Jones et al v. Singing River Health Services Foundation et al

Filing 287

ORDER granting 164 Motion for Attorney Fees, Expenses, Costs, and Incentive Fee. Signed by Chief District Judge Louis Guirola, Jr on 06/10/2016 (Guirola, Louis)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
THOMAS JONES, et al., on behalf of
themselves and others similarly situated
v.

PLAINTIFFS

CAUSE NO. 1:14CV447-LG-RHW
CONSOLIDATED WITH 1:15CV1-LG-RHW
CONSOLIDATED WITH 1:15CV44-LG-RHW

SINGING RIVER HEALTH SYSTEM, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’
MOTION FOR ATTORNEYS’ FEES, COSTS, AND INCENTIVE FEE
BEFORE THE COURT is the Motion [164] for Award of Attorneys’ Fees
and Reimbursement of Costs and Award of Incentive Fee filed by the plaintiffs in
these consolidated class action lawsuits. They seek an award of $6,450,000 in
attorneys’ fees and $125,000 in costs for the attorneys’ efforts in negotiating a
settlement in the class action cases. The plaintiffs also ask the Court to award
$12,500 in incentive fees, to be divided among the named class representatives in
the class action cases and in some of the Jackson County Chancery Court cases.
Approximately 204 members of the settlement class have objected to the attorneys’
fees in a joint response [177].
After reviewing the submissions of the parties, the record in this matter, and
the applicable law, the Court finds that the Motion seeking an award of attorneys’
fees, costs, and an incentive fee should be granted to the extent that $4,805,772.30
in attorneys’ fees are awarded, $125,000 in expenses are awarded, and an incentive
fee of $12,500 is awarded. This opinion constitutes the Court’s findings of fact and
conclusions of law pursuant to Fed. R. Civ. P. 23(h)(3) and Fed. R. Civ. P. 52(a).

BACKGROUND
These consolidated class action lawsuits arose out of the alleged
underfunding of the Singing River Health System Employees’ Retirement Plan and
Trust (“the Plan”). This Court has approved a settlement pursuant to which SRHS
will pay $149,950,000 to the Plan over a period of approximately thirty-five years.
The settlement agreement also provides:
[SRHS has] agreed to pay attorneys’ fees and expenses, provided that
any such award does not exceed $6,450,000 in fees and $125,000 in
documented expenses, which may include expenses incurred in
connection with administering the settlement. Plaintiffs’ Counsel will
not apply for a larger award of attorney fees unless Defendants oppose
the request for the sum set forth in Exhibit C [to the Stipulation].
(Pls.’ Mem., Ex. 1 at 14, ECF No. 163-1). Exhibit C to the settlement agreement
provides that the attorneys’ fees shall be paid in four installments, subject to
approval by this Court: (1) a $2,000,000 payment upon approval of the settlement;
(2) a $1,200,000 payment on September 30, 2016; (3) a $1,750,000 payment on
September 30, 2017; and (4) a $1,500,000 payment on September 30, 2018. (Pls.’
Mem., Ex. C to Ex. 1, ECF No. 163-1). Additionally, as an incentive award, Singing
River has also agreed to pay $12,500, to be divided among the named plaintiffs to
the Jones, Cobb, and Lowe federal lawsuits as well as the Broun and Lay state court
lawsuits. (Pls.’ Mem., Ex. 1 at 8, ECF No. 163-1).
Twenty-four attorneys who participated in the class settlement have provided

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their billing records to the Court.1 These attorneys have reported 7785.63 hours
through April 1, 2016.2 In addition, 722.55 hours have been reported by the
paralegals who assisted these attorneys for that same time period. The Court
recognizes that additional time was expended by at least some of these attorneys
after April 1, 2016, because a two-day fairness hearing was held on May 16-17,
2016. The attorneys also incurred $138,225.49 in out-of-pocket expenses while
prosecuting these lawsuits. (Pls.’ Mem., Ex. 2 at 10, ECF No. 165-2).
Allen Carroll, a certified public accountant designated by the plaintiffs as an
expert witness, has testified by affidavit that the present value of the future
payments to the Plan is $55,950,876, and the present value of the attorneys’ fees
sought is $5,944,745. (Pls.’ Mem., Ex. 3 at 4, ECF No. 165-3). Thus, the attorneys’
fees constitute 9.6 percent of the total class recovery.3 (Id.)
Mr. Hugh D. Keating of the Gulfport, Mississippi law firm Dukes, Dukes,

