BOWERS et al v. BB&T CORPORATION et al

Filing 450

MEMORANDUM OPINION AND ORDER signed by JUDGE CATHERINE C. EAGLES on 05/06/2019, that: 1. Class Counsel's motion for attorney's fees, reimbursement of expenses, and case contribution awards for named plain tiffs, Doc. 444 , is GRANTED. 2. Class Counsel is entitled to an attorney's fee of $8,000,000, to be paid from the settlement amount. 3. Class Counsel shall be reimbursed for expenses of $768,176, which are to be paid from the sett lement amount. 4. A case contribution award of $20,000 shall be paid to each of the named plaintiffs Brewster Smith, Erik Gavidia, Stephanie Gavidia, Doris Kirouac, Paula Bridges, Nancy Johnson, Kerri Greaner, Robert Sims, Stacy Holstein, and Patricia Wells, also to be paid from the settlement amount. (Garland, Leah)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
ROBERT SIMS, et al.,
Plaintiffs,
v.

1:15-CV-732

BB&T CORPORATION, et al.,
Defendants.

BREWSTER SMITH, JR., et al.,
Plaintiffs,
v.

1:15-CV-841

BB&T CORPORATION, et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, District Judge.
Class Counsel for the plaintiffs seek an award of attorney’s fees, reimbursement of
reasonable expenses incurred in prosecuting this action, and compensation for the named
plaintiffs from a common fund created from the class action settlement. The Court has
reviewed Class Counsel’s request and supporting evidence, as well as attorney’s fees and
class representative awards from similar cases. For the reasons stated herein, the Court
will grant the motion.

I.

Background

A detailed procedural history and description of the settlement agreement is set
forth in the Court’s Memorandum Opinion on final approval of the class action
settlement, issued concurrently with this Order. In sum, the parties have agreed to settle
the plaintiffs’ class action ERISA claims, which are based on alleged breaches of duties
of prudence and loyalty and prohibited transactions arising out of the defendants’
management of the BB&T employee retirement plan. The proposed settlement provides
for a common fund of $24 million as well as other non-monetary relief in exchange for,
inter alia, a release of ERISA-related claims on behalf of the approximately 72,000 class
members. The settlement also allows for an award of up to $8,000,000 in attorney’s fees,
$1.1 million in attorney’s expenses, and service awards of $20,000 for each of the
representatives.
Consistent with this provision, Class Counsel asks this Court to approve an award
of $8,000,000 in attorney’s fees, reflecting one-third of the monetary recovery,
reimbursement of $768,176.42 in litigation expenses, and case contribution awards of
$20,000 for each of the class representatives. Doc. 444; Doc. 449. The defendants have
not opposed the motion.
II.

Attorney’s Fees
A.

