Oklahoma Firefighters Pension and Retirement System v. Lexmark International, Inc. et al
Filing
158
MEMORANDUM & ORDER granting 136 Motion for Settlement; granting in part and denying in part 138 Motion for Attorney Fees. The motion for final approval of the settlement is granted and the motion for an award of attorneys' fees and expense s is granted in part and denied in part. The Proposed Settlement, the Plan of Allocation, and the Settlement Notice are approved. In addition, Lead Counsel is awarded attorneys' fees in the amount of $2.88 million, representing 24% of the Settlement Fund. These attorneys' fees may be disbursed from the CRIS account once 75% of the net settlement fund has been distributed. Moreover, Lead Counsel may be reimbursed $201,357.78 in litigation expenses forthwith. Finally, Lead Plaintiff may be reimbursed $2,500 forthwith. The Clerk of Court is directed to terminate all pending motions and to mark this case closed. So Ordered. (Signed by Judge William H. Pauley, III on 1/7/21) (yv) Transmission to Finance Unit (Cashiers) for processing.
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 1 of 15
1
2
3
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
OKLAHOMA FIREFIGHTERS PENSION
AND RETIREMENT SYSTEM,
Individually and on Behalf of All Others
Similarly Situated,
Plaintiff,
-againstLEXMARK INTERNATIONAL, INC.,
PAUL A. ROOKE, DAVID REEDER, and
GARY STROMQUIST,
Defendants.
4
5
6
7
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
17cv5543
MEMORANDUM & ORDER
WILLIAM H. PAULEY III, Senior United States District Judge:
Lead Plaintiff Oklahoma Firefighters Pension and Retirement System (“Lead
8
Plaintiff”), on behalf of itself and the other members of the class, moves for final approval of its
9
proposed settlement with Defendants (the “Proposed Settlement”) and the proposed Plan of
10
Allocation. (ECF No. 136.) In addition, Robbins Geller Rudman & Dowd LLP (“Robbins
11
Geller”) and Labaton Sucharow LLP (“Labaton,” together with Robbins Geller, “Lead Counsel”)
12
move for an award of attorneys’ fees and expenses. (ECF No. 138.) For the reasons that follow,
13
the motion for final approval of settlement is granted and the motion for an award of attorneys’
14
fees and expenses is granted in part and denied in part.
15
16
BACKGROUND
This putative class action was filed on July 20, 2017. (ECF No. 1.) Thereafter,
17
the parties briefed—and this Court resolved—a motion to dismiss the amended consolidated
18
complaint. See Okla. Firefighters Pension & Retirement Sys. v. Lexmark Int’l, 367 F. Supp. 3d
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 2 of 15
1
16 (S.D.N.Y. 2019). The parties conducted extensive document discovery, and in August 2019,
2
Lead Plaintiff moved for class certification, (ECF No. 99). After engaging in mediation, the
3
parties reached an agreement to resolve this litigation. (ECF No. 122.) On June 17, 2020, this
4
Court preliminarily approved the settlement and permitted notice to the class. (ECF No. 126.)
5
The settlement funds were deposited into a Court Registry Investment System (“CRIS”) account.
6
(ECF No. 128.)
The Proposed Settlement resolves the entire litigation for a cash payment of $12
7
8
million. (ECF No. 122.) No objections have been lodged. (ECF No. 147.) In addition, Lead
9
Counsel seeks attorneys’ fees in the amount of 25% of the settlement fund ($3 million), plus
10
$201,357.78 in litigation expenses, as well as a $2,500 reimbursement to Lead Plaintiff as class
11
representative. (ECF No. 139.)
DISCUSSION
12
13
14
I.
Settlement Approval
There is a “strong judicial policy in favor of settlements, particularly in the class
15
action context.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005)
16
(quotation marks omitted). However, a court must “carefully scrutinize the settlement to ensure
17
its fairness, adequacy and reasonableness, and that it was not the product of collusion.”
18
D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001) (citation omitted). Under this two-
19
part inquiry, a court “must determine whether both the negotiating process leading to a
20
settlement and the settlement itself are fair, adequate, and reasonable.” In re Currency
21
Conversion Fee Antitrust Litig., 263 F.R.D. 110, 122 (S.D.N.Y. 2009). In other words, the
22
settlement must be both procedurally and substantively fair. In re Virtus Inv. Partners, Inc. Sec.