1

The contemporaneous time sheets and records were provided to the Court
post fairness hearing for in camera review.
2

Class counsel Jim Reeves had testified by affidavit that 7813 hours had
been reported by a total of twenty-three attorneys who represent the plaintiffs.
(Pls.’ Mem., Ex. 2 at 9, ECF No. 165-2). However, it appears that work performed
by a file clerk working at a rate of $85.00 per hour for attorney Dustin Thomas was
inadvertently counted as attorney time. The Court has disregarded this clerical
work from its consideration. In addition, it appears that one of the attorneys was
not counted when Mr. Reeves’ affidavit was prepared.
3

As explained in this Court’s Memorandum Opinion and Order Granting
Motion for Final Approval of Class Action Settlement [283], the parties have agreed
that any attorneys’ fees and expenses awarded will be paid in addition to the funds
paid to the Plan.
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Keating & Faneca, P.A., has provided the following testimony via affidavit:
For complex, high stakes or high risk litigation in South Mississippi, I
believe that customary and reasonable rates currently charged by
litigation partners in Mississippi firms and/or regional firms with
offices in Mississippi range from $500.00 - $550.00 per hour.
(Pls.’ Mem., Ex. 4 at 3, ECF No. 165-4).
The plaintiffs have also prvided an affidavit that was produced in another
lawsuit pending before this Court by Mr. John G. Corlew of the firm Corlew,
Munford & Smith PLLC, in Jackson Mississippi. (Pls.’ Mem., Ex. 5 at 1, ECF No.
165-5). Mr. Corlew testified that a customary and reasonable hourly rate for
attorneys practicing in complex Mississippi litigation would be $400 to $500. (Id.)
DISCUSSION
I. PLAINTIFFS’ MOTION FOR ATTORNEYS’ FEES
“In a certified class action, the court may award reasonable attorney’s fees
and nontaxable costs that are authorized by law or by the parties’ agreement.” Fed.
R. Civ. P. 23(h).
While the so-called “American Rule” prohibits the award of attorneys’
fees in the absence of a specific statutory or contractual provision, it is
well settled that the “common benefit” or “common fund” equitable
doctrine allows for the assessment of attorneys’ fees against a common
fund created by the attorneys’ efforts.
Barton v. Drummond Co., 636 F.2d 978, 982 (5th Cir. 1981). In common fund cases,
courts in the Fifth Circuit are permitted to use either the percentage method or the
lodestar method to calculate attorneys’ fees. Union Asset Mgmt. v. Dell, Inc., 669
F.3d 632, 644 (5th Cir. 2012).

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“A variant on the traditional common-fund case occurs frequently in mass
tort litigation – in both class actions and large consolidations – where a separate
fund to pay attorney fees is created as a part of the settlement.” In re Heartland
Payment Sys., Inc. Customer Data Sec. Breach Litig., 851 F. Supp. 2d 1040, 1072
(S.D. Tex. 2012). The percentage method can also be utilized for these “constructive
common funds.” Id. (citing Johnston v. Comerica Mortg. Corp., 83 F.3d 241, 246
(8th Cir. 1996)).
Although under the terms of each settlement agreement, attorney fees
technically derive from the defendant rather than out of the class’
recovery, in essence the entire settlement amount comes from the
same source. The award to the class and the agreement on attorney
fees represent a package deal. Even if the fees are paid directly to the
attorneys, those fees are still best viewed as an aspect of the class’
recovery.
Id. (citing Johnston, 83 F.3d at 245-46). “If an agreement is reached on the amount
of a settlement fund and a separate amount for attorney fees and expenses, . . . the
sum of the two amounts ordinarily should be treated as a settlement fund for the
benefit of the class, with the agreed-on fee amount constituting the upper limit on
the fees that can be awarded to counsel.” Id. (quoting Manual for Complex Litig.
(4th) § 21.7 (2004)).
Courts that decide to utilize the percentage method often perform a lodestar
cross-check “to avoid windfall fees, i.e., to ensure that the percentage approach does
not lead to a fee that represents an extraordinary lodestar multiple.” Id. at 1086;
see also Klein v. O’Neal, Inc., 704 F. Supp. 2d 632, 675 (N.D. Tex. 2010). This