Legal Standard

In a class action, the court may award reasonable attorney’s fees and nontaxable
costs as authorized by law or by agreement. Fed. R. Civ. P. 23(h). In a common-fund
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case such as this, “a reasonable fee is based on a percentage of the fund bestowed on the
class.” Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984). District courts in the Fourth
Circuit prefer the percentage method in common-fund cases, including ERISA cases, see
Kruger v. Novant Health, Inc., No 1:14CV208, 2016 WL 6769066, at *2 (M.D.N.C. Sept.
29, 2016); Smith v. Krispy Kreme Doughnut Corp., No. 1:05CV00187, 2007 WL 119157,
at *1 (M.D.N.C. Jan. 10, 2007), and “the vast majority of courts of appeals now permit or
direct district courts to use” this method. Manual for Complex Litigation § 14.121 (4th
ed. 2018); id. at n.483, n.484, n.485 (collecting cases).
To determine the reasonableness of the fee award, courts begin by considering the
twelve factors identified in Barber v. Kimbrell’s, Inc.: “(1) the time and labor expended;
(2) the novelty and difficulty of the questions raised; (3) the skill required to properly
perform the legal services rendered; (4) the attorney’s opportunity costs in pressing the
instant litigation; (5) the customary fee for like work; (6) the attorney’s expectations at
the outset of the litigation; (7) the time limitations imposed by the client or
circumstances; (8) the amount in controversy and the results obtained; (9) the experience,
reputation and ability of the attorney; (10) the undesirability of the case within the legal
community in which the suit arose; (11) the nature and length of the professional
relationship between attorney and client; and (12) attorneys’ fees awards in similar
cases.” 577 F.2d 216, 226 & n.28 (4th Cir. 1978) (adopting factors from Johnson v. Ga.
Highway Express, Inc., 488 F.2d 714, 717–19 (5th Cir. 1974), abrogated on other
grounds by Blanchard v. Bergeron, 489 U.S. 87, 92–93 (1989)).
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Courts should also conduct a lodestar cross-check that compares the requested
contingent fee award against a fee calculated based on hours spent at prevailing market
rates. See Boyd v. Coventry Health Care, Inc., 299 F.R.D. 451, 462 (D. Md. 2014). “The
purpose of a lodestar cross-check is to determine whether a proposed fee award is
excessive relative to the hours reportedly worked by counsel, or whether the fee is within
some reasonable multiplier of the lodestar.” Id. at 467. Courts often use the lodestar
method to cross-check the reasonableness of a percentage fee. Jones v. Dominion Res.
Servs., Inc., 601 F. Supp. 2d 756, 759–60 (S.D.W. Va. 2009) (collecting cases). To
determine the lodestar, courts multiply the reasonable hourly rate for each attorney by the
number of hours reasonably expended. Grissom v. The Mills Corp., 549 F.3d 313, 320
(4th Cir. 2008). When the lodestar method is used only as a cross-check, however, courts
need not “exhaustively scrutinize[]” the hours documented by counsel and “the
reasonableness of the claimed lodestar can be tested by the court’s familiarity with the
case.” Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000). Typically a
reasonable rate is calculated by looking at the local market, see Burrs v. United Tech.
Corp, No. 1:18-CV491, 2019 WL 1430258, at *1 (M.D.N.C. Mar. 29, 2019), but a
national market rate is appropriate for matters involving complex issues requiring
specialized expertise, such as ERISA class actions. See Kruger, 2016 WL 6769066, at
*4.

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B.

Analysis

Class Counsel’s request for a fee of $8 million, reflecting one-third of the
monetary recovery provided to class members in the settlement agreement, is reasonable
following consideration of the twelve Barber factors. Class Counsel spent over 16,000
attorney hours and 2,200 hours of non-attorney time to this matter, a significant
investment of labor and resources. See Doc. 445 at 6; Doc. 445-5 at ¶ 3; Doc. 445-3 at
¶¶ 4–6. ERISA litigation is a “rapidly evolving and demanding area of law” in which
“[n]ew precedents are frequently issued.” In re Wachovia Corp ERISA Litig., No.
3:09cv262, 2011 WL 5037183, at *4 (W.D.N.C. Oct. 24, 2011). This, and the
“significant risk of nonpayment” in ERISA matters generally, see Kruger, 2016 WL
6769066, at *4, tend to indicate that recovery requires navigating novel issues and
applying specialized skills. Class Counsel credibly testified that taking on a large class
action like this “impacts the firm’s ability to handle other class actions or pursue other
less risky matters,” Doc. 445-1 at ¶ 30, and thus comes at some opportunity cost.
A one-third fee is consistent with the market rate in complex ERISA matters such
as this and reflects a customary fee for like work. See Kruger, 2016 WL 6769066, at *2
(collecting cases). Class Counsel has also credibly described their expectation that this
matter would be vigorously defended by BB&T, as it was, and would require
considerable resources, as it has. Doc. 445-1 at ¶¶ 26–29. Class Counsel recovered
monetary relief reflecting 19% of $124 million in total damages sought by the plaintiffs
after summary judgment, as well as non-monetary relief and tax benefits that will add
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approximately $15 million in additional monetary value for class members. See Doc. 445
at 12–14 (estimating a total settlement value of $38.97 million).
Several courts have recognized the considerable skills and ability of lead counsel,
Mr. Schlichter and his firm, in ERISA matters, see, e.g., Beesley v. Int’l Paper Co., No.
06-703, 2014 WL 375432, at *2 (S.D. Ill. Jan. 31, 2014); Will v. Gen. Dynamics Corp.,
No. 06-698, 2010 WL 4818174, at *2–3 (S.D. Ill. Nov. 22, 2010), and have recognized
that this firm’s work on behalf of retirement plan beneficiaries has resulted in reductions
of recordkeeping fees on retirement plans in the United States overall. Nolte v. Cigna
Corp., No. 2:07-cv-2046- HAB-DGB, 2013 WL 12242015, at *2 (C.D. Ill. Oct. 15,
2013). Co-counsel Nichols Kaster has appeared in ERISA matters and has received
similar recognition. See Johnson v. Fujitsu Tech. & Bus. Of Am., Inc., No. 16-3698, 2018
WL 2183253, at *6–7 (N.D. Cal. May 11, 2018) (noting the firm achieved a “strong
result” that appeared by “all measures to be the work of skillful and experienced
attorneys with significant expertise in the ERISA context.”).
In this matter as well, Class Counsel displayed skill and determination. It is
unsurprising that only a few firms might invest the considerable resources to ERISA class
actions such as this, which require considerable resources and hold uncertain potential for
recovery. A one-third fee reflects a reasonable attorney’s fee in this matter for the
attorneys who did assume this risk, diligently advocated on behalf of the class, and
obtained significant recovery.

