Montague v. Dixie National Life Insurance Company et al
ORDER granting 129 Motion for Attorney Fees, Expenses and Class Representative Incentive Award, approving Class Counsels' petition forattorneys' fees of $1,109,731.26 and the Class Representative incentive award of $7,500. Signed by Honorable Joseph F Anderson, Jr on 08/17/2011.(bshr, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Phyllis Gaither Montague, on behalf of
Herself and all others similarly situated,
Dixie National Life Insurance Company
and National Foundation Life Insurance
Civil Action No.: 3:09-00687-JFA
) ORDER APPROVING ATTORNEYS’ FEES,
REIMBURSEMENT OF COSTS AND
) EXPENSES, AND PAYMENT OF CLASS
) REPRESENTATIVE INCENTIVE AWARD
This matter is before the Court on the petition of Class Counsel, as attorneys for Plaintiff
Phyllis Gaither-Montague (“Montague”) and the Class, for the approval of Attorneys’ Fees,
reimbursement of costs and expenses, and payment of a Class Representative Incentive Award in
conjunction with the Final Settlement of this case. For the reasons stated herein, the Petition is
On June 8, 2011, this Court entered summary judgment in favor of Montague and the
Class on their breach of contract and declaratory judgment claims against the Defendants, Dixie
National Life Insurance Company (“Dixie”) and National Foundation Life Insurance Company
(“NFL”). The Court accepted Montague’s method of calculating damages in its Order, but
withheld entry of a judgment on compensatory damages subject to the submission of final
numbers from Plaintiff’s expert. See Dkt. 120 at 46. Having completed the revised itemization of
compensatory damages requested by the Court, Montague and the Class filed their expert report
establishing contractual damages of $3,396,789.55. See Dkt. 121.
Subsequent to the filing of the updated expert report, this Court entered judgment on
behalf of the Plaintiff class. See Dkt. 127. The judgment amount is 100% of the damages
requested by Class Counsel. In exchange for waiving any right to appeal the June 8, 2011 order
and satisfying the judgment entered against Dixie and NFL, the Plaintiff has agreed to settle this
matter for the payment of $3,362,822.00, or 99% of the monetary judgment in this case. Class
Counsel now request an award of attorneys’ fees of $1,109,731.26, or 33% of the settlement
amount.1 Class Counsel also request an award of $7,500 as a class representative incentive award
to Phyllis Gaither-Montague.
Appropriate notice of this petition for attorneys’ fees and incentive award (and the basis
thereof) was provided to all class members via the Class Notice previously approved by this
court. No class members have objected to the petition.
The procedure for awarding attorneys’ fees in the class action context is controlled by
In 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. The following procedures apply:
(1) A claim for an award must be made by motion under Rule
54(d)(2), subject to the provisions of this subdivision (h), at a time
the court sets. Notice of the motion must be served on all parties
and, for motions by class counsel, directed to class members in a
Subsequent to the calculation of the settlement amount, Class Counsel discovered that certain
class members may be entitled to compensation in addition to what was set forth in the
judgment. Via agreement with the settling Defendants, such benefits will be paid directly to the
class members entitled to those benefits. To avoid necessitating an additional notice period for
the approval of attorneys’ fees, however, Class Counsel have waived any request for attorneys’
fees otherwise associated with those additional benefits.
(2) A class member, or a party from whom payment is sought, may
object to the motion.
(3) The court may hold a hearing and must find the facts and state
its legal conclusions under Rule 52(a).
Fed. R. Civ. P. 23(h). Rule 54(d)(2)(B) further clarifies the necessary content of the motion for
(A) Claim to Be by Motion. A claim for attorney's fees and related
nontaxable expenses must be made by motion unless the
substantive law requires those fees to be proved at trial as an
element of damages.
(B) Timing and Contents of the Motion. Unless a statute or a court
order provides otherwise, the motion must:
(i) be filed no later than 14 days after the entry of judgment;
(ii) specify the judgment and the statute, rule, or other grounds
entitling the movant to the award;
(iii) state the amount sought or provide a fair estimate of it; and
(iv) disclose, if the court so orders, the terms of any agreement
about fees for the services for which the claim is made.
Fed. R. Civ. P. 54(d)(2).
