Speaks et al v. U.S. Tobacco Cooperative, Inc.

Filing 269

ORDER granting 85 Motion for Attorney Fees. Signed by Chief Judge James C. Dever III on 2/20/2018. (Briggeman, N.)

IN TIIE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:12-CV-729-D
TERESA M. SPEAKS, TOBY SPEAKS,
STANLEY SMITH, EDDIE BROWN,
ROBERT POINDEXTER, MIKE MITCHELL,
ROYL. COOK, ALEX SHUGART,
H. RANDLE WOOD, ROBIN ROGERS,
and DANIEL LEE NELSON,

)
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)

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)
)
v.
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)
U.S. TOBACCO COOPERATIVE, INC. f/k/a )
FLUE-CURED TOBACCO COOPERATIVE )
STABILIZATION CORPORATION,
)
)
Defendant.
)

Plaintiffs,

ORDER

Plaintiffs and defendant U.S. Tobacco Cooperative, Inc. (''the Cooperative" or "defendant'')
entered into a "Stipulation and Agreement of Class Action Compromise, Settlement and Release"
(herein the "Settlement Agreement") intended to resolve this action. See [D.E. 60-1 ]. In this action,
plaintiffs contend that after Congress enacted the Fair and Equitable Tobacco Reform Act of2004
and ended the Tobacco Price Support Program, the Cooperative's purpose ended and the Cooperative
should be forced to distribute its reserves and be judicially dissolved. On September 13, 2017, this
court granted preliminary approval ofthe $24 million Settlement Agreement, preliminarily certified
a settlement class for settlement purposes only, and directed class counsel to submit their application
for attorneys' fees, expenses, and incentive awards. See [D.E. 63]. On November 20, 2017, class
counsel filed an unopposed motion for attorneys' fees, expenses, and incentive awards [D.E. 85] and
a memorandum in support [D.E. 86]. On November 27, 2017, class counsel filed declarations of

named class representative plaintiffs [D.E. 87, 88]. On January 19, 2018, this court held a fairness
hearing. On January 24, 2018, class counsel filed supplemental declarations in support of class
counsel's motion for attorneys' fees, expenses, and incentive awards. See [D.E. 261, 261-1, 261-2].
On February 20, 2018, this court granted plaintiffs' motion for final approval of a class action

settlement and entered a final approval order.
The court has reviewed the motion and the record. As explained below, the court grants the
motion and awards $10,000 to Teresa M. Speaks and Toby Speaks,1 Stanley Smith, Eddie Brown,
Robert Poindexter, Mike Mitchell, Roy L. Cook, Alex Shugart, H. Randle Wood, Robin Rogers, and
Daniel Lee Nelson as an incentive award. The court also awards $1,900,000 to class counsel. These
payments are reasonable and shaf1 be made in accordance with the Settlement Agreement and this
order.
I.

The Settlement Agreement resolves hotly disputed claims ofmembers and former members
of the Cooperative to the Cooperative's reserves and for dissolution of the Cooperative. On
September 13, 2017, this court entered an order preJiminarily approving the Settlement Agreement
dated September 6, 2017 (as modified by this court's order dated September 29, 2017 [D.E. 77]),
certifying the settlement class, and approving the form and manner of notice. See [D.E. 63]. The

order stated, inter aliil, that at the fairness hearing on January 19, 2018, the court would consider
class counsel's request for an award ofattorneys' fees, expenses, and incentive awards for the named
plaintiffs in an amount not to exceed $2 million, to be paid from the $24 million settlement fund.

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Teresa M. Speaks and Toby Speaks will split a single $10,000 incentive award.
\

2

Following publication of the class notice, no class members specifically objected to the
proposed award of attorneys' fees, expenses, and incentive awards. The Settlement Agreement ·
provides for $24 million in cash benefits that the Cooperative will pay into a settlement fund, plus
.,

the Cooperative will pay separately the costs ofnotice and claims administration, which b,as a value
in excess of $1.5 million. See [D.E. 60-1] 9--16; [D.E. 86-1]; [D.E. 217] 14 n.4. Thus, the total
gross value of the settlement to the settlement class is approximately $25.5 million. See id.
On February 20, 2018, the court granted plaintiffs' motion for final approval of the class

action settlement and approved the settlement as fair, reasonable, and adequate. In that order, the
court recounted in great detail the case, the settlement negotiations, the settlement process, the
objections, and the excellent work of class counsel. The record reflects the excellent work of class
counsel and the successful resolution that class counsel achieved for the settlement class.
"In a certified class action, the court may award reasonable attorney's fees and nontaxable

