FLORES v. EXPRESS SERVICES, INC.

Filing 49

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE HARVEY BARTLE, III ON 3/29/17. 3/30/17 ENTERED AND COPIES EMAILED TO COUNSEL AND COPY TO LEGAL.(jaa, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOSE FLORES
v.
EXPRESS SERVICES, INC., et al.

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CIVIL ACTION

NO. 14-3298

MEMORANDUM
Bartle, J.

March 29, 2017
Before the court is the motion of plaintiff Jose

Flores seeking attorneys’ fees and reimbursement of expenses for
work performed in connection with the class settlement in this
action.
Plaintiff Jose Flores, on behalf of himself and a
class of similarly situated individuals, sued defendants Express
Services, Inc. and Express Personnel - Philadelphia for
violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C.
§§ 1681, et seq.

In his Second Amended Complaint, Flores has

alleged that defendants, staffing agencies and users of consumer
reports for employment purposes, willfully failed to provide
applicants who were the subjects of background reports with
notice and a copy of the report before taking adverse action
against them, in violation of 15 U.S.C. § 1681b(b)(3).
On October 28, 2016, the court preliminarily approved
the class Settlement Agreement, pending a final approval hearing
pursuant to Rule 23(e) of the Federal Rules of Civil Procedure.

See Doc. # 39.

The court required notice to be given to Class

Members and scheduled a final hearing for March 9, 2017.
On February 28, 2017, Flores filed a motion for final
approval of class action settlement.
was held on March 9, 2017.

A final approval hearing

In a separate order following the

hearing, the court has approved the class settlement and has
found it to be fair, reasonable, and adequate.
The Settlement Agreement provides that defendants will
establish a Settlement Fund of $5,750,000 to be used for
compensation to Class Members, costs of settlement
administration, a $10,000 service award to the individual Class
Representative, Jose Flores, and fees and costs for class
counsel.
Of this Settlement Fund, an Automatic Payment Fund of
$1,842,400 is allocated for compensation of $50 to each to Class
Member who does not file a claim for damages.

As of

February 17, 2017, class counsel estimated that there are
approximately 32,748 Class Members set to receive automatic
payments of $50 each.

The Settlement Agreement also contains a

Damages Claims Fund of $1,830,850, which will provide a payment
of up to $2,500 for each Class Member who submits a claim for
damages.

The Settlement Administrator had received 2,333 Damage

Claims as of February 17, 2017, which translates to a minimum
payment of $785 per Class Member seeking damages.
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A cy pres provision for funds not otherwise expended
is included with the following recipients:

50% to the Salvation

Army, 25% to the Veterans’ Multi-Service Center; and 25% to HAP
Veterans’ Project.
Finally, plaintiff seeks from the Settlement Fund
$1,895,362.33 in attorneys’ fees and $19,387.67 in costs for a
total of $1,914,750.
I.
Rule 23(h) of the Federal Rules of Civil Procedure
provides, in relevant part, that “[i]n a certified class action,
the court may award reasonable attorney’s fees and nontaxable
costs that are authorized by law or by the parties’ agreement.”
Fed. R. Civ. P. 23(h).
attorneys’ fees.

The FCRA authorizes the award of

See 15 U.S.C. § 1681n(a)(3).

are calculated using one of two methods:

Attorneys’ fees

the percentage-of-

recovery method (“POR method”) or the lodestar method.

Sullivan

v. DB Investments, Inc., 667 F.3d 273, 330 (3d Cir. 2011).

The

POR method applies a “certain percentage to the settlement fund,
while [the lodestar method] multiples the number of hours class
counsel worked on a case by a reasonable hourly billing rate for
such services.”

Id. (quoting In re Rite Aid Corp. Sec. Litig.,

396 F.3d 294, 300 (3d Cir. 2005)) (internal citations and
quotations omitted).

The POR method is favored where class

counsel’s efforts have achieved a common fund because it allows
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the court to award fees in a manner that rewards counsel for
success and penalizes counsel for failure or waste.
396 F.3d at 300.

Rite Aid,

The lodestar method, which multiplies the

number of hours reasonably expended on the case by counsel’s
reasonable hourly rate, is commonly used in statutory
fee-shifting cases and “where the expected relief has a small
enough monetary value that a percentage-of-recovery method would
provide inadequate compensation.”
524, 540-41 (3d Cir. 2009).

In re Diet Drugs, 582 F.3d

The lodestar method is also used to

cross check the reasonableness of the POR method fee award.
Sullivan, 667 F.3d at 330; Rite Aid, 396 F.3d at 294; In re AT&T
Corp., 455 F.3d 160, 164 (3d Cir. 2006).
Here, we have a hybrid case.