23
Litig., 2018 WL 6333657, at *1 (S.D.N.Y. Dec. 4, 2018).
2
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 3 of 15
1
With respect to procedural fairness, the “[n]egotiation of a settlement is presumed
2
fair when the settlement is ‘reached in arm’s length negotiations conducted by experienced,
3
capable counsel after meaningful discovery.’” Dial Corp. v. News Corp., 317 F.R.D. 426, 430
4
(S.D.N.Y. 2016) (quoting Wal-Mart, 396 F.3d at 116). Indeed, “‘great weight’ is accorded to the
5
recommendations of counsel, who are most closely acquainted with the facts of the underlying
6
litigation.” In re PaineWebber Ltd. P’ships Litig., 171 F.R.D. 104, 125 (S.D.N.Y. 1997); accord
7
City of Providence v. Aeropostale, Inc., 2014 WL 1883494, at *5 (S.D.N.Y. May 9, 2014).
8
Moreover, where a settlement is reached “under the supervision and with the endorsement of a
9
sophisticated institutional investor,” it “is entitled to an even greater presumption of
10
reasonableness.” In re Hi-Crush Partners L.P. Sec. Litig., 2014 WL 7323417, at *5 (S.D.N.Y.
11
Dec. 19, 2014) (quotation marks omitted). Given that the Proposed Settlement was the product
12
of arm’s length negotiations between experienced counsel and created under the supervision of a
13
sophisticated investor, the Proposed Settlement is procedurally fair.
14
15
To determine substantive fairness, courts consider the factors set forth in City of
Detroit v. Grinnell Corp.:
(1) the complexity, 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 trial; (7) the ability of
the defendants to withstand greater judgment; (8) the range of
reasonableness of the settlement fund in light of the best possible
recovery; and (9) the range of reasonableness of the settlement fund
to a possible recovery in light of all the attendant risks of the
litigation.
16
17
18
19
20
21
22
23
24
25
26
27
Pa. Pub. Sch. Emps.’ Ret. Sys. v. Bank of Am. Corp., 318 F.R.D. 19, 24 (S.D.N.Y. 2016) (citing
28
City of Detroit v. Grinnell, 495 F.2d 448, 463 (2d Cir. 1974), abrogated on other grounds by
29
Golberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000)); accord Wal-Mart, 396 F.3d at
3
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 4 of 15
1
117. “[N]ot every factor must weigh in favor of settlement, rather the court should consider the
2
totality of these factors in light of the particular circumstances.” Dial Corp., 317 F.R.D. at 431
3
(quotation marks omitted) (alteration in original).
A. Complexity, Expense, and Likely Duration of the Litigation
4
“As a general rule, securities class actions are notably difficult and notoriously
5
6
uncertain to litigate.” In re Facebook, Inc. IPO Sec. & Derivative Litig., 2015 WL 6971424, at
7
*3 (S.D.N.Y. Nov. 9, 2015); see also Bank of Am. Corp., 318 F.R.D. at 24. Such is the case
8
here, where expert testimony would have been required with respect to falsity, materiality,
9
scienter, loss causation, and damages. As such, this factor strongly counsels in favor of
10
11
12
approval.
B. Reaction of the Class to the Settlement
It is well settled that “the reaction of the class to the settlement is perhaps the
13
most significant factor to be weighed in considering its adequacy.” In re Facebook, Inc., IPO Sec.
14
& Derivative Litig., 343 F. Supp. 3d 394, 410 (S.D.N.Y. 2018) (quotation marks omitted). And
15
“the absence of objections by the class is extraordinarily positive and weighs in favor of
16
settlement.” Dial Corp., 317 F.R.D. at 431 (quotation marks omitted); accord Bank of Am. Corp.,
17
318 F.R.D. at 24. Here, no class members objected or opted out, which strongly favors approval.
18
19
C. Stage of the Proceedings and the Amount of Discovery Completed
The parties briefed—and this Court decided—a motion to dismiss. (ECF Nos. 66,
20
71, 78.) They also completed document discovery, and Plaintiff moved for class certification,
21
(ECF No. 99.). Thus, “a substantial amount of work had been completed” prior to settlement
22
negotiations. Wal-Mart, 396 F.3d at 118. The significant litigation prior to the proposed
23
settlement favors approval.
4
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 5 of 15
D. Risks of Establishing Liability and Damages and of Maintaining the Class
Through Trial
1
2
3
4
“Courts generally consider the fourth, fifth, and sixth Grinnell factors together.”