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The lodestar cross-check also supports that the motion for attorney’s fees should
be granted. Class Counsel has submitted evidence that lead counsel Schlichter, Bogard &
Denton spent 14,605.70 hours of attorney time and 1,951.70 hours of non-attorney time
on this matter. Doc. 445-5 at ¶ 3. Co-counsel Nichols Kaster has also submitted
evidence they spent 1,419.50 hours of attorney time and 273.50 hours of non-attorney
time on this matter to date. Doc. 445-3 at ¶¶ 4–6. Both firms provided a breakdown of
hours by overall stage in the litigation, see id. at ¶ 4; Doc. 445-2 at ¶ 9, and the amount of
time spent by Class Counsel was reasonable based on the Court’s familiarity with the
case. See Goldberger, 209 F.3d at 50.
Class Counsel Schlichter, Bogard & Denton asserts that reasonable hourly rates
for its attorneys are $1,060 per hour for attorneys with over 25 years of experience, $900
per hour for attorneys with 15 to 24 years of experience, $650 per hour for attorneys with
5 to 14 years of experience, $ 490 per hour for attorneys with 2–4 years of experience,
and $330 per hour for attorneys with less than 2 years of experience, law clerks, and
paralegals. Doc 445-2 at ¶ 7. These requests are reasonable and reflect a 3% annual
increase over two years from fees previously approved in this District for an ERISA case
two-and-a-half years ago. Kruger, 2016 WL 6769066, at *4; see also Burrs v. United
Tech. Corp, No. 1:18-CV491, 2019 WL 1430258, at *1–2 (M.D.N.C. Mar. 29, 2019)
(calculating reasonable attorney rate based on reasonable increase over time given the
legal market). The rates claimed by Nichols Kaster—$250 for law clerks and paralegals,
$425 per hour for attorneys with 2 to 4 years of experience, $575 per hour for attorneys
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with 5 to 9 years of experience, $625 per hour for attorneys with 10 to 14 years of
experience, $775 per hour for attorneys with 15 to 24 years of experience, and $875 per
hour for attorneys with more than 25 years of experience, Doc. 445-3 at ¶¶ 5–6—are also
reasonable and are comparable to fees that have been recently approved in another
ERISA class action. See Johnson, 2018 WL 2183253, at *7 (approving rates of $600 to
$875 per hour for attorneys with more than 10 years of experience, $325 to $575 per hour
for attorneys with 10 years or less experience, and $250 per hour for paralegals and
clerks).
The lodestar amount, using these hours and rates, amounts to over $12 million for
Schlichter and almost $1 million for Nichols Kaster, for a total of over $13 million. Doc.
445 at 21; Doc. 445-2 at ¶ 8; 445-3 at ¶ 7. This is several million dollars more than the
fee request and reflects a multiplier far below the typical range for similar class actions.
See Singleton v. Domino’s Pizza, LLC, 976 F. Supp. 2d 665, 689 (D. Md. 2013) (noting
that the lodestar multipliers “on large and complicated class actions have ranged from at
least 2.26 to 4.5”). The lodestar cross-check confirms that the requested attorney’s fees
are more than reasonable, and the motion as to attorney’s fees will be granted.
III.

