Moreno et al v. Deutsche Bank Americas Holding Corp. et al

Filing 348

OPINION AND ORDER. Class Counsel's request for $6,570,000 in attorneys' fees, $759,779.30 in litigation expenses, $106,536 for settlement administration expenses and $10,000 in incentive awards for each of the five nam ed Plaintiffs is GRANTED. Funds for litigation expenses and settlement administration expenses may be disbursed immediately. The attorneys' fees award and incentive awards shall be disbursed when the distribution of the Settlement Fund to the Class has been substantially completed. (Signed by Judge Lorna G. Schofield on 3/7/19) (yv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
RAMON MORENO, et al.,
:
Plaintiffs, :
:
-against:
:
DEUTSCHE BANK AMERICAS HOLDING
:
CORP., et al.,
:
Defendants. :
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3/7/2019

15 Civ. 9936 (LGS)
OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:
This is an ERISA class action brought by participants in the Deutsche Bank Matched
Savings Plan (the “Plan”). On March 1, 2019, the Court granted final approval of the parties’
class action settlement, which created a settlement fund of $21,900,000 (the “Settlement Fund”).
Pursuant to Federal Rule of Civil Procedure 23(h), Class Counsel moves for attorneys’ fees,
reimbursement of litigation expenses, settlement administration expenses and incentive awards
for the named Plaintiffs. For the reasons discussed herein, the Court awards Class Counsel
attorneys’ fees of $6,570,000, equivalent to 30% of the Settlement Fund. The Court also awards
$759,779.30 in litigation expenses, $106,536 in settlement administration expenses and $10,000
incentive awards for each of the five named Plaintiffs.
I.

STANDARD
In a Rule 23 class action, the “attorneys whose efforts created the fund are entitled to a

reasonable fee -- set by the court -- to be taken from the fund.” Goldberger v. Integrated Res.,
Inc., 209 F.3d 43, 47 (2d Cir. 2000). “What constitutes a reasonable fee is properly committed to
the sound discretion of the district court . . . and will not be overturned absent an abuse of
discretion . . . .” Id. (citations omitted). In evaluating a proposed fee, a court must heed the

factors set forth in Goldberger: “(1) the time and labor expended by counsel; (2) the magnitude
and complexities of the litigation; (3) the risk of the litigation; (4) the quality of representation;
(5) the requested fee in relation to the settlement; and (6) public policy considerations.” Id. at 50
(alterations omitted).
The Second Circuit has approved the use of two methods to calculate attorneys’ fees: the
“lodestar” method and the “percentage of the fund” method. See id. at 47. Under the lodestar
method, the court multiplies the reasonable hours billed by a reasonable hourly rate, then adjusts
the award based on factors such as the risk of the litigation and the performance of the attorneys.
See id. Under the percentage of the fund method, the fee is a reasonable percentage of the total
value of the settlement fund created for the class. See id. The percentage method is adopted in
this case, as it “directly aligns the interests of the class and its counsel and provides a powerful
incentive for the efficient prosecution and early resolution of litigation.” Wal-Mart Stores Inc. v.
Visa U.S.A., Inc., 396 F.3d 96, 121 (2d Cir. 2005); see also In re Colgate-Palmolive Co. ERISA
Litig., 36 F. Supp. 3d 344, 348 (S.D.N.Y. 2014) (comparing the lodestar and percentage
methods); McDaniel v. Cty. Of Schenectady, 595 F.3d 411, 417 (2d Cir. 2010) (noting that the
percentage method is the trend in the Second Circuit). Nevertheless, the lodestar remains useful
as a “cross check on the reasonableness of the requested percentage.” Goldberger, 209 F.3d at
50 (internal quotation marks omitted).
II.

DISCUSSION
A.

Attorneys’ Fees

In applying the Goldberger factors, this opinion adopts the three-step approach set forth
in Colgate-Palmolive. The first step is to determine a baseline reasonable fee by reference to
other common fund settlements of a similar size, complexity and subject matter. Colgate2