costs that are authorized by ... the parties' agreement." Fed. R. Civ. P. 23(h). Rule 23(h)(1)
provides that "[a] claim for an award must be made by motion under [Federal] Rule [of Civil
Procedure] 54(d)(2)." Fed. R. Civ. P. 23(h)(1 ). ''Notice ofthe motion must be served on all parities
and, for motions by class counsel, directed to class members in a reasonable manner." Id. The court
may hold a hearing concerning the motion, and ''must find the facts and state its legal conclusions
under Rule 52(a)." Fed. R. Civ. P. 23(h)(3).
In calculating an award of attorneys' fees as part of a class action settlement, courts have the

discretion to apply either the percentage-of-recovery method or the lodestar method.

See,~ Ferris

v. SprintCommc'nsCo.L.P.,No. 5:11-CV-00667-H,2012 WL 12914716,at*2(E.D.N.C.Dec.13,
2012) (unpublished); Kay Co. v. Equitable Prod. Co., 749 F. Supp. 2d 455, 461--64 (S.D. W.Va.
2010). Under the percentage-of-recovery method, the court awards a fee as a percentage of the
!

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common fund recovered.

See,~

Ferris, 2012 WL 12914716, at *2; Kay Co., 749 F. Supp. 2d at

462. The percentage-of-recovery method often better aligns the interests of class counsel and class
members because the method ties the attorney fee award to the overall result achieved rather than
the hours that the attorneys expended. See, e.g., In re Prudential Ins. Co. of Am. Sales Practices
Litig., 148 F.3d283, 333-34 (3d Cir. 1998); Inre ThirteenAp_pealsArisingoutofSanJuan.DuPont
Plaza Hotel Fire Litig., 56 F.3d 295, 306-08 (1st Cir. 1995); Gottlieb v. Barry. 43 F.3d 474, 487-89
/

(lOth Cir. 1994); Rawlings v. Prudential-Bache Props.. Inc., 9 F.3d 513, 516 (6th Cir. 1993);

SwedishHosp. Com. v. Shalal~ 1 F.3d 1261, 1271-72 (D.C. Cir. 1993); Camden I Condo. Ass'n.
Inc. v.Dunkle, 946F.2d 768,773-75 (llthCir.1991);Kirchoffv.Flynn, 786F.2d320, 326--28 (7th
Cir. 1986); Ferris, 2012 WL 12914716, at *2.
The court finds that applying the percentage-of-recovery method is appropriate in this case.
The court has considered the following factors in applying the percentage-of-recovery method: (1)
the results obtained for the class, (2) the quality, skill, and efficiency of class counsel, (3) the
complexity and duration of the case, (4) the risk of nonpayment, (5) awards in similar cases, (6)
objections, and (7) public policy. See, ~Kay Co., 749 F. Supp. 2d at 464.
In assessing the results obtained for the class, a court may examine the percentage of the
.'

gross cash benefits available for class members to claim, plus the additional benefits conferred on ·
the class by the settling defendant's separate payment of administration expenses. See, ~ Ferris,
2012 WL 12914716, at *2-3. Here, class counsel achieved an excellent result for the class. See Kay
Co., 749 F. Supp. 2d at 464-65. Despite the extraordinary litigation risk facing the class (which this
court described at length in its final approval order), class counsel obtained a settlement for the class
that exceeds $25 million in v8lue.

The total fee, expense, and incentive awards represent

approximately 7.8% ofthe settlement fund, as a whole. Ifthe court subtracts the $100,000 incentive
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awards and the $1,900,000 fee-and-expense award, the court finds that a minimum of $22 million
will be paid to qualifying class members. Accordingly, the $1.9 million fee-and-expense award

represents approximately 7.5% of the funds to be paid to class members.
As for awards in similar cases, a fee-and-expense award of approximately 7.5% fits ,

comfortably within the range of reasonable percentage-fee awards in the Fourth Circuit. See, e.g.,
Fenis,2012 WL 12914716,at *3-4;Inre WachoviaCo~p.ERISALitig.,No. 3:09CV262,2011 WL
7787962, at *4-6 (W.D.N.C. Oct. 24, 2011) (unpublished); In re The Millis Com. Sec. Litig., 265
F.RD. 246, 260-64 (B.D. Va 2009); Muhammad v. Nat'l Cicy Mortg., No. 2:07-0423, 2008 WL
5377783, at *6--9 (S.D. W.Va. Dec. 19, 2008) (unpublished).
As for class counsel's experience, skill, and efficiency, class counsel used all these attributes

