DAVIS LANDSCAPE, LTD. v. HERTZ EQUIPMENT RENTAL CORPORATION

Filing 244

OPINION fld. Signed by Judge Dennis M. Cavanaugh on 6/20/13. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

MIGUEL V. PRO and DAVIS
LANDSCAPE, LTD., a Pennsylvania
Corporation, individually
and on behalf of others similarly situated
Hon. Dennis M. Cavanaugh
Plaintiffs,
OPINION
V.

Civil Action No. 06-3 830 (DMC)
HERTZ EQUIPMENT RENTAL
CORPORATION
Defendant.

DENNIS M. CAVANAUGH, U.S.D.J.:
This matter comes before the Court upon Application for Final Approval of the Class
Action Settlement (App. for Final Approval, June 11, 2012, ECF No. 242), in accordance with
the parties’ Settlement Agreement dated March 6, 2013 and motion by Miguel V. Pro and Davis
Landscape, Ltd. on behalf of themselves and all other members of the Settlement Class
(collectively Plaintiffs”) for approval of the agreed upon attorneys’ fees to be paid by Hertz
Equipment Rental Corporation (“HERC” or “Defendant”) with the final settlement of the instant
litigation. (Pls.’ Mot. for Attny’s Fees, May 7, 2013, ECF No, 239). For the reasons stated
below, Plaintiffs’ Application for Final Approval of the Settlement Agreement is granted and
Plaintiffs’ Motion for Approval of Attorneys’ Fees is granted. Plaintiffs are hereby awarded the
agreed upon $11 .5 million which includes the $1 .3 million in hard costs.
1

Hard costs refer to the expenses spent by Class Counsel in litigating the case.

I.

2
BAcKGRouND

On August 15, 2006, Plaintiffs initiated this action against HERC, alleging that HERC’s
Loss and Damage Waiver (“LDW”) was unconscionable in that it provided illusory coverage for
a premium price. Plaintiffs also alleged that the Environmental Recovery Fee (“ERF”) HERC
charged did not reflect any actual additional fees or expenses related to protection of the
environment. On December 11, 2008, the Court appointed Carella Byrne, Complex Litigation
Group LLC and Seeger Weiss LLP as co-lead counsel (“Class Counsel”). HERC and the Class
Representatives reached a settlement (the “Settlement”). The parties submitted a Settlement
Agreement dated March 6, 201 3 (“the Settlement Agreement”). The Court granted preliminary
approval of the Settlement on March 18, 2013 (the “Preliminary Approval Order”) and directed
the parties to provide notice to the Class of the proposed settlement and the Final Approval
hearing date via mail, electronic mail, and the Internet. Notice was so provided. No objections
were made by members of the Class.
The terms of the Settlement Agreement provide for both retroactive and prospective
benetits to members of the class, i.e. customers who rented equipment from HERC and paid an
applicable fee (“Class Members”) during the applicable Class Period. included among those
retroactive benefits is the Class Member’s option to elect for reimbursement of damages paid
out-of-pocket for rented equipment (“Category 1 claimant”) or to obtain compensation lbr LDW
paid (“Category 2 claimant”). Class Members may choose to receive settlement benefits under
either Category 1 or Category 2. Furthermore, HERC has agreed to change its future business
practices with regard to the way that it describes and discloses its LDW program and ERF fee to
its customers. (See Settlement Agreement, Exh. E). These changes include a plain statement of

2

The facts contained herein are taken from the parties’ respective
2

moving papers.

the deductible amount on the first page of its disclosure documents.

Category I claimants are defined pursuant to the Settlement as those HERC customers
who purchased LDW, experienced either partial or complete damage to the equipment, and paid
HERC for such damages up to the total amount of the applicable LDW deductible for each
occurrence during the Class Period. HERC has agreed to pay up to $3 million to provide for
Category 1 claims. Category 1 claimants that qualify will receive 75% of the amount of the
total deductible paid b the claimant during the Class Period, subject to possible pro rota
reduction if the total amount of eligible claims exceeds $3 million.
Conversely, Category 2 claimants are those HERC customers who do not submit a
Category 1 claim. Category 2 claimants, often one-time or sporadic customers, may elect under
the terms of the Settlement Agreement to receive discounts on up to four (4) future rentals
totaling 50% of all LDW paid during the period or a cash payment equal to 1 5% of the total
LDW paid during the Class Period. The benefits allotted from Category 2 claimants are not
taken from a limited fund and are not subject to any possible pro rata reduction.
The parties now move for final approval of the Settlement Agreement and for approval of
agreed upon attorneys’ fees. Pursuant to the Settlement, HERC agreed to pay the negotiated
attorneys’ fees to Class Counsel. This agreed upon fee amounted to $11.5 million, which
includes the $1.3 million in hard costs incurred by Class Counsel since it began litigating the
case in 2006. The fee was negotiated after the substantive terms of the Settlement Agreement
were made, under the supervision of an arms-length mediator, the Honorable William L’E.
Wertheimer, a retired New Jersey Superior Court Judge. The Settlement Agreement provides
customers who are members of the class with the option of either obtaining a cash refund of a
portion of the premiums they paid HERC or credits on future rentals of 1-IERC equipment. The
.5