Palmolive, 36 F. Supp. 3d at 348. This step considers three of the Goldberger factors -- the
requested fee in relation to the settlement, the magnitude and complexity of the case, and the
policy consideration of avoiding a windfall to class counsel. Id. The second step is to make any
necessary adjustments to the baseline fee based on the Goldberger factors of risk, quality of
representation and other public policy concerns. Id. The third step is to apply the lodestar
method as a cross-check, which addresses the final Goldberger factor of the time and labor
expended by counsel. Id. Based on this analysis, a reasonable baseline fee in this case is 27%.
A 3% upward adjustment to the baseline fee is warranted based on the substantial non-monetary
benefits of the settlement.
i. Comparison to Court-Approved Fees in Other Class Action Settlements
In using the percentage of the fund approach, the critical Goldberger factor is the size of
the requested fee in relation to the settlement. See Colgate-Palmolive, 36 F. Supp. 3d at 348.
Accordingly, the first step is to determine a baseline reasonable fee by looking to other common
fund settlements of a similar size, complexity and subject matter. In conducting this assessment,
a “sliding scale” approach -- awarding a smaller percentage for fees as the size of the settlement
fund increases -- is appropriate. See Wal-Mart, 396 F.3d at 122–23 (“Recognizing that
economies of scale could cause windfalls in common fund cases, courts have traditionally
awarded fees for common fund cases in the lower range of what is reasonable.”); Goldberger,
209 F.3d at 52 (noting that it is not “ten times as difficult to prepare, and try or settle a 10 million
dollar case as it is to try a 1 million dollar case”).
Historical data of fees awarded in common fund cases provide an unbiased and useful
reference for comparing fees cases of similar magnitude as a starting point for the sliding scale.
Professor Brian T. Fitzpatrick’s 2010 empirical study examined data from 688 class action
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settlements in 2006 and 2007. See Brian T. Fitzpatrick, An Empirical Study of Class Action
Settlements and Their Fee Awards, 7 J. EMPIRICAL LEGAL STUD. 811, 839 (2010) (“Fitzpatrick”).
Fitzpatrick divided the cases into ten ranges of recovery (deciles) based on the amount of the
settlement, and then calculated the mean and median fee percent, as well as the standard
deviation. See id. at 839. The $21.9 million settlement in this case is in the eighth decile of
cases; in that decile, the median fee was 25% with a standard deviation of 7.5%. See id. As
noted by the court in Colgate-Palmolive, Fitzpatrick may “understate the appropriate percentage
for fees in ERISA cases,” which “concern[] a highly specialized area of law.” ColgatePalmolive, 36 F. Supp. 3d at 350. Accordingly, a reasonable baseline fee for an ERISA case of
this size is 27%.
ii. Consideration of Risk, Result and Policy Considerations
In light of the substantial non-monetary benefits achieved by the settlement, an upward
adjustment to the baseline fee is warranted. “Considering the non-monetary benefits and relief
created by counsel’s efforts is important because it encourages attorneys to obtain meaningful
affirmative relief.” Kruger v. Novant Health, Inc., No. 14 Civ. 208, 2016 WL 6769066, at *3
(M.D.N.C. Sept. 29, 2016); Torres v. Gristede’s Operating Corp., 519 Fed. App’x 1, 5 (2d. Cir.
2013) (summary order) (considering non-monetary benefits in assessing the proportionality of a
fee award to the settlement amount). Here, the parties’ settlement provides for significant
prospective non-monetary relief. Pursuant to the settlement agreement, Defendant Deutsche
Bank Americas Holding Corp. has agreed that all decisions regarding the selection, retention,
removal or evaluation of any Deutsche Fund in the Plan shall be delegated to an independent
fiduciary. Moreover, the independent fiduciary will provide a written opinion regarding whether
any of the existing funds in the Plan should be replaced with alternative investment vehicles.
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Under the circumstances of this case, these non-monetary benefits have significant value for Plan
participants.
Litigation risk does not warrant an adjustment to the baseline fee; there is no evidence
that the risks in this action were significantly greater than those in cases of a similar size,
complexity and subject matter. Likewise, quality of representation does not warrant an
adjustment to the baseline fee; although the $21.9 million settlement represents over 34% of total
estimated damages, there is no reason for the Court to conclude that this result is so exceptional
as to warrant an increase in the baseline percentage. See Goldberger, 209 F.3d at 55 (stating that
“the quality of representation is best measured by results”).
iii. The Lodestar Cross–Check
The last step of the analysis is to cross-check the fee award against the lodestar
multiplier. The lodestar multiplier is calculated by dividing the fee award by the lodestar (the
reasonable hours billed multiplied by a reasonable hourly rate). Here, a fee award equivalent to
30% of the settlement fund represents a lodestar multiplier of approximately 1.8. This is within
the typical range for cases of this size, complexity and subject matter. See Colgate-Palmolive,
36 F. Supp. 3d at 353 (approving lodestar multiplier of 5.0 in $45.9 million ERISA settlement);
In re Glob. Crossing Sec. & ERISA Litig., 225 F.R.D. 436, 469 (S.D.N.Y. 2004) (approving
lodestar multiplier of 2.6 in $78 million ERISA settlement).
B.

Litigation and Settlement Administration Expenses

Class Counsel moves for reimbursement of $759,779.30 in litigation expenses incurred in
connection with this action. This figure includes expenses for experts ($568,519.42), travel
($69,307.96), mediation ($42,340.00) and depositions ($34,908.49). Courts routinely award
such costs. See Fleisher v. Phoenix Life Ins. Co., Nos. 11 Civ. 8405, 14 Civ. 8714, 2015 WL
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10847814, at *23 (S.D.N.Y. Sept. 9, 2015). Likewise, Class Counsel’s request for $106,536 in
settlement administration expenses (comprising $64,036 to the settlement administrator, $2,500
to the escrow agent and $40,000 to the independent fiduciary) is granted.
C.

Incentive Awards

An incentive award may be given to compensate named plaintiffs for efforts expended
“for the benefit of the lawsuit.” In re LIBOR-Based Fin. Instruments Antitrust Litig., No. 11 Civ.
5450, 2018 WL 3863445, at *2 (S.D.N.Y. Aug. 14, 2018). Class Counsel requests an incentive
award of $10,000 for each of the five named plaintiffs to compensate them for their efforts and
personal time spent advancing the litigation on behalf of the Class. Plaintiffs produced
documents, appeared for depositions, participated in mediation and reviewed pleadings and the
settlement agreement. The requested incentive award is in line with those awarded in similar
ERISA class actions. See, e.g., Bd. of Trustees of AFTRA Ret. Fund v. JPMorgan Chase Bank,
N.A., 09 Civ. 686, 2012 WL 2064907, at *3 (S.D.N.Y. June 7, 2012) (awarding $50,000 to each
of the three named plaintiffs); In re Marsh ERISA Litig., 265 F.R.D. 128, 151 (S.D.N.Y. 2010)
(awarding $15,000 to each of the three named plaintiffs).
III.

CONCLUSION
For the foregoing reasons, Class Counsel’s request for $6,570,000 in attorneys’ fees,

$759,779.30 in litigation expenses, $106,536 for settlement administration expenses and $10,000
in incentive awards for each of the five named Plaintiffs is GRANTED. Funds for litigation
expenses and settlement administration expenses may be disbursed immediately. The attorneys’
fees award and incentive awards shall be disbursed when the distribution of the Settlement Fund
to the Class has been substantially completed.
Dated: March 7, 2019
New York, New York
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