Cox et al v. Zurn Pex, Inc. et al
Filing
171
ORDER granting (247) Motion for Attorney Fees in case 0:08-md-01958-ADM-AJB (Written Opinion). Signed by Judge Ann D. Montgomery on 02/27/2013. Associated Cases: 0:08-md-01958-ADM-AJB et al.(TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
In Re: Zurn Pex Plumbing
Products Liability Litigation
Court File No. 08-MDL-1958 ADM/AJB
This Document Relates to:
All Actions
Order Granting Motion for an Award of Service Payments to Class Representatives
and for an Award of Attorneys’ Fees, Costs, and
Expenses to Class Counsel
On February 25, 2013, the undersigned United States District Judge heard oral
argument on Plaintiffs’ Motion for an Award of Service Payments to Class Representatives
and for an Award of Attorneys’ Fees, Costs, and Expenses to Class Counsel [Docket No.
247]. Based upon the pleadings, memoranda, arguments of counsel, and after considering
the entire file in this matter and being fully advised, it is hereby ordered that the Motion is
GRANTED.
I.
BACKGROUND
The Plaintiffs in this litigation alleged that Zurn Pex, Inc. and Zurn Industries LLC
(collectively the “Zurn Defendants”) sold defective brass fittings that were used in plumbing
systems sold under standard ASTM F1807 (“F1807 Fittings”). The Zurn Defendants denied
that the fittings were defective and asserted defenses.
In 2008, the Judicial Panel for
Multidistrict Litigation established an MDL proceeding and transferred all pending actions to
the District of Minnesota for pretrial coordination. Fifteen putative class actions and a
number of individual actions have been coordinated in this litigation.
After substantial discovery, class certification, and an appeal to the Eighth Circuit
Court of Appeals, Plaintiffs and the Zurn Defendants engaged in settlement discussions.
After months of arm’s-length negotiations facilitated by Chief Magistrate Judge Arthur J.
Boylan, the parties reached agreement on material terms in August 2012 and finalized a
proposed settlement in October 2012.
On October 15, 2012, the parties presented the proposed settlement to the Court for
preliminary approval. There was no opposition. The Court issued an order on October 18,
2012, that: (1) granted preliminary approval of the settlement; (2) preliminarily certified a
settlement class; (3) appointed class representatives for the settlement class; (4) appointed
class counsel (“Class Counsel”); (5) approved a notice plan and directed that notice be
provided to potential class members; and (6) scheduled a final fairness hearing.
Under the Settlement Agreement, the Zurn Defendants agreed to pay class counsel
up to $8.5 million for attorneys’ fees, costs, and expenses. Aff. of Shawn Raiter in Supp. of
Mot. for Final Approval and in Supp. of Mot. for Atty. Fees [Docket No. 250] (“Raiter
Aff.”) Ex. A (“Settlement Agreement”) ¶ 101. The Settlement Agreement also authorizes
class counsel to petition the Court for class representative service awards for the class
representatives as follows: (1) $7,500.00 per home/abode to Denise and Terry Cox, Jody and
Brian Minnerath, Christa and Kevin Haugen, Carrie and Robert Hvezda, and Michelle
Oelfke; and (2) $5,000.00 per home/abode to Beverly Barnes and Brian Johnston, Bridget
and Paul Bohn, Charles A. Breaux, Sr., Coppersmith Plumbing, Darla and Anthony Kolker,
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Judith Nicodemus, Brenda and Brian Rose, Donovan and Alyssa Shaughnessy, and Don
Vtipil. Settlement Agreement ¶ 103.
After carrying out the notice plan and receiving no objections to any aspect of the
settlement, the parties filed their moving papers seeking final approval of the settlement.
Class counsel and the plaintiffs also moved for an award of attorneys’ fees and expenses and
class representative service awards. The Court held a final fairness hearing on February 25,
2013, and granted the parties’ joint, unopposed motion for final approval of the settlement
in an order dated February 27, 2013.
II.
CLASS REPRESENTATIVE SERVICE AWARDS
Pursuant to the Settlement Agreement, class counsel request service payments to the
class representatives in the amount of either $7,500.00 or $5,000.00, depending on whether
the representative was deposed. Settlement Agreement ¶ 103. Service award payments are
regularly made to compensate class representatives for their help to a class. See, e.g., In re
Xcel Energy, Inc., Sec., Derivative, & “ERISA” Litig., 364 F. Supp. 2d 980, 1000 (D. Minn.