economic relief made available to the Class is valued at approximately $65 million, HERC does
not oppose Plaintiffs request for an award of fees and reimbursement of costs and expenses of
$1 1.5 million. The matter is now before the Court.
IL

STANDARD OF REVIEW
A.

Settlement Agreement Approval

Federal Rule of Civil Procedure 23(e), provides that “[a] class action shall not he
dismissed or compromised without the approval of the court, and notice of the proposed
dismissal or compromise shall be given to all members of the class in such a manner as the court
directs.”

FED.

R. Civ. P. 23(e).

In determining whether to approve a class action settlement

pursuant to Rule 23(e). “the district court acts as a tduciary who must serve as a guardian of the
tights ot absent class membeis

“

In

ic

GMC Pick-Up Fiuck Fue’ lank Piods I iab Lug 55

F.3d 768, 785 (3d Cir.1995) (quoting Grunin v. Int’l House of Pancakes. 513 F.2d 114. 123 (8th
Cir. 1975), cert, denied, 423 U.S. 864 (1975)).
Before giving final approval to a proposed class action settlement, the Court must
determine that the settlement is “fair, adequate, and reasonable.” Girsh v. Jepson. 521 F.2d 153.
1 57 (3d Cir. 1 975). In Girsh v. Jepson. the Third Circuit identified nine factors, known as the
“Girsh factors,” that a district court should consider when making this determination: (1 ) the
complexit. expense and likely duration of the litigation; (2) the reaction of the class to the
settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks
of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the
class action through the trial; (7) the ability of the defendants to withstand a greater judgment:
(8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9)
the range of reasonableness of the settlement fund to a possible recovery in light oi all the
4

attendant risks of litigation. 521 F.2d 153. 157 (3d Cir. 1975). “These factors are a guide and
the absence of one or more does not automatically render the settlement unfair.” In re American
Family Enterises, 256 B.R. 377, 418 (D.N.J. 2000) (internal citations omitted), Rather, the
court must look at all the circumstances of the case and determine whether the settlement is
within the range of reasonableness under Girsh. See In re Orthopedic Bone Screw Prods. [jab.
litin

176 F RD 158, 184 (F D Pa 1997) In ie AT&T Corp Sc I

Itig,

4 I 3d 160 (3d (a

2006).
B.

Attorneys’ Fees

Pursuant to 29 U.S.C.

§

216 the Court is authorized to award “reasonable attorney[s’

fees to he paid by the defendant and costs of the action.” 29 U.S.C.

§

216. As recognized by the

Supreme Court, the district court has discretion in determining the amount of a fee award, This
is appropriate in view of the district court’s superior understanding of the litigation and the
desirability of avoiding frequent appellate review of what essentially are factual matters”
Henslev v. Eckerhart, 461 U.S. 424, 437 (1983). The Third Circuit has identified several factors
that a district court should consider when evaluating a motion for an award of attorneys’ fles.
Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 (3d Cir. 2000). These factors include:
(1) the size of the fund created and the number of persons benefitted: (2) the presence or absence
of substantial objections by members of the class to the settlement terms and/or fees requested by
LounsLl

(‘)

the skill md ett1c1Lnc of the rttolne\ s in ol ed (4) thc LomplL’\It\ md dui ition at

the litigation; (5) the risk of nonpayment; (6) the amount of time devoted to the case by plaintiff’s
counsel; and (7) the awards in similar cases. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 301
(3d Cii’. 2005) (citing Guiiter v. Ridgewood Energy Corp., 223 F.3d 190, 195 n.1 (3d Cir. 2000)).
The Court may not sua sponle reduce a request for attorneys’ fees. Bell v. United

Princeton

884 F.2d 713, 719 (3d Cir. 1989). Only if the defindants challenge the hours or
“if the hours expended are within the judges personal knowledge” is a reduction proper
. Cerva
v, E,B,R. Enterprises. Inc., 740 F.Supp. 1099. 1103 (E.D. Pa. 1990).
Iii.