Attorney’s Expenses

Under Rule 23(h), a trial court may award nontaxable costs that are authorized by
law or the parties’ agreement. Fed. R. Civ. P. 23(h). “The prevailing view is that
expenses are awarded in addition to the fee percentage.” Krispy Kreme, 2007 WL
119157, at *3 (internal quotation omitted). Reimbursable expenses include expert fees,
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travel, long-distance and conference telephone, postage, delivery services, settlement
costs, and computerized legal research. Alba Conte, 1 Attorney Fee Awards § 2:19 (3d
ed. 2018); Phillips v. Triad Guar. Inc., No. 1:09-CV71, 2016 WL 2636289, at *9
(M.D.N.C. May 9, 2016); Spano v. Boeing Co., No. 06-CV-743-NJR-DGW, 2016 WL
3791123, at *4 (S.D. Ill. Mar. 31, 2016).
Class Counsel has submitted evidence in support of their request for
reimbursement for $737,377.63 of expenses on behalf of Schlichter, Bogard & Denton,
Doc. 449 at 2; 449-1; 449-2, and $30,798.79 on behalf of Nicols Kaster. Doc. 445-3 at
¶ 8. These expenses included the costs of hiring experts and consultants, taking
depositions, travel, lodging, and parking, copies and communication costs, and mediation
and settlement costs, and professional fees, among others. Doc. 449-2 at ¶ 2; Doc. 445-3
at ¶ 8. In a supplemental filing, Schlichter, Bogard & Denton have represented that
mediation and settlement costs include the mediator charges, and costs associated with
the settlement-related website. Doc. 449-1 at 3. At the May 1, 2019 fairness hearing,
Class Counsel also stated that the professional fees included costs of counsel for experts
that were retained in connection with prosecuting this matter.
The Court has reviewed the expenses and the supporting documentation and finds
that the expenses were reasonable. The motion will be granted.
IV.

Service Awards

At the end of a successful class action, it is common for trial courts to compensate
class representatives for the time and effort they invested to benefit the class. See, e.g.,
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Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998). The plaintiffs ask that each of the
ten named plaintiffs receive $20,000 in recognition of their contributions to the success of
the case. Doc. 445 at 23.
Class Counsel has proffered that the named plaintiffs “provided invaluable
assistance to Class Counsel in prosecuting the case” and “showed commitment to the
case,” and the record reflects that these individuals provided declarations and depositions
related to class certification. Doc. 445 at 23 (citing Docs. 192-3–192-12; 147-3–147-6,
147-9–147-14). This amount is consistent with awards in similar ERISA settlements and
the motion as to this request will also be granted. See, e.g., Kruger, 2016 WL 6769066,
at *6 (approving service award of $25,000 to seven class representatives); Abbott v.
Lockheed Martin Corp., No 06-cv-701-MJR-DGW, 2015 WL 4398475, at *4 (S.D. Ill.
July 17, 2015) (approving incentive awards of $25,000 for six class representatives);
Krueger v. Ameriprise Fin., Inc., No. 11-CV-02781, 2015 WL 4246879, at *3–4 (D.
Minn. July 13, 2015) (approving incentive awards of $25,000 for five named plaintiffs).
V.

Conclusion

The Court finds that Class Counsel’s uncontested motion for attorney’s fees,
attorney’s expenses, and service awards for the named plaintiffs is well-supported and
reasonable. Accordingly, it is ORDERED that:
1. Class Counsel’s motion for attorney’s fees, reimbursement of expenses, and case
contribution awards for named plaintiffs, Doc. 444, is GRANTED.

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2. Class Counsel is entitled to an attorney’s fee of $8,000,000, to be paid from the
settlement amount.
3. Class Counsel shall be reimbursed for expenses of $768,176, which are to be paid
from the settlement amount.
4. A case contribution award of $20,000 shall be paid to each of the named plaintiffs
Brewster Smith, Erik Gavidia, Stephanie Gavidia, Doris Kirouac, Paula Bridges,
Nancy Johnson, Kerri Greaner, Robert Sims, Stacy Holstein, and Patricia Wells,
also to be paid from the settlement amount.
This is the 6th day of May, 2019.

________________________________
UNITED STATES DISTRICT JUDGE

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