2005) ($100,000 award to lead plaintiffs in a securities class action case); White v. Nat’l
Football League, 822 F. Supp. 1389, 1406 (D. Minn. 1993) (citing cases).
The service payments sought under the settlement reflect the efforts by the class
representatives to gather and communicate information to counsel and act as the public face
of the litigation. The class representatives opened their homes up to inspection and testing,
some of them more than once. Each assisted with the investigation and preparation of these
suits, gathered documents for production, and helped class counsel. Some of the class
representatives gave depositions. The class representatives stayed abreast of the cases from
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the outset and have performed a valuable service to class members and the public as a
whole.
The requested payments of either $7,500.00 or $5,000.00 to the class representatives
are reasonable when compared to awards of service payments in other cases. See, e.g.,
Austin v. Metro. Council, Civ. No. 11-3621, at ¶ 48 (D. Minn. Mar. 27, 2012) (approving
$20,000 award); see also Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998) (awarding
$25,000 award); Brotherton v. Cleveland, 141 F. Supp. 2d 907, 913-14 (S.D. Ohio 2001)
($50,000 award); Enter. Energy Corp. v. Columbia Gas Transmission Corp., 137 F.R.D. 240,
250-52 (S.D. Ohio 1991) ($50,000 service awards to each of six class representatives);
Bogosian v. Gulf Oil Corp., 621 F. Supp. 27, 33 (E.D. Pa. 1985) (approving $20,000 award
to class representatives); Camp v. Progressive Corp., No. 01-2680, 2004 WL 2149079, at *6,
*22 (E.D. La. Sept. 23, 2004) (awarding $102,000 to class representatives in a case in which
the amount allocable to class members was $3.6 million); In re Linerboard Antitrust, No.
MDL 1261, 2004 WL 1221350, at **18-19 (E.D. Pa. June 2, 2004) (awarding $25,000 to each
of five class representatives); Sheppard v. Consol. Edison Co. of N.Y., Inc., No. 94-CV0403, 2002 WL 2003206, at **6-7 (S.D.N.Y. Aug. 1, 2002) (three of six class representatives
awarded $25,000 or more).
No class member has objected to these proposed awards and the Court approves the
requested $7,500.00 and $5,000.00 service awards.
III.
ATTORNEYS’ FEES AND EXPENSES
Class counsel requests reimbursement of attorneys’ fees and expenses of $8.5 million,
an amount agreed upon by the parties. Settlement Agreement ¶ 101. The Court finds that
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the requested attorneys’ fees and expenses are appropriate and reasonable under the
circumstances. No class member has objected to the requested attorneys’ fees and expenses.
A district court has wide discretion to award attorneys’ fees. Petrovic v. Amoco Oil,
Co., 200 F.3d 1140, 1157 (8th Cir. 1999). “Courts have recognized that the risk of receiving
little or no recovery is a major factor in awarding attorney fees.” In re Xcel Energy, 364 F.
Supp. 2d at 994. The Eighth Circuit has established factors that a district court should
consider to determine whether requested attorneys’ fees are reasonable: (1) “the number of
hours spent in various legal activities by the individual attorneys”; (2) “the reasonable hourly
rate for the individual attorneys”; (3) “the contingent nature of the success”; and (4) “the
quality of the attorneys’ work.” Grunin v. Int’l House of Pancakes, 513 F.2d 114, 127 (8th
Cir. 1975); see also In re Xcel Energy, 364 F. Supp. 2d at 992.
The reasonableness of an award can include evidence of an arm’s-length negotiation
or an agreement by the defendant to a certain amount that does not impact the relief
afforded to the class. See Snell v. Allianz Life Ins. Co. of N. Am., No. 97-2784, 2000 WL
1336640, at *19 (D. Minn. Sept. 8, 2000) (a court’s “acceptance of the fee request is
facilitated by the fact that the fee amount was independently negotiated by the settling
parties, and comes from a source that does not impact upon the total settlement fund that is
available to the Class”); see also DeBoer v. Mellon Mortg. Co., 64 F.3d 1171, 1178 (8th Cir.
1995) (affirming district court’s grant of fee award where the vast majority was to be paid by
the defendant, separate from any class recovery), cert. denied, 517 U.S. 1156 (1996).