5
Dial Corp., 317 F.R.D. at 432. With respect to establishing liability, there was a substantial
6
question regarding whether Plaintiffs could prove misrepresentation, loss causation, and scienter.
7
While Lead Plaintiff submitted a damages expert report on its motion for class certification,
8
(ECF No. 100, Ex. C), Defendants would have likely offered an expert of their own.
9
Accordingly, the risk in establishing damages was real and counsels in favor of approving the
10
settlement. See Dial Corp., 317 F.R.D. at 432 (“Plaintiffs would have encountered additional
11
challenges to proving damages given the parties’ dueling expert reports.”). Moreover, “[a]s with
12
any complicated securities action, the class faced the very real risk that a jury could be swayed
13
by experts . . . who could minimize or eliminate the amount of Plaintiffs’ losses.” Bank of Am.
14
Corp., 318 F.R.D. at 24 (quotation marks omitted). Finally, the fact that Lead Plaintiff’s motion
15
for class certification had not been fully briefed—let alone decided—presented additional risks
16
to Lead Plaintiff and the proposed class. Overall, these factors counsel in favor of approving the
17
settlement.
E. Ability of Defendants to Withstand a Greater Judgment
18
Lead Plaintiff concedes that Defendants can withstand a greater judgment in
19
20
excess of the settlement amount. (ECF No. 137, at 14.) However, Lead Plaintiff also avers that
21
Defendant’s liability insurance policy was diminishing throughout the course of the litigation.
22
(ECF No. 137, at 14–15.) Defendants have not confirmed this fact and, at this stage, have no
23
incentive to deny it. See Hart v. BHH, LLC, 2020 WL 5645984, at *4 (S.D.N.Y. Sept. 22,
24
2020).
25
Nevertheless, “while relevant to settlement approval, the ability of defendants to
5
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 6 of 15
1
withstand greater judgment does not alone suggest the settlement is unfair or unreasonable.” In
2
re Facebook, 2015 WL 6971424, at *5; see also D’Amato, 236 F.3d at 86 (“[T]his factor,
3
standing alone, does not suggest that the settlement is unfair.”).
4
5
6
7
F. The Range of Reasonableness of the Settlement Fund in Light of the Best
Possible Recovery and All the Attendant Risks of the Litigation
“The final two Grinnell factors are typically considered together.” Dial Corp.,
8
317 F.R.D. at 432. Here, the $12 million settlement is approximately 10% of $116.8 million,
9
which is Lead Plaintiff’s estimated damages consistent with the Plan of Allocation. Moreover, if
10
this Court were to credit Defendants’ anticipated attempt to reduce the class period by moving
11
the start date from August 1, 2014 to June 16, 2015, the maximum potential recovery would be
12
$31.5 million. Under this formulation, $12 million would be approximately 38% of the potential
13
recovery. But “[t]he fact that the settlement amount may equal but a fraction of potential
14
recovery does not render the settlement inadequate. Dollar amounts are judged not in
15
comparison with the possible recovery in the best of all possible worlds, but rather in light of the
16
strengths and weaknesses of plaintiffs’ case.” In re Facebook, 2015 WL 6971424, at *6. Given
17
the risks of proving loss causation, the recoverable damages were unlikely to be anywhere close
18
to $116.8 million. See Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 339 (2005).
19
While this settlement is hardly a windfall for Plaintiffs, it is within the range
20
previously approved by judges in this District. See, e.g., In re Bear Stearns Cos. Sec.,
21
Derivative, & ERISA Litig., 909 F. Supp. 2d 259, 269 (S.D.N.Y. 2012) (approving settlement
22
amounting to 11% of estimated damages); In re Canadian Superior Sec. Litig., 2011 WL
23
5830110, at *4 (S.D.N.Y. Nov. 16, 2011) (approving settlement worth 8.5% of maximum
24
amount of estimated damages); In re Merrill Lynch Tyco Research Sec. Litig., 249 F.R.D. 124,
25
135 (S.D.N.Y. 2008) (approving settlement worth approximately 3% of total estimated
6
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 7 of 15
1
damages). Ultimately, there is no indication that the Proposed Settlement is anything but the
2
result of an arm’s length negotiation. In view of the risk of litigation and the estimated recovery,
3
the $12 million settlement fund is reasonable.