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lodestar cross-check helps confirm that the attorneys’ fees calculated pursuant to
the percentage method are reasonable. In re Heartland, 851 F. Supp. 2d at 1086.
The settlement in the present case is a constructive common fund, because
the attorneys are not asking to be paid from the fund awarded to the Plan. This
Court will first analyze the proposed fees using the percentage method. The Court
will then perform a lodestar cross-check to determine whether the proposed award
is reasonable.
A. PERCENTAGE METHOD
Pursuant to the percentage method, the court awards a reasonable
percentage of the common fund to the attorneys. Dell, Inc., 669 F.3d at 642-43. The
court first determines the actual monetary value conferred to the class by the
settlement. In re Heartland, 851 F. Supp. 2d at 1075. Next, the court applies a
benchmark percentage to this value. Id. Finally, the court applies the factors set
forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), to
determine whether the percentage should be adjusted upward or downward. Id.
Fees of twenty to thirty percent of the common fund are usually awarded in class
action cases. Gooch v. Life Invs. Co. of Am., 672 F.3d 402, 426 (6th Cir. 2012);
Manual, § 14.121.
The present value of the future payments to the Plan is $55,950,876. (Pls.’
Mem., Ex. 3 at 4, ECF No. 165-3). The present value of the attorneys’ fees sought is
$5,944,745. (Id.) Since there is a constructive common fund in the present case,

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these two figures should be added to determine the value of the settlement to the
class – $61,895,621. The attorneys’ fees sought constitute approximately 9.6% of
the value conferred on the class. See in re Heartland, 851 F. Supp. 2d at 1072
(quoting Manual, § 21.7 ). Thus, this request is well below the amount typically
awarded in class action cases.4 Nevertheless, the Court will perform a lodestar
cross-check, which includes application of the Johnson factors to determine whether
the requested award is reasonable.
B. LODESTAR CROSS-CHECK
Under the lodestar method, the court first multiplies the reasonable number
of hours spent working on the case by the reasonable hourly rate for the attorney to
determine the lodestar figure. Black v. SettlePou, P.C., 732 F.3d 492, 502 (5th Cir.
2013). “[T]he relevant market for purposes of determining the prevailing rate to be
paid in a fee award is the community in which the district court sits.” Tollett v. City
of Kemah, 285 F.3d 357, 368 (5th Cir. 2002). “Generally, the reasonable hourly
rate for a particular community is established through affidavits of other attorneys
practicing there.” Id.
The plaintiffs have produced affidavits from local attorneys who have
testified that the market rate in this district for complex litigation ranges from $400
to $550. This Court has previously held that a $400 hourly rate is proper in this