The Supreme Court has “recognized consistently that a litigant or a lawyer who recovers
a common fund for the benefit of persons other than himself or his client is entitled to reasonable
attorney’s fees from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478, (1980).
Historically, attorneys’ fees awarded from a common fund have been calculated as a percentage
of the fund. See Federal Judicial Center, Manual for Complex Litigation (Fourth) § 14.121 at
187 (2004) (footnotes omitted). See also Camden I Condominium Assoc. v. Dunkle, 946 F.2d
768, 771-74 (11th Cir. 1991) (discussing the history of common fund fee awards). “The vast
majority of courts of appeals now permit or direct district courts to use the percentage-fee
method in common fund cases.” Manual for Complex Litigation (Fourth) § 14.21 at 187.
A total fee of 33 percent for all work performed in this case is well within the range of
what is customarily awarded in settlement class actions. An award of fees in the range of 33% of
the fund for work performed in the creation of a settlement fund has been held to be reasonable
by many federal courts. See also, e.g., In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 306-307
(3d Cir. 2005) (review of 289 settlements demonstrates “average attorney’s fees percentage [of]
31.71% with a median value that “turns out to be one-third”); In re Newbridge Networks Sec.
Litig., No. Civ. A. 94-1678, 1998 WL 765724 (D.D.C. Oct. 23, 1988) (awarding 30% of
settlement fund plus $150,864.82 in expenses); Cullen v. Whitman Medical Corp., 197 F.R.D.
136, 150 (E.D. Pa. 2000) (“the award of one-third of the [settlement] fund for attorneys’ fees is
consistent with fee awards in a number of recent decisions within this district”); In re Crazy
Eddie Sec. Litig., 824 F.Supp. 320 (E.D. N.Y. 1993) (awarding approximately 33.8% from $42
million settlement fund plus $2 million in expenses); In re Bioscience Sec. Litig., 155 F.R.D.
116, 117 (E.D. Pa. 1994) (awarding 30% fee award from 5.2 million settlement fund).
It must also be noted that the requested attorneys’ fee percentage is identical to that
awarded to Class Counsel in the predecessor case of Ward v. Dixie National Life. Ward v. Dixie
Nat. Life Ins. Co., Civil Action No. 3:03-3239-JFA (Dkt. 403).
As an additional consideration, even though the fees typically awarded in settlement class
actions are similar to or even higher than the fee percentage sought by Class Counsel herein, this
is not a typical settlement class action. The summary judgment on the breach of contract and
declaratory judgment claims in favor of Gaither-Montague and the Class was won only after
fully briefed dispositive motions. Very few class actions are ever litigated to judgment as in this
case. See Allapattah Serv. Inc. v. Exxon Corp., 454 F.Supp.2d 1185, 1210 (S.D. Fla. 2006).
A 33% fee award from the common fund in this case is consistent with what is routinely
privately negotiated in contingency fee litigation. In non-class contingency fee litigation, a 30%
to 40% contingency fee is typical. “[A] one-third fee is a common benchmark in private
contingency fee cases. That bench mark is then often adjusted upward to 40% or higher in the
event of an appeal.” See Allapattah Serv. Inc., 454 F.Supp.2d at 1212 (citations to studies and
reports omitted). See also In re Orthopedic Bone Screws Products Liability Litig., No. 97-381,
2000 WL 1622741 (E.D.Pa. Oct. 23, 2000)(“plaintiffs’ counsel in private contingency fee cases
regularly negotiate agreements providing for thirty to forty percent of any recovery.”); Durant v.
Traditional Invest., Ltd., No. 88-9048, 1992 WL 203872 (S.D.N.Y. Aug. 12, 1992)(“contingent
fee agreements up to forty percent have been held to be reasonable”); McKenzie Constr., Inc. v.
Maynard, 823 F.2d 43, 45 (3d Cir. 1987) (holding 33% contingency fee reasonable).
Accordingly, the Court finds that the requested percentage award in this case of 33
percent for attorneys’ fees is reasonable in light of the evidence establishing that the market rate
for private contingency fees is in the range of 33 1/3 percent to 40 percent, the precedent finding
that attorneys’ fees in the range of 30 percent of a settlement fund are reasonable, and the
additional circumstances of this case addressed in further detail below.