DISCUSSION

A.

The Settlement Agreement

This Court finds that the Settlement Agreement satisfies Rule 23(e) because the relief
it
provides the Class is “fair, adequate. and reasonable” pursuant to the Third Circuit’s
nine-factor
Girsh test. Notably. none of the members of the Class. numbering in the hundreds of
thousands.
have objected to the terms of the Settlement.
1.

Complexity and Likely Duration of Litigation

The first factor set forth in Girsh focuses assessment of the “probable costs. in both time
and money. of continued litigation.” In re Cendant Corp. Litig., 264 F.3d 201, 234 (3d Cir.
2001) (citing In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liability Litig.,
55
F.3d 768, 812 (3d Cir.1995)). The significant delay in recovery that may result if this case
proceeds to trial lends in favor of approval of the settlement.
\ntittu’t Ling, 391 1 3d 516 536 (3d Cu 2004) Weiss

gig., In re Warfarin Sodium

Mc.icedc.s Benz ol N ‘\m Inc. 899

F. Supp. 1297, 1301 (D.N.J. 1995). This matter has been pending for approximatel six
y
years
and, if trial and appeals occur, would likely continue for years further. Therefore, this factor
favors settlement approval.
2.

Reaction of the Class to Settlement

The second Girsh factor “attempts to gauge whether members of the class support the
settlement.’ In re Prudential Ins. Co. of America Sales Practice Litig,, 148 F.3d 283, 318
(3d
Cir. 1 998). The Court notes that this second factor is especially critical to its fairness analys
is, as
6

the reaction of the class “is perhaps the most significant factor to be weighed in considering [the
settlement’s] adequacy.” Sala v. National R.R. Passenger Corp., 721 F, Supp. 80, 83 (ED. Pa.
1989). Pursuant to this Court’s Preliminary Approval Order, any objections from the Settlement
Class were required to be received by the Court twenty-one (21) days before the June 18, 2013
Final Approval Hearing. (Preliminary Approval Order, Mar. 18, 2013, ECF No. 238). As noted
above, not a single Class Member has objected to the Settlement, Therefore, this factor
overwhelmingly weighs in favor of approval.
3.

Stage of the Proceedings and Amount of Discovery Completed

The third Girsh factor “captures the degree of case development that class counsel [hasi
accomplished prior to settlement,” In re Cendant Corp. Litig.. 264 F.3d 201, 233 (3d Cir. 2001),
In short, under this factor the Court considers whether the amount of discovery completed in the
case has permitted “counsel [to have] an adequate appreciation of the merits of the case before

negotiating.” In re Schering PloughlMerck Merger Litig., No, 09-1099, 2010 WL 1257722, at
*30 (D.N.J. Jan. 20, 2012). This matter has been extensively litigated through certification and
multiple summary judgment motions, and numerous depositions of witnesses and experts have
been conducted. Counsel was well-versed in the merits and complexities of this matter before
beginning negotiations. Therefore, this factor also weighs in favor of approval of the Settlement
Agreement.
4.

Risks of Establishing Liability

The fourth factor set forth by Girsh involves the risk of establishing liability. A trial on
the merits always entails considerable risk. Weiss v. Mercedes-Benz of N. Am., Inc., 899 F.
Supp. 1297, 1301 (D.N.J. 1995). The inquiry requires a balancing of the likelihood of success if
“the case were taken to trial against the benefits of immediate settlement.” In re Safety
7

Components Int’l, 166 F. Supp. 2d 72, 89 (D.NJ. 2001) (quoting In re Prudential Ins.
Co. of Am.
Sales Practices Litig.. 148 F.3d 283, 319 (3d Cir.1998)). The risks of litigation in this
matter
include the risk of losing at trial or reversal on appeal. The Settlement Agreement
provides
substantial monetary and injunctive benefits without the inherent risk of being unable
to establish
liability during litigation. Accordingly. this factor also weighs in favor of approval.
5.

Risks of Establishing Damages

Like the preceding factor, “this inquiry attempts to measure the expected value of
litigating the action rather than settling it at the current time.” In re Cendant Corp. Litig., 264
F.3d 201, 238 (3d Cir. 2001) (quoting In re General Motors Corp. Pick-Up Truck Fuel Tank
Prods. Liability Litig., 55 F.3d 768, 816 (3d Cir. 1995)). The Court compares a potential
damage award if the case were taken to trial against the benefits of immediate settlement.

e

Prudential Ins. Co. of America Sales Practice Litig.. 148 F.3d 283. 319 (3d Cir. 1998). The
Third Circuit noted in Cendant that no compelling reason existed to think that “a jury confronted
with competing expert opinions” would accept the plaintiffs theory of damages over the
defendant’s, and therefore the risk in establishing damages weighed in favor of approval of the
settlement. 264 F.3d at 239. Here, Class Members may have difficulty at trial establishing
damages and the extent of those damages, especially in light of the pending motion to strike
Plaintiffs’ expert and the starkly different trial testimony anticipated by each sides opposing
experts. Therefore. this factor also weighs in favor of approval.
6.

