“class
and
action
perpetuating
plaintiffs’
overcompensated for the work that they do.”
the
public
lawyers
are
Third Circuit Task
Force Report, 208 F.R.D. 340, 342, 344 (Jan. 15, 2002).
Courts
in this circuit have recognized that “[t]his concern is not a
trivial one and requires attentiveness . . . in awarding fees.”
The Mills Corp., 265 F.R.D. at 263; see also Domonoske, 790
F.Supp.2d
at
476
(“the
court
notes
the
need
to
‘properly
balance[ ] the policy goals of encouraging counsel to pursue
meritorious [litigation in the relevant legal field, consumer
litigation
excessive
here,]
fees.’”
.
.
.
(quoting
while
In
re
[also]
Nortel
protecting
Networks
against
Corp.
Sec.
Litig., 539 F.3d 129, 132 (2nd Cir. 2008)); The Kay Company, 749
F.Supp.2d
at
469
(“[b]ecause
of
41
the
damage
caused
by
the
perception
of
overcompensation
of
attorneys
in
class
action
suits, lawyers requesting attorneys’ fees and judges reviewing
those requests must exercise heightened vigilance to ensure the
fees are in fact reasonable beyond reproach and worthy of our
justice system.”).
Here, a reduction of the attorneys’ fees award to twentyfive (25) percent of the common fund would be more reasonable in
light of these competing public policy concerns.
See, e.g.,
Carroll v. Wolpoff & Abramson, 53 F.3d 626, 630 (4th Cir. 1995)
(finding a lower attorneys’ fee award appropriate in a case
involving
a
technical
violation
of
the
Fair
Debt
Collection
Practices Act (“FDCPA”), because a higher award would “overencourage litigation alleging technical violations of [FDCPA]
and other statutes aimed principally at collecting attorney’s
fees.”).
Although no class member objected to the proposed
attorneys’ fee of up to thirty (30) percent of the common fund,
the court is cognizant of the fact that after discounting for
the
requested
fees,
the
class
members’
potential
declines by approximately thirty-four (34) percent.
recovery
Plaintiffs
argue that “public policy and important consumer rights at stake
justify
an
exceptional
risk
enhancement”
considering
the
potential risks that counsel undertook in deciding to initiate
this action.
have
rejected
(See ECF No. 74-1, at 28 (“Named Plaintiffs could
this
good
settlement
42
offer
.
.
.
[o]r
the
Defendant could have sought to moot the case by buying off the
class
representatives
Defendant
might
sufficient
injuries
through
have
(emphasis added)).
in
a
Rule
68
offer
argued
Plaintiffs
fact
have
to
.
had
Article
.
not
III
.
[or]
alleged
standing.”)
Based on the foregoing, however a nominal
reduction in the requested fee award is sufficient to account
for
the
promote
risks
the
class
policy
counsel
goals
identifies
of
enforcing
protecting against excessive fees.
while
continuing
consumer
goals
to
and
See The Kay Company, 749
F.Supp.2d at 468-69 (“It is not at all clear . . . that the
increased risk to class counsel of investing time and resources
to prosecute class actions justifies the treatment of such cases
as
entirely
purposes.
analogous
to
individual
claims
for
fee
award
Increasing the number of class action plaintiffs does
not necessarily increase the amount of time class counsel spends
on a case”).
b.
Lodestar Cross-Check
Under the “lodestar” method, a district court identifies a
lodestar figure by multiplying the number of hours expended by
class counsel by a reasonable hourly rate.
Corp., 549 F.3d 313, 320 (4th Cir. 2008).11
11
Grissom v. The Mills
The court may then
Maryland courts use the “lodestar” approach when
determining attorneys’ fees under fee-shifting statutes.
See,
e.g., Friolo v. Frankel, 373 Md. 501, 504-05 (2003). In Perdue
v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010), the Supreme
43
adjust the lodestar figure using a “multiplier” derived from a
number
of
factors,
including
the
benefit
obtained
for
the
settlement class, the complexity of the case, and the quality of
the representation.
See The Kay Company, 749 F.Supp.2d at 462;
see also In re Microstrategy, Inc. Sec. Litig., 172 F.Supp.2d
778, 786-87 (E.D.Va. 2001).
The
purpose
of
a
lodestar
cross-check
is
to
determine
whether a proposed fee award is excessive relative to the hours
reportedly worked by counsel, or whether the fee is within some
reasonable multiplier of the lodestar.
In re Rite Aid Corp.
Sec. Litig., 396 F.3d at 306 (“The lodestar cross-check serves
the purpose of alerting the trial judge that when the multiplier
is too great, the court should reconsider its calculation under
the
percentage-of-recovery
method”);
Viscaino
v.
Microsoft
Corp., 290 F.3d 1043, 1050 (9th Cir. 2002) (“[T]he lodestar may
provide a useful perspective on the reasonableness of a given
percentage award.”).
used
‘as
a
mere
Importantly, “where the lodestar fee is
cross-check’
to
the
percentage
method
of
determining reasonable attorneys’ fees, ‘the hours documented by
counsel need not be exhaustively scrutinized by the district
court.’”
