Kaltman v. Petroleo Brasileiro S.A.- Petrobras

Filing 980

OPINION AND ORDER: The award of attorneys' fees to counsel to objector William Haynes is accordingly increased from $11,731.65 to $33,741.65, to be funded from Class Counsel's fee award. (Signed by Judge Jed S. Rakoff on 9/27/2019) (jwh)

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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 1 of 12

ELfCTRONICALLY FILED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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D(fC #: _ _ _-FH-+----1-D~TE :..:FTL~E~•D~:
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14-cv-9662 (JSR)
In re: PETROBRAS SECURITIES
LITIGATION

orINION AND ORDER
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JED S. RAKOFF, U.S.D.J.
Before the Court on remand from the Second!Circuit is the
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issue of what amount of attorneys' fees the Court should award

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to counsel to Petrobras objector William Thomas :Haynes. Summary
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Order dated Sept. 5, 2019, ECF No. 979 ("Summar1 Order").
Because the issues as to which the remand was m~de were already
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fully briefed, both in this Court and in the appeal, the Court
is in a position to promptly resolve the issues.\
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More generally, familiarity with the prior proceedings in
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the overall Petrobras litigation is here assumed~ but an
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overview of a few pertinent facts may facilitate~ this
discussion.
On February 1, 2018, after more than three years of
extensive litigation in which Haynes and his counsel had no

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involvement, counsel for the class representatives ("Class

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Counsel") filed a notice of motion for preliminary approval of a
settlement in the underlying class action against Petrobras. ECF
No. 765. Haynes then objected and, in a brief dated May 10,
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2018, raised several objections to the settlement. See Objection

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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 2 of 12

of William Thomas Haynes, as Trustee for the Benefit of W.

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Thomas and Katherine Haynes Irrevocable Trust for the Benefit of
Sara L. Haynes, to the Proposed Class Action Settlement and
Attorneys' Fee Request, ECF No. 797

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("Objectionf). Haynes's

objections broadly fell into two categories: first,

he objected

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to the certification of the settlement class, and second, he
objected to Class Counsel's proposed fee award. ; Id.
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The Court found the first set of objection1 to lack merit
and, on June 22, 2018, the Court certified the ~ettlement class
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and approved the proposed class action settlement. Opinion and

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Order dated June 22, 2018, ECF No. 834. The Court of Appeals

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subsequently affirmed these decisions. Summary Order at 8; see
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also Summary Order dated Aug. 30, 2019, ECF No. J952.
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As to the second set of objections, howeve;, while the
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Court awarded attorneys' fees to Class Counsel, kt did so in an
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amount lower than requested.

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Id. Although most of the reduction

had nothing to do with Haynes~objections, a palt of the
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reduction resulted from the only one of Haynes' objections that
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had any merit. Specifically, Haynes noted that Class Counsel had
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inappropriately added roughly $28 million to itsj lodestar to
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account for the work of Brazilian contract attor~eys, but, for
technical reasons,

it should have been billed inftead as an at-

cost expense. See Objection at 12-14. Since counsel's fees were
multiplied by a 1.78 lodestar factor, whereas co 9 ts and expenses

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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 3 of 12

were not, this led to a reduction in counsel fers of
approximately $46 million, offset by an increase of costs of
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approximately $28 million, for a net savings toj the class of
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about $18 million.

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Haynes subsequently filed a motion to recover $199,400 of
attorneys' fees -

representing a lodestar amoun{ of $117,316.50

with a multiplier of 1.7 -

for his counsel, Anni St. John, Esq.,

ECF Nos. 839 & 840. Given the fact that only onJ of Haynes's
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objections had resulted in any benefit to the class, the Court
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granted Haynes' request for attorneys' fees onl~ in the amount
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of $11,731.65. Opinion and Order dated August 141,
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866.

2018, ECF No.