Risk of Maintaining the Class Action through Trial

The Court has granted class certification in this matter. However, even where a class has
already been certified, courts routinely approve settlement pursuant to the other Girsh factors in
light of the ever-present risk that “intractable management problems” may warrant
8

decertiflcation of the class. In re Safety Components. Inc. Sec. Lititg.. 166 F. Supp. 2d 72. 91
(D.NJ. 2001) (internal citations omitted). Here, there is no

guarantee

that Plaintiffs would

survive a subsequent decertification motion. If the Class were to be decertified. it would leave
Class Members with few resources or a t’inancial incentive to pursue claims on their own behalf
The proposed Settlement Agreement offers an amenable remedy to all Class Members, while
avoiding the risk of an uncertain result following subsequent years of litigation. Thus, this
factor supports approval of the Settlement Agreement as well.
7.

Ability of I)efcndants to Withstand Greater Judgment

The seventh Girsh factor instructs the Court to consider “whether the defendants could
withstand a judgment for an amount significantly greater than the [s]ettlement.” In re Cendant
Corp. Litig., 264 F.3d 201, 240 (3d Cir. 2001). Although it is recognized that HERC could
likely withstand a judgment greater than the settlement proposed here, that, in and of itself, does
not require denial of final approval. $çç, g, In re Warfarin Sodium Antitrust Litig.. 391 F.3d
516. 538 (3d Cir. 2004) (concluding that “{DuPont’s ability to pay a higher amount was
irrelevant in determining the fairness of the settlement.”). Additionally, the likelihood that
Plaintiffs would achieve a more substantial amount at trial is uncertain. With approval of the
Settlement Agreement, Class Members will receive a substantial part of the costs incurred for
their LDW payments made during the Class Period. In addition to a monetary award for Class
Members, the Settlement Agreement also offers injunctive relief Therefore, this factor does not
thwart approval of the Settlement.
8.

Range of Reasonableness of the Settlement Fund in Light of Best
Possible Recovery And in Light of Litigation Risks

The final two Girsh factors are typically considered in tandem. The eighth and ninth
factors inquire

“whether the settlement is reasonable in light of the best possible recovery and the
9

risks the parties would face if the case went to trial.” In re Prudential

Ins.

Co. of America Sales

Practice Litig., 148 F.3d 283. 322 (3d Cir. 1998). Here. the parties engaged in
arms-length
negotiations overseen by an experienced mediator, the Honorable William LIZ. Werthe
imer.
Further, Plaintiffs and Defendant were properly equipped to understand both
the strengths and
relative weaknesses of their cases, given the discovery and investigation that has
occurred thus
far in this extended litigation. This, like the other Girsh factors, weighs in favor

of

final

approval. Based on the foregoing, this Court finds that the Settlement Agreem
ent is fair,
adequate, and reasonable. The Settlement Agreement represents a meaningful recove
ry for the
class and the fact that no member has objected to its terms demonstrates the adequa
cy of the
relief provided.
B.

The Fee Agreement

Plaintiffs’ Counsel are entitled to the proposed and agreed upon $11 .5 million fie.
to
include the $1.3 million in hard costs, to be paid within ten (10) days of final approv
al of the
Settlement Agreement. HERC has agreed to the proposed fees and, after the Final
Approval
hearing on June 18, 20i3, to the timing of the initial payment. The Court linds the
fee is justified
under the factors to be considered in determining fee awards.
The Supreme Court has recognized a preference for allowing litigants to resolve fee
issues through agreement. stating “[a] request for attorney[s’] fees should not result
in a second
major litigation. Ideally, of course, litigants will settle the amount of a fee.” l-lensle
v v.
Eckerhart. 461 U.S. 424, 437 (1983). In light of this recognized principle, Courts routine
ly
approve agreed-upon attorneys’ fees, particularly when the amount is independent
and does not
impaLt thL benefit obtained toi the class See In re LG/Zemth Reai PlojLctbon I e1e
ision Class
Civ. No. 06-5609, 2009 WL 455513, at *89 (D.N.J. Feb. 18, 2009)
l0