In re Royal Ahold N.V. Securities, 461 F.Supp.2d at
385 (quoting Goldberger, 209 F.3d at 50).
Court reaffirmed the use of the “lodestar” method in federal
fee-shifting cases.
44
A
lodestar
cross-check
confirms
that
twenty-five
(25)
percent of the $2.5 million settlement fund is a reasonable fee
award for class counsel here.
Class counsel claims a lodestar
of approximately $200,136, which represents 627.52 hours billed
by twelve (12) attorneys at various rates ranging from $250.00
to
$550.00
staff,
per
hour
including
law
and
thirteen
clerks,
(13)
professional
paralegals,
legal
support
assistants,
litigation support staff, and class action clerks, at a $175.00
hourly rate.
held
that
(ECF No. 75-2 & 75-3).12
lodestar
multipliers
Courts have generally
falling
demonstrate a reasonable attorneys’ fee.
between
2
and
4.5
See Goldenberg, 33
F.Supp.2d at 439 n.6; see also In re Microstrategy, Inc., 172
F.Supp.2d
at
789
(reducing
fee
award
from
a
requested
percentage, which would have resulted in an award approximately
four times the lodestar figure, to a percentage that resulted in
an award 2.6 times the lodestar figure); In re Cendant, 243 F.3d
at 742 (“[M]ultiples ranging from one to four are frequently
12
These hourly rates, while somewhat high for this
district, are within a reasonable range for firms with national
class action practices.
See, e.g, DeHoyos v. Allstate Corp.,
240 F.R.D. 269, 325 (W.D.Tex. 2007) (finding reasonable hourly
rates of between $500 and $550 for lead class counsel, and
between $350.00 and $475.00 for other counsel and associate
attorneys).
In any event, as noted above, the court need not
engage in an intensive analysis of the rates charged when
applying the lodestar analysis merely as a cross-check, in
contrast to employing the lodestar method in full.
See In re
World Com Sec. Litig., 388 F.Supp.2d 319, 355 (S.D.N.Y. 2005).
45
awarded
in
common
fund
cases
when
the
lodestar
method
is
multiplier
of
The
of
applied.”).
Here,
class
approximately
counsel
3.8.
(ECF
suggests
No.
a
74-1,
lodestar
at
34).
range
multipliers on large and complicated class actions have ranged
from at least 2.26 to 4.5, but a fee resulting in such a high
relative
multiplier
is
unreasonable
in
complexity and risk of this action.
light
of
the
lesser
See Retiree Med. Benefits
ERISA Litig., 886 F.Supp. 445, 481-82 (E.D.Pa. 1995); see also
The Kay Company, 749 F.Supp.2d at 471 (“[a]lthough the technical
and administrative details of the case were surely complicated
by the large number of plaintiffs, the legal theory underlying
the case did not change.”).
Considering the nature of this
litigation, the “technical” violations involved, and the limited
discovery, a multiplier closer to 3 is more reasonable under the
circumstances
and
multipliers.
well
within
the
normal
range
of
lodestar
See Jones, 601 F.Supp.2d at 766.
Accordingly, a percentage award of twenty-five (25) percent
in this case is perfectly reasonable when cross-checked under
the lodestar method.
2.
Reimbursement for Litigation Expenses
In addition to attorneys’ fees, Plaintiffs’ attorneys seek
$13,339.84
litigation.
in
out-of-pocket
expenses
incurred
throughout
the
(ECF No. 74-1, at 36; see also ECF No. 75-4, at 2046
21).
to
“It is well-established that plaintiffs who are entitled
recover
attorneys’
fees
are
also
entitled
to
recover
reasonable litigation-related expenses as part of their overall
award.”
Kabore v. Anchor Staffing, Inc., No. L-10-3204, 2012 WL
5077636, at *10 (D.Md. Oct. 17, 2012).
The Fourth Circuit has
stated that such costs may include “those reasonable out-ofpocket
expenses
incurred
by
the
attorney
which
are
normally
charged to a fee-paying client, in the course of providing legal
Spell v. McDaniel, 852 F.2d 762, 771 (4th Cir. 1988)
services.”
(internal quotations omitted).
Examples of costs that have been
charged include necessary travel, depositions and transcripts,
computer
Almendarez
research,
v.
postage,
J.T.T.
Enters.
court
Corp.,
costs,
No.
and
JKS
photocopying.
06-68,
2010
WL
3385362, at *7 (D.Md. Aug. 25, 2010) (citing Vaughns v. Bd. of
Educ. of Prince George’s Cnty., 598 F.Supp. 1262, 1289-90 (D.Md.
1984)).
The court has reviewed the itemization submitted by class
counsel of the incurred costs and expenses.
included
filing
fees,
miscellaneous costs.
travel
costs,
The itemization
copies,
(ECF No. 75-4, at 20-21).
and
other
The requested
reimbursement for expenses appears to be reasonable and typical.