G. Aggregation of All Factors
4
Overall, the Grinnell factors counsel in favor of approving the Proposed
5
6
Settlement. No one has objected or opted out, and this action was contested at each stage of the
7
litigation. And Plaintiffs faced substantial risk in proving misrepresentation, scienter, and loss
8
causation. Accordingly, this Court approves the Proposed Settlement.
9
II.
10
Plan of Allocation
“The standard for approval of a plan of allocation is the same as the standard for
11
approving a settlement: namely, it must be fair and adequate.” In re Top Tankers, Inc. Sec.
12
Litig., 2008 WL 2944620, at *11 (S.D.N.Y. July 31, 2008) (quotation marks omitted). “[I]n
13
determining whether a plan of allocation is fair, courts look primarily to the opinion of counsel.”
14
In re Giant Interactive Grp., Inc. Sec. Litig., 279 F.R.D. 151, 163 (S.D.N.Y. 2011) (quotation
15
marks omitted); see also In re Top Tankers, 2008 WL 2944620, at *11 (“If the plan of allocation
16
is formulated by competent and experienced class counsel, an allocation plan need only have a
17
reasonable, rational basis.” (quotation marks omitted)). Here, the Plan of Allocation—which
18
was developed by Lead Counsel—is based on the level of artificial inflation in Lexmark’s
19
common stock price during the Class Period. Moreover, the Plan of Allocation apportions the
20
net settlement fund among Authorized claimants based on the claims alleged. Because the Plan
21
of Allocation appears fair and adequate and comes by the recommendation of experienced Class
22
Counsel, it is approved.
23
7
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 8 of 15
1
III.
Notice
“The standard for the adequacy of a settlement notice in a class action under
2
3
either the Due Process Clause or the Federal Rules is measured by reasonableness.” Wal-Mart,
4
396 F.3d at 113. The Second Circuit explains that:
5
6
7
8
9
10
11
12
There are no rigid rules to determine whether a settlement notice to
the class satisfies constitutional or Rule 23(e) requirements; the
settlement notice must fairly apprise the prospective members of the
class of the terms of the proposed settlement and of the options that
are open to them in connection with the proceedings. Notice is
adequate if it may be understood by the average class member.
Wal-Mart, 396 F.3d at 114 (quotation marks and citation omitted).
The Settlement Notice is reasonable. The Court preliminarily approved the notice
13
14
plan. (ECF No. 126, at 4.) As of December 5, 2020, more than 32,500 copies of the Notice
15
Packet were mailed to all class members who could be identified with reasonable effort. (Decl.
16
of Eric Nordskog in Supp. Of Mot. for Attorneys’ Fees, ECF No. 142 (“Nordskog Decl.”), at 3.)
17
Additionally, Summary Notice was published in The Wall Street Journal and over PR Newswire
18
on July 13, 2020. (Nordskog Decl., at 3.) Finally, the Notice Packet and other important
19
documents were posted on the website maintained for the Settlement:
20
www.LexmarkSecuritiesSettlement.com. (Nordskog Decl., at 3.) The Settlement Notice also set
21
forth the amount of settlement, maximum amount of attorneys’ fees and expenses sought, rights
22
to object, dates and deadlines, and the Plan of Allocation. (Nordskog Decl., Exhibit A, at 3.)
23
This Court approves the Settlement Notice.
24
25
IV.
Attorneys’ Fees
In a class action settlement, courts must carefully scrutinize lead counsel’s
26
application for attorneys’ fees to “ensure that the interests of the class members are not
27
subordinated to the interests of . . . class counsel.” Maywalt v. Parker & Parsley Petroleum Co.,
8
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 9 of 15
1
67 F.3d 1072, 1078 (2d Cir. 1995). A court’s role in this context is “to act as a fiduciary who
2
must serve as a guardian of the rights of absent class members.” McDaniel v. Cty. Of
3
Schenectady, 595 F.3d 411, 419 (2d Cir. 2010). The trend in the Second Circuit is to assess a fee
4
application using the “percentage of the fund” approach, which “assigns a proportion of the
5
common settlement fund toward payment of attorneys’ fees.” Dial Corp., 317 F.R.D. at 433. As
6
a “cross-check on the reasonableness of the requested percentage,” however, courts also look to
7
the lodestar multiplier, which should be a reasonable multiple of the total number of hours billed
8
at a standard hourly rate. Goldberger, 209 F.3d at 53. And regardless of which method is used,
9
courts rely on the factors set forth in Goldberger to determine whether fees are reasonable. Wal-
10
11
12
Mart, 396 F.3d at 121.