4

Even if the amount of attorneys’ fees available pursuant to the settlement
were not considered a value conferred on the class, the percentage requested would
be 10.6 %. Thus, the fees requested in the present case would still fall far below the
typical award in this type of case.
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jurisdiction for an experienced attorney handling complex litigation. See U.S. ex rel.
Rigsby v. State Farm Fire & Cas. Co., No. 1:06cv433-HSO-RHW, 2014 WL 691500,
at *14 (S.D. Miss. Feb. 21, 2014). There is no reason to deviate from that approved
rate or grant a higher rate in the present case.
The plaintiffs have not provided any expert testimony concerning a
reasonable rate for paralegals. However, this Court has previously determined that
$124 per hour is a reasonable rate for paralegals. Id. at *18.
The twenty-four attorneys who have requested attorneys’ fees in this case
have reported collectively 7785.63 hours, and their paralegals have recorded 722.55
hours. At a rate of $400 per hour, the lodestar is $3,114,252 for the attorneys. The
lodestar for paralegals is $89,596.20. Therefore, the total lodestar is $3,203,848.20.
The amount of fees requested by the attorneys – $6,450,000 – is therefore 2.01
times the amount of the lodestar.
“There is a strong presumption of the reasonableness of the lodestar
amount.” Black, 732 F.3d at 502. However, the court must consider the Johnson
factors to determine whether the lodestar figure should be adjusted upward or
downward. Strong v. Bellsouth Telecomm., Inc., 137 F.3d 844, 850 (5th Cir. 1998).
These factors are:
(1) the time and labor required; (2) the novelty and difficulty of the
questions involved; (3) the skill required to perform the legal service
properly; (4) the preclusion of other employment by the attorney due to
the acceptance of the case; (5) the customary fee; (6) whether the fee is
fixed or contingent; (7) the time limitations imposed by the client or
the circumstances; (8) the amount involved and the results obtained;
(9) the experience, reputation, and ability of the attorneys; (10) the
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undesirability of the case; (11) the nature and the length of the
professional relationship with the client; and (12) awards in similar
cases.
Johnson, 488 F.2d at 717-19. The most important factor is the degree of the success
obtained. Black, 732 F.3d at 503. The Court “must be careful, however, not to
double count a Johnson factor already considered in calculating the lodestar when it
determines the necessary adjustments.” Shipes v. Trinity Indus., 987 F.2d 311, 320
(5th Cir. 1993).
As for the first factor, over 150 lawsuits concerning the alleged underfunding
of the Plan have been filed in three different courts and plaintiffs’ counsel’s
investigation of the case involved the review of thousands of pages of financial
records. The twenty-four plaintiffs’ attorneys have demonstrated that they spent
7785.63 hours prosecuting this litigation and negotiating the settlement. A total of
722.55 hours of paralegal time has also been reported by the law firms that
represent the plaintiffs.
The second factor requires consideration of the novelty and difficulty of the
questions involved. The plaintiffs have asserted that the following novel and
difficult questions have been presented by this lawsuit: (1) the issue of whether the
Plan is governed by ERISA; (2) the implications of Mississippi’s Uniform Trust
Code, Miss. Code Ann. § 91-8-10, et seq., which recently went into effect in 2014; (3)
the effect of the Mississippi Tort Claims Act; (4) the potential liability of Jackson
County, Mississippi; (5) the method of calculating the amount of funds that should
have been deposited in the Plan; and (6) “the nature of the complex relationship
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between the federal court and parallel state court proceedings.” (See Pls.’ Mem. at
22-23, ECF No. 165).
The third factor is the level of skill necessary to represent the plaintiffs
effectively in this lawsuit. As explained previously, this litigation was complex and
time-consuming. Furthermore, the comprehensive settlement agreement5 entered
into in this case indicates that these attorneys are skilled in negotiation.
The fourth factor to consider is whether the plaintiffs’ attorneys were
precluded from accepting other cases due to their involvement in the present case.
Class counsel Jim Reeves has testified by affidavit that he and the other attorneys
who represented the class have “devoted a substantial percentage of their time to
this litigation” as well as a “substantial commitment of resources.” (Pls.’ Mem., Ex.
2 at 9, ECF No. 165-2). This is further evidenced by a review of the submitted
billing records, which indicate that a large percentage of class counsel’s time was
spent working on this litigation. However, some of the attorneys seeking a fee
award have not spent a substantial amount of time litigating this case.
The fifth factor is the customary fee in the community for cases of this
nature. The Court has adequately addressed this factor while calculating the
lodestar. The sixth factor takes into account the fact that the plaintiffs agreed to a
contingency fee of forty percent. (Id. at 10).