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"[I]t is well settled that objectors .

are entitled to
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an allowance as compensation for attorneys' feesl and expenses
where a proper showing has been made that the settlement was
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improved as a result of their efforts," id. at 2J (quoting White
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v. Auerbach, 500 F.2d 822, 828

(2d Cir. 1974). H~re, however, it

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was only Haynes's single objection about the Brazilian contract
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attorneys that ultimately contributed to the class's recovery,
id. at 3, and only in the amount of approximatelt $18 million.
None of Haynes's other objections contributed to'.the class's
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recovery; on the contrary, they occasioned addedjexpenses to the
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class, since Class Counsel had to spend considerable time
responding to them. And the objections were subsequently
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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 4 of 12

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overridden. As the Court noted in its August 14;, 2018 ruling,
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Haynes's objections to the certification of the: settlement class
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were entirely without merit, id. at 3-4, and Ha~nes's objections
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to the amount of Class Counsel's fee request wete, with the sole
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exception of the objection to the Brazilian contract attorney
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fees, similar or identical to those already raised by other
objectors and "did not assist the Court in reaching its decision
to award Class Counsel lower fees than those sought," id. at 4;
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see also Opinion and Order dated June 22, 2018 at 31-37
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(discussing and evaluating various objections to Class Counsel's
fee award) .
The Court therefore determined that Haynes's attorney
should only recover fees attributable to her time and effort
developing the successful objection about the Brazilian contract
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attorneys, and the Court further determined that: $11,731.65, or
10% of Haynes' lodestar, was the amount appropriately
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attributable to Haynes's one successful objectiop. Opinion and
Order dated August 14, 2018 at 7.

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Haynes appealed the Court's limited attorney fee award, and

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the Court of Appeals affirmed in part and vacatea and remanded
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in part. Notably, the Second Circuit did not askithe Court to

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reconsider either its conclusion that Haynes's objection about
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the Brazilian contract attorneys was the only objection that
significantly contributed to the class's recovery, nor its
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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 5 of 12

conclusion that $11,731.65 was the fee amount a~propriately
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attributable to developing that objection. Rather, the Second
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Circuit asked the Court to reconsider the narrower questions of
(1) whether Haynes's other objections to Class Counsel's award
of attorneys' fees besides the successful one (~he "additional
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fee objections") were so related to the Brazilian contract
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attorney objection that Haynes's counsel should :also recover
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fees for the time spent developing these objections, and (2)
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whether Haynes's counsel should recover fees fo~' various "all1

inclusive" activities, such as satisfying the crass notice
requirements, preparing for the fairness hearinJ, and responding
to discovery requests. Id. at 10.
The Court considers these two questions in ~urn and holds
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that (1) the additional fee objections were sufficiently

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distinct from the successful objection as to merit no additional
award of attorneys' fees, but (2) a $22,010 incrlase in the fee
award to account for the all-inclusive activitiek is
appropriate.
As to the first question, in addition to hil successful
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objection, Haynes raised (along with some vague $nd conclusory
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objections) two further objections to Class Counsel's fee award
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- that the hourly rates for U.S.-based project attorneys use in

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the lodestar calculation were excessive and thatlclass Counsel

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failed to provide sufficient billing summaries. ihe Court
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ultimately found these and Haynes' other such ofjections
unhelpful in its decision to reduce Class Couns~l's fee award

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below the requested amount. Objection at 12-25. \The Court denied
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Haynes's request for attorneys' fees for the tirtie spent
developing these unsuccessful objections, reaso~ing that while
"objectors

are entitled to an allowance a~ compensation

for attorneys' fees and expenses where a proper ;showing has been
made that the settlement was improved as a resu~t of their
efforts," White v. Auerbach, 500 F.2d 822, 828

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02d Cir. 1974),
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an objector is not entitled to recover attorneysj' fees for
actions that were not "a substantial cause of th~ benefit
obtained," In re Holocaust Victim Assets Litig., 424 F.3d 150,
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157 (2d Cir. 2005) (internal quotation marks andi citation
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omitted).