Throughout this litigation, class counsel invested significant time and expense and
faced real risk in cases that involved vigorously contested allegations, considerable discovery
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efforts, and complex issues of fact and law. To a large degree, the settlement and resolution
of the complex issues present in this MDL litigation are the result of the diligence and focus
of class counsel. The Zurn Defendants strenuously defended this litigation and class counsel
were confronted with challenges created by a team of skilled defense attorneys.
In considering this fee request, the Court respects that the amount requested and
agreed upon was the product of arm’s-length negotiations conducted by Chief
Magistrate Judge Boylan. The fact that fees and expenses will be paid separate from,
and in addition to the class members’ benefits, is an important consideration. Because
the Zurn Defendants agree to pay the fees and costs separately from the benefit to the
class, the Court “may rely on summaries submitted by the attorneys and need not
review actual billing records.” In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 306-07
(3d Cir. 2005).
Class counsel seeks reimbursement of fees based on a lodestar analysis of the time
and expense invested in the case. Under a lodestar analysis or a common-benefit analysis,
the fee request is reasonable under the circumstances of this litigation. Class counsel spent
extensive time on this litigation.
The Court has reviewed class counsel’s motion for
attorneys’ fees and finds that the time spent and its resulting lodestar represents a reasonable
number of hours spent by timekeepers with the appropriate levels of experience.
Class counsel’s lodestar is determined by multiplying the number of hours reasonably
expended on the litigation by the timekeeper’s hourly rate. See Hensley v. Eckerhart, 461
U.S. 424, 447-49 (1983). “[I]n cases where fees are calculated using the lodestar method,
counsel may be entitled to a multiplier to reward them for taking on risk and high-quality
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work.” In re United Health Grp., Inc. PSLRA Litig., 643 F. Supp. 2d 1094, 1106 (D. Minn.
2009). “The resulting multiplier need not fall within any pre-defined range, so long as the
court’s analysis justifies the award, such as when the multiplier is in line with multipliers used
in other cases.” In re Xcel Energy, 364 F. Supp. 2d at 999.
“[A] financial incentive is necessary to entice capable attorneys, who otherwise could
be paid regularly by hourly-rate clients, to devote their time to complex, time-consuming
cases for which they may never be paid.” Mashburn v. Nat’l Healthcare Inc., 684 F. Supp.
679, 687 (M.D. Ala. 1988). “To make certain that the public interest is represented by
talented and experienced trial counsel, the remuneration should be both fair and rewarding.”
Eltman v. Grandma Lee’s, Inc., No. 82-CV-1912, 1986 WL 53400, at *9 (E.D.N.Y. May 28,
1986) (quotation omitted); see also In re WorldCom, Inc. ERISA Litig., No. 02-CV-4816,
2004 WL 2338151, at *10 (S.D.N.Y. Oct. 18, 2004) (noting in awarding attorneys’ fees that
“Lead Counsel has performed an important public service in this action. . .”); In re
Monosodium Glutamate Antitrust Litig., No. CIV11MDL1328PAM, 2003 WL 297276, at
*1 (D. Minn. Feb. 6, 2003) (“The theory behind attorneys’ fees awards in class actions is not
merely to compensate counsel for their time, but to reward counsel for the benefit they
brought to the class and take into account the risk undertaken in prosecuting the action.”).
Class counsel’s lodestar includes time only through February 2013 and does not
include the additional time that class counsel will spend to bring this MDL litigation to a
conclusion, counsel class members about the settlement, and oversee the distributions of
payments and benefits to class members. Because the administration of claims will last for
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seven years, class counsel will spend significant additional time on this litigation and
settlement.
Class counsel calculated the requested fee amount by using their current class action
rates. This is appropriate given the deferred nature of counsel’s compensation. LeBlancSternberg v. Fletcher, 143 F.3d 748, 764 (2d Cir. 1998) (“[C]urrent rates, rather than
historical rates, should be applied in order to compensate for the delay in payment”); In re
Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1305 (9th Cir. 1994) (“The district
court has discretion to compensate delay in payment in one of two ways: (1) by applying the
attorneys’ current rates to all hours billed during the course of the litigation; or (2) by using
the attorneys’ historic rates and adding a prime rate enhancement.”).