As noted above, the proposed settlement amount consists of 99% of the judgment
awarded to the Class on June 20, 2011. The settlement amount represents a 1% discount of the
value of the judgment in exchange for avoiding the risks and delay inherently associated with
post-judgment motions and appeal. This is a good result for the class members.
Class Counsel are skilled and experienced attorneys. Their skill is demonstrated by the
effective prosecution of this action to date and the Court’s previous recognition of their success
in these matters. See Ward v. Dixie National Life. Ward v. Dixie Nat. Life Ins. Co., Civil Action
No. 3:03-3239-JFA (Dkt. 403)(“[T]he litigation of this case involved considerable costs, yielded
a favorable result, and required a great deal of effort by highly-skilled attorneys.”)
This case presented unique issues and complications. Class Counsel successfully
defended several rounds of dispositive motions, including but not limited to precarious issues
surrounding the retroactive application of state legislation allegedly designed to overturn the
Fourth Circuit’s Ward rulings.
The litigation has been actively litigated for over two years. This case was hotly
contested both on the merits of the claims and the issue of class certification. There have been
numerous discovery and dispositive motions. These facts provide support for a 33 percent fee
Courts recognize that the risk of receiving no recovery is a major factor in awarding
attorneys’ fees and it is the primary aspect of a contingency fee case that supports a percentage
fee recovery. Courts note that the riskier the case, the greater the justification for a substantial fee
award. See, e.g., In re Ins. Brokerage Antitrust Litig., MDL 1663, 2007 WL 2916472, at *5
(D.N.J. Oct. 5, 2007) (citing In re Prudential-Baache Energy Income P’ships Sec. Litig., No.
888, 1994 WL 202394 (E.D. La. May 18, 1994).
The successful outcome in this case was far from certain. Montague faced many legal and
procedural hurdles in her prosecution of this claim, including the burden of surviving the
enactment of S.C. Code Ann. § 38-71-242—a statute which purported to change the meaning of
a term within her insurance policy (and the policies of the class).
It is not uncommon, despite excellent representation, that class claims are ultimately
unsuccessful. See, e.g., Robbins v. Koger Props., Inc., 116 F.3d 1441 (11th Cir. 1997) (jury
verdict of $81 million for plaintiffs against an accounting firm reversed on appeal on loss
causation grounds and judgment entered for defendant); Eisenstadt v. Centel Corp., 113 F.3d 738
(7th Cir. 1997) (affirming lower court’s granting of summary judgment for defendants).
Accordingly, the risks of non-payment in this case weigh in favor of approving the fee request.
Class Counsel were required to devote considerable time to advocate the contractual
rights of Mrs. Gaither-Montague and the Class. The record of this case establishes that Class
Counsel have expended numerous hours in prosecuting this case to judgment.
In addition to attorneys’ fees, Class Counsel also seek the approval of an Incentive
Award to be paid to the Class Representative from the common fund. At the conclusion of a
successful class action case, it is common for courts exercising their discretion, to award special
compensation to the class representative in recognition of the time and effort they have invested
for the benefit of the class. Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998). See also
Bogosian v. Gulf Oil Corp., 621 F.Supp. 27, 32 (E.D. Pa. 1985) (“The propriety of allowing
modest compensation to class representatives seems obvious”); Van Vranken v. Atl. Richfield
Co., 901 F.Supp. 294, 299-300 (N.D. Cal. 1995) (awarding $50,000 to the named plaintiff); In
re Dunn & Bradstreet Credit Serv. Customer Litig., 130 F.R.D. 366, 374 (S.D. Ohio 1990)
(awarding $55,000 each to two named plaintiffs).
The Court finds that an incentive award of $7,500 to Phyllis Gaither-Montague
accurately reflects her efforts on behalf of the Class. All evidence suggests that Mrs. GaitherMontague has actively and effectively fulfilled her obligations as Class Representative and has
worked closely with the attorneys since the inception of this litigation.
For all of the foregoing reasons, the Court approves Class Counsels’ petition for
attorneys’ fees of $1,109,731.26 and the Class Representative incentive award of $7,500.
IT IS SO ORDERED.
August 17, 2011
Columbia, South Carolina
Joseph F. Anderson, Jr.
United States District Judge
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