A. Percentage of the Fund
Here, Class Counsel seeks 25% of the settlement fund ($12 million) in attorneys’
13
fees. In assessing reasonable percentages of settlement funds, courts have “cabined awards to
14
between 12% and 28%” for “class action settlements ranging from $15 million to $336 million.”
15
Dial Corp. 317 F.R.D. at 436, 438 (awarding fees representing 20% of a $244 million settlement
16
fund); see also In re Facebook, 343 F. Supp. 3d at 418 (approving 25% of a $35 million
17
settlement fund); Bank of Am. Corp., 318 F.R.D. at 27 (allowing fees representing 12% of a
18
$335 million settlement fund); In re Platinum & Palladium Commodities Litig., 2015 WL
19
4560206, at *5 (S.D.N.Y. July 7, 2015) (awarding fees representing 22.5% of the $72.5 million
20
fund); In re Bayer AG Sec. Litig., 2008 WL 5336691, at *2, *6 (S.D.N.Y. Dec. 15, 2008)
21
(approving 12% of an $18.5 million settlement fund); In re Polaroid ERISA Litig., 2007 WL
22
2116398, at *3 (S.D.N.Y. July 19, 2007) (approving 28% of a $15 million settlement fund).
23
While a fee award of 25% of the settlement fund is within the range of awards previously
9
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 10 of 15
1
approved by courts in this District, it is on the higher end.
B. Lodestar Cross Check
2
The lodestar is “the product of a reasonable hourly rate and the reasonable
3
4
number of hours required by the case.” Millea v. Metro-North. R. Co., 658 F.3d 154, 166 (2d
5
Cir. 2011). Here, Lead Counsel spent about 4,581 attorney and professional support hours on
6
this litigation, leading to a lodestar of $3,011,766.00. (Decl. of Robert Robbins in Supp. of Mot.
7
for Attorneys’ Fees, ECF No. 143 (“Robbins Decl.”), Ex. A; Decl. of Christine Fox in Supp. of
8
Mot. for Attorneys’ Fees, ECF. No. 144 (“Fox Decl.”), Ex. A.) This amounts to a lodestar
9
multiplier of 0.996, which is below multipliers previously approved by this Court. See Bank of
10
Am. Corp., 318 F.R.D. at 27 (1.2 lodestar multiplier); Dial Corp., 317 F.R.D. at 437 (1.75
11
lodestar multiplier); In re Platinum & Palladium, 2015 WL 4560206, at *3 (1.4 lodestar
12
multiplier).
However, Lead Counsel’s lodestar raises several issues. First, the allocation of
13
14
time is heavily weighted toward partners. Of the 32 attorneys who billed, 16 were partners.
15
(Robbins Decl., Ex. A; Fox Decl., Ex. A.) Those 16 partners accounted for nearly 47% of the
16
hours billed by Lead Counsel. (Robbins Decl., Ex. A; Fox Decl., Ex. A.) Moreover, the hourly
17
rates for some partners were higher than any hourly rates this Court has previously seen.
18
Specifically, 5 of the 16 partners who billed had hourly rates exceeding $1,000, and the rate for
19
two of them exceeded $1,300 per hour. (Robbins Decl., Ex. A; Fox Decl., Ex. A.) Lead Counsel
20
asserts that the more expensive partners were used primarily in an advisory role, but this
21
explanation is insufficient. 1 (Tr. of Fairness Hearing, ECF No. 156, at 8–9.) Further, the hourly
1
It is generally helpful for counsel to submit contemporaneous, detailed time records as part of their initial
motion for attorneys’ fees. See William B. Rubenstein, 5 Newberg on Class Actions § 15:6 (5th ed. 2020). A court
should not have to request billing records.
10
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 11 of 15
1
rates for Lead Counsel’s associates were high, and the rates for 5 associates exceeded $600 per
2
hour. (Robbins Dec., Ex. A; Fox Decl., Ex. A.) Finally, Lead Counsel billed a summer associate
3
on the litigation, which is a practice this Court has never seen. (Robbins Decl., Ex. A.)