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The Second Circuit now directs the Court to] reconsider that
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conclusion in light of the language in Hensley vl Eckerhart, 461
U.S. 424, 435

(1983), that indicates that it may]be appropriate
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to award attorneys' fees attributable to unsuccessful efforts
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where those "involve a common core of facts or [~re] based on
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related legal theories" to the successful actions. While
"[t]here is no precise rule or formula" for detefmining which
claims are sufficiently related, id. at 436, district courts
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must determine fee awards with awareness that "[i]itigants in
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good faith may raise alternative legal grounds fdr a desired
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outcome, and the court's rejection of or failurf to reach
certain grounds is not a sufficient reason for feducing a fee,"
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id. at 435.

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Nonetheless, even after full reconsideratitn in light of
Hensley, the Court concludes that Haynes's counJel is entitled
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to no added award of fees for the time attribut~ble to
litigating the additional fee objections, becau~e they were
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sufficiently unrelated to Haynes's successful objection.
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Haynes's objection regarding the proper chargin~ of the
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Brazilian contract attorneys was the rather narr.ow and technical
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objection that an attorney must be at least capa~le of being

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admitted pro hac vice in the relevant court in order for her
services to be added to the attorneys' fee lodestar, rather than
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billed as an at-cost expense. See Opinion and Orp.er dated June
22, 2018 at 32

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(citing Spanos v. Skouras, 364 F.2d 161, 168 (2d
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Cir. 1966) and In re One Infant Child, No. 12 Ciy. 7797, 2014 WL
704037 at *5 (S.D.N.Y. Feb. 20, 2014), rev'd sublnom. on other
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grounds Souratgar v. Lee Jen Fair, 818 F.3d 72 (~d Cir. 2016);
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Objection at 12-14.

By contrast, the first of the additional fee objections was
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that Class Counsel should also account for the charges of U.S.I

based project attorneys, who performed document review and
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translation work, at cost rather than adding the~e charges to

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the lodestar, or, in the alternative, that these \charges should
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be added to the lodestar at a lower hourly rate, Objection at
14-17. This objection relied on a series of cases, e.g., Lola v.
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Skadden, Ar:es, Slate, Meagher & Flom LLP, 620 FJd. Appx. 37, 39
( 2d Cir. 2015), where the court held that a plajntiff had

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adequately pled that similar activities did not Jconsti tute the

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npractice of law." The second and only other ad~itional fee
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objection raised in Haynes's brief with any part'icularity was
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that Class Counsel's billing summaries were insu fficiently
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detailed to ascertain whether their lodestar figure may have
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been inflated in other ways. Objection at 17-18.]
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Neither of these additional fee objections ~involve a
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common core of facts or .

. legal theories," Hknsley, 4 61 U.S.
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at 435, with the Brazilian contract attorney obj~ction. While,
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as the Second Circuit notes, these objections alt
(superficially)

relate to overbilling, Summary otder at 9, they
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have little else in common. And indeed, virtually any
conceivable objection to an attorneys' fee reque~t by
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plaintiff's counsel in a class action would in some way allege
that counsel was overbilling the class. The successful objection
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related only to Class Counsel's billing practice 9 for foreign
attorneys, and it relied on a distinct set of caJes setting
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forth the narrow proposition that the work of fo4eign attorneys
who were not capable of being admitted pro hac v~ce in the U.S.
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courts must be billed at cost. The additional fee objections, in
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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 9 of 12

contrast, relied on entirely different factual fnd legal
arguments.
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Furthermore, these other objections were n~t "alternative
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legal grounds," Hensley, 461 U.S. at 435, to the successful
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objection for arriving at the same result. Thes~ were separate
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(and unpersuasive) objections to different aspe8ts of Class
Counsel's lodestar calculation, and they sought ,to justify a
reduction of Class Counsel's fee award beyond the reduction
associated with the successful objection.
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For these reasons, the Court declines to increase the fee
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award to Haynes's counsel to account for her time litigating the
additional fee objections.
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Turning to the second question, the Second ~ircuit also
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directs the Court to reconsider whether Haynes'si counsel is