Accordingly,
the
request
for
$13,339.84
approved.
47
in
expenses
will
be
3.
Claims Administration Fee
KCC, the Settlement Administrator in this case, provided an
itemized list of expenses already incurred in connection with
administering
costs.
the
Amended
Settlement
(ECF No. 78, at 28-30).
Agreement
and
remaining
It appears that KCC has already
performed substantial work by facilitating the claims and optout process, giving notice to the proposed Settlement Classes,
and reviewing the claims; KCC appears to have performed its
tasks in an efficient manner.
KCC requests fees in the amount
of $89,208.63 to complete the administration of this settlement,
which
will
involve
distributing
approved claimants.
the
(ECF No. 78 ¶ 23).
respective
amounts
to
The fee requested here
comports with other claims administration fees in similar classaction
settlements,
Notice
Forms
that
particularly
the
process – over 45,000.
Claims
in
light
of
Administrator
(ECF No. 80 ¶ 10).
the
was
number
of
required
to
See e.g., Garcia v.
Gordon Trucking, No. 1:10-CV-0324-AWI-SKO, 2012 WL 5364575, at
*3 (E.D.Cal. Oct. 31, 2012) (approving $25,000 administrator fee
awarded in wage and hour case involving 1,868 potential class
members); Harris v. Vector Marketing Corp., No. C-08-5198 EMC,
2012
WL
3812012,
at
*6
(N.D.Cal.
Feb.
6,
2012)
(awarding
$250,000 in administration costs where claims administrator sent
out 68,487 notices).
Furthermore, class members were notified
that administrative costs would be deducted from the fund, and
48
no one objected.
(See ECF No. 67-1, at 51 (“[i]f any settlement
funds, remain after all checks have been distributed, and after
all . . . administrative costs have been paid, half of any
remaining amounts will revert to Domino’s and the remainder will
be divided between the Center for Employment Opportunities and
St. Judge Children’s Research Hospital.”).
Based on KCC’s submission and administration costs approved
in comparable cases, the proposed claims administration fee of
$89,208.63 appears fair and reasonable.
4.
Reasonableness of the Incentive Payments
As a last step in granting final approval of the Settlement
Agreement,
$2,500
the
court
incentive
must
payments
assess
to
the
each
reasonableness
Named
of
Plaintiff,
the
Justin
D’Heilly and Adrian Singleton.
Incentive
payments
to
class
awarded in Rule 23 class actions.
representatives
have
been
See, e.g., In re Tyson Foods,
Inc., No. RDB-08-1982, 2010 WL 1924012, at *4 (D.Md. May 11,
2010).
“Because a named plaintiff is an essential ingredient of
any class action, an incentive award is appropriate if it is
necessary to induce an individual to participate in the suit.”
Cook
v.
Niedert,
142
F.3d
1004,
1016
(7th
Cir.
1998).
To
determine whether an incentive payment is warranted, a court
should consider “the actions the plaintiff has taken to protect
the interests of the class, the degree to which the class has
49
benefitted from those actions, and the amount of time and effort
the plaintiff expended in pursuing the litigation.”
Cook, 142
F.3d at 1016.
Here, the Amended Settlement Agreement – to which no one
has objected - contemplates an incentive payment of $2,500 to
each
Named
settlement
Plaintiff,
payment.
in
(ECF
addition
No.
to
67-1,
their
at
53).
approval
motion,
Plaintiffs
represent
that
justified
because
both
Plaintiffs
spent
amount
of
time
Named
“meeting
and
receipt
In
this
a
communicating
the
of
a
final
award
is
considerable
with
counsel,
reviewing pleadings and correspondence, gathering documents” and
participating in the mediation, all done in furtherance of the
interests of the Settlement Classes.
also
ECF
Nos.
76
&
Adrian Singleton)).
77
(ECF No. 74-1, at 37; see
(Declarations
of
Justin
D’Heilly
and
These efforts have resulted in the Second
Amended Settlement Agreement, which is now before the court.
Additionally, Named Plaintiffs have undertaken personal risk in
furtherance of this lawsuit.
Specifically, both Singleton and
D’Heilly express concern that their decision to litigate against
Domino’s,
their
former
future job prospects.
employer,
will
adversely
affect
their
As Plaintiffs point out, “this lawsuit
appears on the first page of Google’s search result” when a
search for Named Plaintiffs is conducted on the Internet.
No. 74-1, at 37).
50
(ECF
In light of the Named Plaintiffs’ role in initiating this
lawsuit and in helping to achieve a favorable resolution despite
the
potential
future
risks,
the
relatively
modest
incentive
payment of $2,500 to each Named Plaintiff is reasonable.
III. Conclusion
For the foregoing reasons, the unopposed motion for final
approval of the Amended Settlement Agreement will be granted,
with the change in the amount for attorneys’ fees.
A separate
Order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
51
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