(approving

the

attorneys’ fees requested for class counsel after a finding that the fees were separate from, and
thus did not diminish, the class settlement); In re Ins. Brokerage Antirust Ljjg.. MDL Docket
No. 1663. 2007 WL 1652303, at 1, *4(D.N.J. June 5, 2007), affd 579 F.3d 241 (3d Cir, 2009)
(same); In re Prudential Ins. Co. of Am. Sales Practice Litig., 106 F. Supp. 2d 721, 732 (D.NJ.
2000) (same).
Here, any award of attorneys’ fees and costs is wholly separate and apart from the relief
provided for the Settlement Class and that relief will not be reduced by an award of the fees.
The proposed amount of attorneys’ fees was garnered following the Settlement Agreement.
Furthermore, the fee represents a market rate compromise negotiated by sophisticated counsel
familiar with complex and class action litigation in the context of mediation. The Court finds
that the expenses requested were reasonably necessary to try the complex issues presented in
this matter and the hourly rate requested is comparable to the market rate for similar services by
attorneys of similar experience in the respective geographic area.
The Court further finds that applicable methods of attorneys’ fee calculation support the
reasonableness of the requested attorneys’ fees. The common benefits doctrine bolsters an
award of attorneys’ fees where class counsel’s efforts in litigating a case results in “a substantial
benefit on members of an ascertainable class.” See In re Diet Drugs, 582 F.3d 524, 546 (3d Cir,
2009) (internal citations and quotations omitted). Here, the Settlement provides signi lcant
pecuniary and non-pecuniary benefits to Class Members.
Plaintiffs also employ the percentage-of-recovery approach to justify the reasonableness
of the agreed upon attorneys’ fees. (Pls.’ Mot. Br. 21). The percentage of recovery method may
be utilized “in common fund cases because it allows courts to award fees from the fund in a
manner that rewards counsel for success and penalizes it for failure.” In re Rite Aid Corp. Sec.
11

jtjg., 396 F.3d 294, 300 (3d Cir. 2005) (quoting in re Prudential Ins. Co. Ameri
ca Sales Practice
Litig. Agent Actions, 148 F.3d 283, 333 (3d Cir. 1998)). The Manual for Compl
ex Litigation
also endorses the use of the percentage of recovery method in awarding attorne
ys’ fees in
common fund cases. See MANuAL FOR CON4PLEx LITIGATION (FOURTH)

§

14.21 at 187 (2004)

(commenting that “the vast majority of courts of appeals now permit or direct distric
t courts to
use the percentage-fee method in common fund cases”). In applying that metho
d here, it is
determined that the total amount available to the Category 1 and Category 2 claima
nts. i.e. those
who paid for damage to rented equipment and those that provided compensation
for LF)W paid
respectively, is $66,033,254 exclusive of attorneys’ fees. (Pis.’ Mot. Br. 23). When
the
requested amount of attorneys’ fees is added to the sum, the value of the Settlement is
$77.533,254. (Id.) Therefore, the percentage of requested fees is 14.8%. (Id.) Upon adding a
conservative $10 per Class Member for injunctive reliet the percentage is reduced to 13.3%
.
(Id) I

ulthLl

thL peicentage iequested is fan and ieasonahlc undei thc iclcxant standards t

forth in Gunter v. Ridgewood Energy Corp., 223 F.3d 1 90, 1 95

n.

I (3d Cir. 2000). This matter

involved complex legal issues and Class Counsel accepted representation on a fully contingent
fee basis. Courts have recognized that where counsel’s compensation is contingent on recove
ry,
a premium above counsel’s hourly rate may be appropriate. $gg Gunter v. Ridgewood Energy
Corp., 233 F.3d 190, 199 (3d Cir. 2000) C’[Tjhe risk counsel takes in prosecuting a client’
s case
should also be considered when assessing a fee award.”). This matter has spanned the
course of
more than six years and has involved significant motions practice. It is clear that class counse
l
has been cxtensively involved in each aspect of this case

from

its inception more than six

years

ago. The Court is therefore satisfied that the attorneys’ fees requested are fair and reasonable.

12

IV.

CoNcLusioN

For the foregoing reasons. Plaintiffs’ Application for Final Approval of the Settlement is
granted and Plaintiffs’

Motion

for Attorney’s Fees is granted in the amount of $11 .5 million, to

include $1.3 million in hard costs, to be paid within ten (10) days of final approv
al of the
Settlement. An appropriate Order accompanies this Opinion.

Date:
Original:
Cc:

June
2013
Clerk’s Office
i-\ll Counsel of Record
,

Ii