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entitled to recover fees for the "all-inclusive"! activities
necessary to sustain Haynes's status as an objector, including
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"satisfying the class notice requirements, prepaking for the
fairness hearing, and responding to discovery requests." Summary
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Order at 10. The amount of Haynes's counsel's lodestar amount
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attributable to these activities appears to be $~3,015,
comprising 51 hours spent by Ms. St. John on "re~ponding to
class counsel's onslaught of abusive discovery rJquests" and 20
hours spent by Ms. St. John preparing for the fa~rness hearing,
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all charged at the rate of $465 per hour.

Declaration of Anna
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St. John, July 11, 2018, ECF No. 841, at 3-4.
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The Court believes it would be inappropriate to award this
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entire lodestar amount in additional attorneys' '.fees. As
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explained in the Court's original opinion and older on this
motion for attorneys'

fees,

ECF No. 866 at 7, Haynes "was only
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involved in the case for a short period of time and faced no
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risks in his involvement." These factors counset against an
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award of fees for the activities associated with maintaining the

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objection. Furthermore, the Court is also skept~cal that all of
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the time spent responding to Class Counsel's di~covery requests
merits a recovery of attorneys' fees, as at least some of these
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discovery requests were likely prompted by Haynef's objections
to the certification of the settlement class -

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which, in
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addition to being unsuccessful, resembled objections filed by
the so-called "professional objectors" whom the lourt had reason
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to believe might be acting in bad faith. See Opinion and Order

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St. John also indicated that attorney Theodore :H. Frank spent a
total of 27.6 hours working on Haynes's objection, with some
unspecified number of those hours dedicated to responding to
discovery requests. The description of his activities, as well
as his status as the most senior attorney on the.team, both
indicate that his role was primarily to consult 9n the overall
strategy of the objection, and not to perform th1 specific tasks
necessary to sustain Haynes's status as an objec~or. Declaration
of Anna St. John, July 11, 2018, ECF No. 841, at :4-5. The Court
therefore declines to include Frank's time in the lodestar
amount attributable to the all-inclusive activities.
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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 11 of 12

dated September 19, 2018, ECF No. 896 (denying,\ but not without
misgivings, Class Representatives' motion for sanctions against
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objectors Joseph, Richard, and Emelina Gielata)r Memorandum
Order dated March 5, 2019, ECF No.

916 (same).

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Nevertheless, the Court is persuaded that $Orne recovery of
fees for the time spent on the all-inclusive ac1ivities is
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appropriate. As the Second Circuit noted, Summa~y Order at 10,
at least one out-of-circuit court has awarded a~torneys' fees
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for such costs under similar circumstances. In r.e Transpacific
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Passenger Air Transp. Antitrust Litig., No. C 0,-5634 (CRBJ,
2015 WL 4776946 at *2

(N.D. Cal. Aug. 13, 2015)

Although this

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decision is not binding on the Court, the Court finds its
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reasoning persuasive on the point that counsel who prepare a
partially-successful objection may sometimes be rntitled to
recover costs for activities that do not relate ?irectly to the
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ultimately-successful objection but without the performance of
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which it "would have been quite impossible" to r9-ise any
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objection at all. Id.

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Weighing all these factors,

the Court's view is that the
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appropriate recovery for Haynes's counsel for he~ time spent on

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the all-inclusive activities is $22,010, or two-uhirds of the
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above-calculated lodestar amount of $33,015, with no multiplier.

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Case 1:14-cv-09662-JSR Document 980 Filed 09/27/19 Page 12 of 12

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When added to the previous recovery of $11,731.fS, this results
in a new award totaling $33,741.65.
The award of attorneys' fees to counsel to objector William
Haynes is accordingly increased from $11,731.651to $33,741.65,
to be funded from Class Counsel's fee award.

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SO ORDERED.
Dated:

~~o~±

New York, NY
September

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2019

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