A hybrid case exists

when there is both a common fund and a fee-shifting statute.
With a hybrid case, the court has discretion to employ either
the POR method or the lodestar method.

See Brytus v. Spang &

Co., 203 F.3d 238, 243 (3d Cir. 2000); In re Cendant Corp.
PRIDES Litig., 243 F.3d 722, 737 n. 20 (3d Cir. 2001).

The

court should cross-check its fee calculation with the unused
method to determine that the award is reasonable.

See Sullivan,

667 F.3d at 330.
In calculating the fee using the POR method, our Court
of Appeals has instructed that there are ten factors that should
be considered.

Id.; Gunter v. Ridgewood Energy Corp., 223 F.3d
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190 (3d Cir. 1990); In re Prudential Ins. Co. Sales Practices,
148 F.3d 283, 332 (3d Cir. 1998).

These factors, identified in

Gunter and Prudential, are:
(1) the size of the fund created and the
number of beneficiaries, (2) the presence or
absence of substantial objections by members
of the class to the settlement terms and/or
fees requested by counsel, (3) the skill and
efficiency of the attorneys involved,
(4) the complexity and duration of the
litigation, (5) the risk of nonpayment,
(6) the amount of time devoted to the case
by plaintiffs’ counsel, (7) the awards in
similar cases, (8) the value of benefits
attributable to the efforts of class counsel
relative to the efforts of other groups,
. . . (9) the percentage fee that would have
been negotiated had the case been subject to
a private contingent fee arrangement at the
time counsel was retained, and (10) any
innovative terms of the settlement.
Diet Drugs, 582 F.3d at 541 (citing Gunter, 223 F.3d at 195 n.1
and Prudential, 148 F.3d at 336-40) (internal citations
omitted).

We are not required to apply the factors

formulaically.

Nonetheless, it is important that we “evaluate

what class counsel actually did and how it benefitted the
class.”

Prudential, 148 F.3d at 332; Rite Aid, 396 F.3d at 301.
II.
We begin by determining which method we will use in

calculating the award for attorneys’ fees.

The FCRA is a

fee-shifting statute, and the Settlement Agreement creates a
common fund.

See 15 U.S.C. § 1681(n)(3).

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Thus, we have a

hybrid situation in which we have discretion to employ the fee
calculating method that we deem appropriate.

See Brytus, 203

F.3d at 243; Cendant Corp., 243 F.3d at 737 n. 20.

We will

calculate the award of attorneys’ fees using the POR method and
cross-check it with the lodestar method.
As described in the Settlement Agreement and memoranda
supporting preliminary and final approval, defendants have
provided a Settlement Fund of $5,750,000 for the benefit of
Class Member claimants.

From the Settlement Fund, $3,683,250 is

allocated for compensation to Class Members.

Flores has

requested expenses of $19,387.67 and attorneys’ fees of
$1,895,362.33, for a total of $1,914,750.
Plaintiff’s request for attorney’s fees is reasonable.
First, the size of the fund created and the number of
beneficiaries support the fee request.
35,081.

The class size totals

The Class Members will receive significant benefits as

a result of the common fund: Class Members who do not opt out of
the Settlement Agreement and do not submit a claim for damages
will receive an automatic payment of $50, while Class Members
who do not opt out of the Settlement Agreement and do submit a
claim for damages will receive a payment up to $2,500.
Second, there have been no objections to the
Settlement Agreement, and only five Class Members have opted out
of it.
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The third consideration, the skill and efficiency of
counsel, is apparent here and favors approval of the fees.
Counsel has achieved a significantly favorable result on behalf
of plaintiffs at the expense of the inherent risk that
accompanies undertaking a contingency fee action.

See In re

Ikon Office Solutions Inc., Sec. Litig., 194 F.R.D. 166, 194
(E.D. Pa. May 9, 2000).

Additionally, counsel has extensive

experience in consumer class action litigation and has been
certified to represent a consumer class both now and many times
in the past.
The fourth consideration, the complexity and duration
of the litigation, supports approval.
on June 9, 2014.

The litigation commenced

Before extensive motions practice took place,

the case was placed in civil suspense less than one year after
the complaint was filed in order to allow for mediation. 1

It

remained in civil suspense for mediation purposes from
April 1, 2015 until October 28, 2016.

Counsel for the class has

advised the court that during this time, written discovery,
three days of mediation, and lengthy settlement discussions took
place.

Less than three years after the complaint was filed,

Flores’ motion for final approval of the settlement was filed on
1. Defendants filed a motion to dismiss for failure to state a
claim under Rule 12(b)(6) of the Federal Rules of Civil
Procedure (Doc. # 14). Plaintiff filed a second amended
complaint on October 22, 2014 and the motion of defendants was
deemed moot (Docs. ## 19 and 20).
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February 28, 2017.