The rates for the applicable timekeepers are set out in the Affidavit of Shawn M.
Raiter, which was submitted in support of the request for attorneys’ fees. These hourly
rates are market rates similar to those charged by firms with expertise in class action
and other complex litigation. See, e.g., Austin v. Metro. Council, Civ. No. 11-3621 at ¶
57 (noting that $500 per hour was “at the lower end of complex class action rates
approved in this District” and citing Yarrington v. Solvay Pharm., 697 F. Supp. 2d
1057, 1066 (D. Minn. 2010), which recognizes that partner rates ranging from $500$800 “are based on prevailing fees for complex class actions of this type that have been
approved by other courts.”); see also In re Xcel Energy, 364 F. Supp. 2d at 989-90
(approving contingency fee of 25 percent of benefit and implicitly approving hourly
attorney rates ranging from $200 to $650 in Rule 23 class action). The Court finds that
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the hourly rates are reasonable in light of the nature of this litigation, the locations of
the firms involved in the litigation, and the rates charged in similar litigation.
The Court finds that the total requested lodestar is reasonable considering the
complex and wide-ranging nature of the case, the amount of discovery and motion
practice undertaken, and the intricacy of the settlement negotiations. The total award
of attorneys’ fees and expenses of $8.5 million does not provide a lodestar enhancement or
multiplier. The ongoing work in finalizing this litigation and administering claims for seven
years will erode the fee award to a negative lodestar multiplier.
As part of the $8.5 million, class counsel seek reimbursement of $1,783,193.34 in
costs and expense.
No class member has objected to class counsel’s requested
reimbursement of costs and expenses.
The Court finds that the requested costs and
expenses are appropriate and reasonable. Such expenses are related and necessary to the
prosecution of this type of litigation and are properly recovered by counsel who
prosecute cases on a contingent basis. Yarrington, 697 F. Supp. at 1066. The costs
will be reimbursed from the $8.5 million and will not reduce the benefits available to
class members.
The Court, having reviewed and considered the motion and all related documents,
evidence, and arguments of all counsel, and being fully advised, concludes that class
counsel’s request for service payment awards to class representatives is appropriate and the
request for attorneys’ fees, costs, and expenses is reasonable. Accordingly, the Motion for
an Award of Service Payments to Class Representatives and for an Award of Attorneys’
Fees, Costs, and Expenses to Class Counsel is GRANTED.
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IT IS HEREBY ORDERED:
1.
The terms of the parties’ Settlement Agreement are incorporated herein and
shall be followed and carried out by class counsel and the Zurn Defendants;
2.
Class counsel’s requested service payments for class representatives are
appropriate and the requested award of $8.5 million for attorneys’ fees, costs, and expenses
is reasonable. There are no objections to the service payments or the attorneys’ fees, costs,
and expenses. The awards are approved.
3.
In accordance with the terms of the parties’ Settlement Agreement:
a.
b.
The following class representatives are awarded a service payment in
the amount of $5,000.00 per home or abode: Beverly Barnes and Brian
Johnston; Bridget and Paul Bohn; Charles A. Breaux, Sr.; Coppersmith
Plumbing; Darla and Anthony Kolker; Judith Nicodemus; Brenda and
Brian Rose; Donovan and Alyssa Shaughnessy; and Don Vtipil.
c.
4.
The following class representatives are awarded a service payment in
the amount of $7,500.00 per home or abode: Denise and Terry Cox;
Jody and Brian Minnerath; Christa and Kevin Haugen; Carrie and
Robert Hvezda; and Michelle Oelfke.
The Zurn Defendants must pay the class representatives service
payments to Lead Class Counsel by the Effective Date of the
Settlement Agreement.
Class counsel are awarded $8.5 million for attorneys’ fees and reimbursement
of the costs and expenses advanced in this litigation. Pursuant to the parties’ Settlement
Agreement, the Zurn Defendants shall pay $8.5 million in attorneys’ fees and costs
reimbursement to Lead Class Counsel within 30 days of the Effective Date. (Settlement
Agreement ¶ 134).
5.
Without affecting the finality of this order, the Court retains continuing
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jurisdiction over this case and the parties, including all members of the class, concerning the
administration and enforcement of the settlement and the Court’s orders in this litigation.
LET JUDGMENT BE ENTERED ACCORDINGLY.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: February 27, 2013
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