to benefit the class. Class counsel will continue to use these attributes ~ they work to ensure that
the class receives the benefits due to· the class in the Settlement Agreement and final judgment.
As for the complexity and duration of the litigation, the court described the litigation in its

final approval order, and finds t,Jtat class counsel objectively analyzed the strengths and weaknesses

of the action and achieved an excellent result following a hard-fought, arms-length mediation in
which retired United States District Judge Frank Bullock served as the mediator. Class counsel also
responded to objections to the settlement and vigorously advocated for the settlement at the fairness
hearing. As for the risk of nonpayment, class counsel faced a risk of nonpayment.
As for objections, some class members objected to the settlement. This court overruled those

objections in its final approval order. Nobody, however, specifically objected to the proposed feeand-expense award. The absence of express objection to the fee-and-expense request supports
finding it reasonable. See,

~

Ferris, 2012 WL 12914716, at *3-4; In re WachoviD, 2011 WL

7787962, at *4.
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As for public policy, public policy supports the requested fee-and-expense award, particularly
in light of class counsel's extensive service to the class to date and the service that class counsel will
provide in working to ensure that the settlement occurs consistent with the Settlement Agreement
and this court's final judgment. See, e.g., Kay Co., 749 F. Supp. 2d at 468--69. Thus, having
considered the entire record, the court finds that the requested fee-and-expense award is reasonable
and awards fees and expenses to class counsel in the amount of$1,900,000.
As for the incentive awards to the named plaintiffs/class representatives, plaintiffs ask the
court to award the sum of $10,000 (i.e., a total of $1 00,000) to be paid to the plaintiffs upon the
effective date of the settlement. See [D.E. 60-1; 85]. Nobody specifically objected to the proposed
incentive awards.
The court finds that the requested incentive awards are reasonable and fit comfortably within
the range of reasonable incentive awards, considering the actions taken by the plaintiffs to protect
the interests of the settlement class, the degree to which the settlement class has benefitted from
those actions, and the amount of time and effort plaintiffs have expended in pursuing the litigation.
See,~ Cook v. Niedm,

142 F.3d 1004, 1016 (7th Cir. 1998); Kirven v. Cent. States Health & Life

Co. of Omaha, No. 3:11-2149-MB, 2015 WL 1314086, at *13-14 (D.S.C. Mar. 23, 2015)
i.

(unpublished); Kay Co., 749 F. Supp. 2d at 472-73. Thus, an incentive award of$10,000 for the
class representatives is reasonable given their contributions to the case.

See,~ Kruger v. Novant

Health. Inc., No. 1:14CV208, 2016 WL 6769066, at *6 (M.D.N.C. Sept. 29, 2016) (unpublished);
Savani v. URS Profl Sols. LLC, No. 1:06-cv-02085-JMC, 2014 WL 172503, at *10 (D.S.C. Jan.
15, 2014) (unpublished); Kay Co., 749 F. Supp. 2d at 472-73; Will v: Gen. Dynamics Cor,p., No.
06-698-GPM, 2010 WL 4818174, at *4 (S.D. m. Nov. 22, 2010). Without incentive awards, the
class representatives would not be rewarded for their participation or for the risk of pursuing this
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action with no promise of a successful outcome. It is fair, reasonable, and appropriate for the court
to grant the requested service awards to reward the named plaintiffs for their participation in this
action.
II.
In sum, plaintiffs' motion for attorney's fees, expenses, and incentive awards [D.E. 85] is

GRANTED. The court APPROVES a fee-and-expense award of $1,900,000 to settlement class
counsel, with the sum of seven hundred sixty thousand dollars ($760,000) to be paid from the
settlement fund upon the effective date of settlement as defined in the Settlement A~ent; the
sum of three hundred eighty thousand ($380,000) to be paid from the settlement fund upon the
payment ofthe second settlement payment as defined in the Settlement Agreement; the sum ofthree
hundred eighty thousand ($380,000) to be paid from the settlement fund upon the payment of the
third settlement payment as defined in the Settlement Agreement; and the sum of three hundred
eighty thousand ($380,000) to be paid from the settlement fund upon the payment of the fourth
settlement payment as defined in the Settlement Agreement. The court also APPROVES incentive
awards in the amount of$10,000 to Teresa and Toby Speaks (together) and $10,000 each to Stanley
Smith, Eddie Brown, Robert Poindexter, Mike Mitchell, Roy L. Cook, Alex Shugart, H. Randle
Wood, Robin Rogers, and Daniel Lee Nelson. This figure totals $100,000 and will be paid from the
settlement fund upon the effective date of settlement as defined in the Settlement Agreement.
SO ORDERED. This zoday ofFebruary 2018.

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