Flores brought suit under a provision of the

FCRA that required a showing of willfulness on the part of the
defendant.

15 U.S.C. § 1681b(b)(3).

This liability obstacle

presents a layer of complexity that Flores would have to
overcome at trial in order to succeed and a contention that
defendants would have undoubtedly contested.

These factors

weigh in favor of approval of the fee.
The fifth factor, risk on nonpayment, does not weigh
for or against approval as counsel undertook the litigation on a
contingent fee basis.
In the next consideration, we review the amount of
time consumed by the litigation.

A total of 677.5 hours of work

has been devoted on behalf of the class over the course of
32 months.

This amount of time has secured a common fund of

$5,750,000 for the benefit of Class Member claimants.

This

consideration weighs in favor of approval.
In the seventh factor, we are asked to consider awards
of attorneys’ requests for fees in in similar common fund class
action settlements.

Here, our consideration must be based on

the size of the settlement.

Cendant Corp., 243 F.3d at 736.

Counsel has requested attorneys’ fees of $1,895,362.33, which is
32.96% of the total Settlement Fund of $5,750,000.

This

constitutes a multiplier of 4.6 of counsel’s lodestar.

Upon

consideration of percentages granted in similar class action
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settlements, 32.96% of the total common fund is within the range
of awards that support approval.

See Boone v. City of

Philadelphia, 668 F.Supp. 2d 693, 714 (E.D. Pa. Nov. 3, 2009);
see also Williams v. Aramark Sports, LLC, 2011 WL 4018205 at *10
(E.D. Pa. Sept. 9, 2011); see also Skeen v. BMW of North
America, LLC, 2016 WL 4033969 at *32 (D. N.J. July 26, 2016);
see also Rite Aid, 146 F.Supp. at 735.
The eighth factor, the value of benefits attributable
to the efforts of class counsel relative to the efforts of other
groups, supports approval.

Only class counsel, and no other

group or agency, has performed work on behalf of the class.
The ninth factor, which considers the percentage fee
that would have been negotiated had the case been subject to a
contingent fee agreement, is a non-factor.
The final consideration weighs in favor of approval.
Here we consider any innovative terms of the settlement.

As a

result of the Settlement Agreement, defendants have changed
their notification policies and practices that served as the
basis of Flores’ claims, even though the FCRA does not provide
for injunctive relief when sought by private parties.
The considerations set forth above support the
approval of counsel’s request for a fee award of $1,895,362.33.

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III.
We now turn to the lodestar method to cross-check the
percentage fee award to confirm that it is reasonable.
See Prudential, 148 F.3d at 333.

The lodestar method requires

us to “multipl[y] the number of hours reasonably worked . . . by
a reasonable hourly billing rate for such services[.]”
Rite Aid, 396 F.3d at 305.

“The multiplier is a device that

attempts to account for the contingent nature of risk involved
in a particular case and the quality of the attorneys’ work.”
Id. at 305-06 (citing Report of the Third Circuit Task Force,
Court Awarded Attorney Fees, 108 F.R.D. 237, 243 (1985)).

In

determining the multiplier, we “blen[d] billing rates that
approximate the fee structure of all the attorneys who worked on
the matter.”

Id. at 306.

Class counsel, as noted above, has expended
677.5 hours on behalf of the class.

This number reflects the

combination of work performed by attorneys and work performed by
paralegals.

The hourly rates of attorneys who worked on this

case range from $725 per hour to $225 per hour, while the hourly
rate of the paralegals is $180 per hour.

We multiply the number

of hours worked by each individual by his or her hourly rate to
calculate the individual fees.
those individual fees.

We next add together all of

The result is the lodestar amount,

$411,153.
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The counsel fee request of $1,895,362.33 results in a
multiplier of 4.6, that is a requested fee which is 4.6 times
the lodestar amount.

This multiplier is reasonable based on the

following considerations: (1) Counsel undertook this matter on a
contingency basis with risk of non-recovery; (2) No objections
were made by defendants or any Class Member to the fee
requested; (3) Counsel demonstrated expertise and efficiency;
(4) The Settlement Agreement provides a substantial monetary
benefit achieved for the Class Members; and (5) Defendants have
revised their relevant policies and practices as a result of the
Settlement Agreement.

This revision of policies and practices

strongly benefits the public-at-large.
The expenses sought after by Flores total $19,387.67.
Based on the documentation provided by Flores, we determine this
sum is also reasonable.
IV.
In sum, we will award Flores attorneys’ fees in the
amount of $1,895,362.33 and expenses in the amount of
$19,387.67, for a total award to Flores of $1,914,750.

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