4
Given the partner-heavy billing, the high rates for several partners and associates,
5
and the billing of a summer associate, a modest reduction of Lead Counsel’s requested attorneys’
6
fee is warranted. See In re Platinum & Palladium Commodities Litig., 2015 WL 4560202, at *4
7
(“Courts have reduced the fee percentage requested where, as here, the lodestar value reflects an
8
over-allocation of work to more expensive partners.”).
9
C. Goldberger Test
10
Regardless of which method is used, courts rely on the factors set forth in
11
Goldberger to determine whether fees are reasonable: (1) the time and labor expanded by
12
counsel; (2) the magnitude and complexities of the litigation; (3) the risk of the litigation; (4) the
13
quality of representation; (5) the requested fee in relation to the settlement; and (6) public policy
14
considerations. Wal-Mart, 396 F.3d at 121 (citing Goldberger, 209 F.3d at 50). There is no
15
“one-size-fits-all ‘benchmark’ in determining the appropriate fee”—in fact, courts should avoid
16
that practice because it “could easily lead to routine windfall where the recovered fund runs into
17
the multi-millions.” In re Visa Check/Mastermoney Antitrust Litig., 297 F. Supp. 2d 503, 521
18
(E.D.N.Y. 2003).
19
20
i. Time and Labor Expanded by Counsel
While many class actions are filed on the heels of a government investigation, the
21
claims in this case were formulated entirely from the findings of a private investigation. See In
22
re Gulf Oil/Cities Serv. Tender Offer Litig., 142 F.R.D. 588, 597 (S.D.N.Y. 1992) (“[T]his is not
23
a case where plaintiffs’ counsel can be cast as jackals to the government’s lion, arriving on the
11
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 12 of 15
1
scene after some enforcement or administrative agency has made the kill. They did all the work
2
on their own.”). Here, Lead Counsel worked through a motion to dismiss, document discovery, a
3
motion for certification, mediation, and settlement negotiations.
4
However, as discussed previously, Lead Counsel’s time charges were partner-
5
heavy and at the top of hourly rates charged in securities actions in this District. Accordingly,
6
this factor militates in favor of some reduction of the requested award.
7
ii. Magnitude and Complexities of the Litigation
8
Courts have recognized that shareholder actions are notoriously complex and
9
difficult to prove. See Mathes v. Roberts, 85 F.R.D. 710, 713 (S.D.N.Y. 1980). This action
10
11
involved a number of difficult and complex questions concerning loss causation and damages.
iii. Risk of Litigation
12
“Perhaps the foremost . . . factor[] is the attorney’s risk of litigation, i.e., the fact
13
that, despite the most vigorous and competent of efforts, success is never guaranteed.” Grinnell
14
Corp., 495 F.2d at 471 (quotation marks omitted). Courts in this district have noted that
15
significant litigation risks, including the difficulty of establishing loss causation in light of the
16
Supreme Court’s decision in Dura Pharms., Inc. v. Broudo, 544 U.S. 336 (2005), and the
17
difficulty in proving that Defendants acted with scienter, militate in favor of fee awards. See In
18
re Veeco Instruments Inc. Sec. Litig., 2007 WL 4115808, at *6 (S.D.N.Y. Nov. 7, 2007).
19
Although Lead Counsel withstood a motion to dismiss, it faced substantial risk in establishing
20
scienter, as well as proving causation and damages at trial.
21
22
23
iv. Quality of Representation
The results achieved through the efforts of Lead Counsel are a “critical element in
determining the appropriate fee to be awarded,” and the settlement here will undoubtably have
12
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 13 of 15
1
widespread benefits to the class. Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358, 373
2
(S.D.N.Y. 2002). Lead Counsel provided high-quality representation in securing an
3
advantageous settlement for the class.
v. Requested Fee in Relation to Settlement
4
As discussed previously, the proposed fee of 25% of the Settlement, while within
5
6
the wide range of fee awards in this District, is on the higher end. See, e.g., Sakiko Fujiwara v.
7
Sushi Yasuda Ltd., 48 F. Supp. 3d 424 (S.D.N.Y. 2014) (awarding 20% of $2.4 million
8
settlement as fees); McGreevy v. Life Alert Emergency Response, Inc., 258 F. Supp. 3d 380
9
(S.D.N.Y. 2017) (awarding 21.5% of a $3.3 million settlement fund); In re Platinum &
10
Palladium Commodities Litig., 2015 WL 4560206 (awarding 22.5% of a $72.5 million fund).
vi. Public Policy Considerations
11
While public policy favors “the award of reasonable attorney’s fees,” courts must
12
13
also “guard against providing a monetary windfall to class counsel to the detriment of the
14
plaintiff class.” In re NTL Inc. Sec. Litig., 2007 WL 1294377, at *8 (S.D.N.Y. May 2, 2007)
15
(quotation marks omitted).