5

The terms of the settlement agreement are detailed in this Court’s
Memorandum Opinion and Order Granting Motion for Final Approval of Class
Action Settlement [283], which is incorporated herein by reference.
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The seventh factor is the time limitations imposed by the client or the
circumstances. There were no such time limitations in the present case. The eighth
factor is the amount involved and the results obtained. As more fully explained in
this Court’s Memorandum Opinion and Order Granting Motion for Final Approval
of Class Action Settlement [283], the class settlement provides a 100 percent
recovery on behalf of the Plan for the time period at issue. The settlement also
provides for Chancery Court oversight of future administration of the Plan.
The Court is unable to adequately consider the ninth factor – the experience,
reputation, and ability of the attorneys – for all of the twenty-four attorneys from
the information provided. However, the Court has previously considered the
experience, reputation, and ability of class counsel in its Memorandum Opinion and
Order Granting Motion for Final Approval of Class Action Settlement [283].
The tenth factor is the undesirability of the case. The Court finds that this
case was undesirable. It was a very high-profile case that definitely had an
emotional impact on the class members. The case has also been complex, and, at
the outset of the litigation, the ability to obtain a recovery was questionable because
SRHS’s debts currently exceed its assets.
The plaintiffs have not requested an enhancement of the lodestar on the
basis of the eleventh factor – the nature and the length of the professional
relationship with the client. Therefore, it is not necessary to consider this factor.
The twelfth factor is awards in similar cases. As explained previously, fees of
twenty to thirty percent of the common fund are usually awarded in class action
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cases. Gooch v. Life Invs. Co. of Am., 672 F.3d 402, 426 (6th Cir. 2012); Manual, §
14.121. The percentage requested here is much lower.
After applying the Johnson factors to the lodestar, the Court finds that a
multiplier of 1.5 should be applied to the lodestar, resulting in an award of
$4,805,772.30. This upward adjustment is warranted, because this was complex,
high profile litigation. Furthermore, as explained previously, the Court is aware
that the attorneys expended additional time that was not reflected in the records
provided to the Court.
C. COMPARISON OF PERCENTAGE AND LODESTAR METHODS
Based on the lodestar cross-check, the Court finds that usage of the
percentage method would result in an unreasonable fee award. The award derived
from the lodestar method with a 1.5 multiplier results in a reasonable award of
attorneys’ fees in the amount of $4,805,772.30.
The Court recognizes that the attorneys have requested a higher multiplier
that would result in an award of $6,450,000. However, the Court finds that no
additional adjustments should be made for several reasons. First, there is a strong
presumption that the lodestar figure is correct. Black, 732 F.3d at 502. Second, the
lodestar calculated in this matter was very generous, because the attorneys were
permitted an across-the-board hourly rate of $400 and paralegals were awarded an
across-the-board rate of $124 per hour, even though the plaintiffs did not submit
resumes for each of these attorneys and paralegals to enable the Court to examine
their individual levels of experience. Third, the Court did not require the attorneys
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to demonstrate that they had exercised billing judgment by writing off
unproductive, excessive, or redundant hours. See id.; see also Green v. Adm’rs of
Tulane Educ. Fund, 284 F.3d 642, 662 (5th Cir. 2002). Finally, the settlement
negotiated by the attorneys provides that they will receive all of their fees and
expenses by September 30, 2018, while the Plan most likely may not recover all
payments due under the settlement until September 30, 2051.
II. PLAINTIFFS’ MOTION FOR COSTS
The Court has reviewed the attorneys’ expenses, which actually exceed the
amount they request in their Motion. The expenses are reasonable considering the
nature of this litigation, and no justification has been submitted to the Court for
reducing the expenses requested. As a result, the Court finds that the attorneys are
entitled to an award of $125,000 for expenses incurred in this litigation.
III. PLAINTIFFS’ MOTION FOR AN INCENTIVE AWARD
“Courts commonly permit payments to class representatives above those
received in settlement by class members generally. Such payments, however, must
be reasonable in light of applicable circumstances, and not unfair to other class
members.” Smith v. Tower Loan of Miss., Inc., 216 F.R.D. 338, 368 (S.D. Miss.
2003). The Court finds that the incentive award of $12,500, which is to be divided
among the named plaintiffs in the Jones, Cobb, and Lowe federal lawsuits as well as
the Broun and Lay state court lawsuits, is reasonable, based on these plaintiffs’
time and effort expended in prosecuting these lawsuits on behalf of the class. The
high profile nature of this litigation provides further justification for this award. In
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addition, this award will not impact the other members of the class. Therefore, the
plaintiffs’ Motion for an Incentive Award is granted.
CONCLUSION
Neither the percentage nor the loadstar method of computing the amount of
attorneys’ fees in this case demonstrates a windfall for the many lawyers who have
participated in this matter. However in the judgment of the Court, the loadstar
calculations more accurately reflect the appropriate amount of compensation for
the actual work performed.
The Court commends all of the attorneys for the hard work, professionalism,
and dedication that they demonstrated throughout this lawsuit. In particular, the
significant contributions of class counsel are acknowledged. Attorneys’ fees in the
amount of $4,805,772.30, and expenses in the amount of $125,000 are awarded. In
addition, the incentive award of $12,500, which is to be divided among the named
plaintiffs in the Jones, Cobb, and Lowe federal lawsuits as well as the Broun and
Lay state court lawsuits, is approved.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion [164]
for Award of Attorneys’ Fees and Reimbursement of Costs and Award of Incentive
Fee filed by the plaintiffs in these consolidated class action lawsuits is GRANTED.
Attorneys’ fees in the amount of $4,805,772.30 are awarded, and expenses in the
amount of $125,000 are awarded. In addition, the incentive award of $12,500,
which is to be divided among the named plaintiffs in the Jones, Cobb, and Lowe
federal lawsuits as well as the Broun and Lay state court lawsuits, is approved by
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the Court.
SO ORDERED AND ADJUDGED this the 10th day of June, 2016.
s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE

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