Applying the Goldberger factors and recognizing that a modest adjustment is
16
17
appropriate, this Court awards a total attorneys’ fee of $2,880,000, which represents 24% of the
18
Settlement Fund. These attorneys’ fees may be disbursed from the CRIS account once 75% of
19
the net settlement fund 2 has been distributed. See Bank of Am., 318 F.R.D. at 28; Beane v. Bank
20
of N.Y. Mellon, 2009 WL 874046, at *9 (S.D.N.Y. Mar. 31, 2009).
21
2
The estimated net settlement fund is $8,743,641.22, which represents the remainder after attorneys’ fees of
$2,880,000, litigation expenses of $201,358.78, reimbursement award of $2,500, 2020 tax filing fee of $2,500, and
the Claims Administrator’s estimated fees and expenses of approximately $170,000.
13
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 14 of 15
1
V.
Litigation Expenses
“In class action settlements, [a]ttorneys may be compensated for reasonable out-
2
3
of-pocket expenses incurred and customarily charged to their clients. When the ‘lion’s share’ of
4
expenses reflects the typical costs of complex litigation such as experts and consultants, trial
5
consultants, litigation and trial support services, document imaging and copying, deposition
6
costs, online legal research, and travel expenses, courts should not depart from the common
7
practice in this Circuit of granting expense requests.” Bank of Am. Corp., 318 F.R.D. at 27
8
(quotation marks omitted).
Here, Lead Counsel seeks $201,358.78 in litigation expenses, which is below the
9
10
$300,000 Lead Counsel informed the class they might apply for in the Settlement Notice.
11
(Nordskog Decl., Ex. A, at 3.) The bulk of expenses were for Plaintiffs’ damage expert,
12
accounting for over $126,000. (Robbins Decl., Ex. B.) This Court finds Lead Counsel’s
13
expense request reasonable and approves it.
14
15
VI.
Reimbursement for Class Representative
Under 15 U.S.C. § 78u-4(a)(4), a class representative may be reimbursed for
16
“reasonable costs and expenses (including lost wages) directly relating to the representation of
17
the class.” “These awards compensate lead plaintiffs for the substantial time and effort the class
18
representatives incurred, including written discovery, being disposed, reviewing and editing
19
submissions, and attending hearings.” Bank of Am. Corp., 318 F.R.D. at 27 (quotation marks
20
omitted). Courts typically require an affidavit demonstrating a “thorough accounting of hours
21
dedicated to the litigation and a statement that these hours constituted lost work time.” In re
22
Bank of Am. Corp. Sec., Derivative, & Emp. Ret. Income Sec. Act (ERISA) Litig., 772 F.3d
23
125, 133 (2d Cir. 2014).
14
Case 1:17-cv-05543-WHP Document 158 Filed 01/07/21 Page 15 of 15
1
Lead Plaintiff’s request for reimbursement of $2,500 represents 0.02% of the
2
Settlement Fund, which is well within the range of reasonableness. See Bank of Am. Corp., 318
3
F.R.D. at 27 (awarding expenses amounting to 0.01% of the fund); see In re Currency
4
Conversion, 263 F.R.D. at 131 (award representing approximately 0.1% of the fund).
5
Accordingly, this Court approves that request.
CONCLUSION
6
7
For the foregoing reasons, the motion for final approval of the settlement is
8
granted and the motion for an award of attorneys’ fees and expenses is granted in part and denied
9
in part. The Proposed Settlement, the Plan of Allocation, and the Settlement Notice are
10
approved. In addition, Lead Counsel is awarded attorneys’ fees in the amount of $2.88 million,
11
representing 24% of the Settlement Fund. These attorneys’ fees may be disbursed from the
12
CRIS account once 75% of the net settlement fund has been distributed. Moreover, Lead
13
Counsel may be reimbursed $201,357.78 in litigation expenses forthwith. Finally, Lead Plaintiff
14
may be reimbursed $2,500 forthwith. The Clerk of Court is directed to terminate all pending
15
motions and to mark this case closed.
16
17
Dated: January 7, 2021
New York, New York
15
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?