Ford, Paul et al v. Sprint Communications Company, L.P. et al

Filing 36

Findings of Fact and Conclusions of Law. Signed by Magistrate Judge Stephen L. Crocker on 12/13/12. (rep)

Case: 3:12-cv-00270-slc Document #: 26-2 Filed: 11/14/12 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

PAUL FORD and DOLORES FORD, RUTH E.
BOBZIEN, AMY DICKERSON and BRUCE
DICKERSON, EVERETT CHAMBERS and
JOANNE CHAMBERS, and RAY VINNEY, for
themselves and all others similarly situated,
Plaintiffs,
vs.
SPRINT COMMUNICATIONS COMPANY
L.P., QWEST COMMUNICATIONS
COMPANY, LLC, and WILTEL
COMMUNICAnONS, LLC,
Defendants.

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Civil Action No. 3: 12-cv-00270-slc

FINDINGS OF FACT AND CONCLUSIONS OF LAW ON PLAINTIFFS' MOTION FOR AWARD OF
ATTORNEYS' FEES AND EXPENSES TO SETTLEMENT CLASS COUNSEL

Under Federal Rules of Civil Procedure 23(h)(1) and 54(d)(2), Plaintiffs in this class
action have moved for an award of attorneys' fees and expenses to Settlement Class Counsel.
Under Rule 23(h)(3), the Court must make findings of fact and state its conclusions oflaw. The
Court does so, as follows, in granting the motion:

Findings of Fact
1.

This class-action settlement resolves a property-rights dispute, which arises out of

the installation of fiber-optic cable on railroad rights of way by Sprint Communications
Company L.P., Qwest Communications Company, LLC fi'k/a Qwest Communications
Corporation, and WilTel Communications, LLC (the "Settling Defendants"). The claims
resolved by the Settlement affect parcels ofland in Wisconsin covering 596 miles of rights of
way throughout the state.

Case: 3:12-cv-00270-slc Document #: 26-2 Filed: 11/14/12 Page 2 of 7

2.

On June 5, 2012, the Court entered an order preliminarily approving the

settlement, certifYing the settlement class, and approving the form and manner of notice. On
July 31, 2012, the claims administrator mailed notices to 9,684 current and prior property owners
along railroad rights of way in Wisconsin containing telecommunications facilities installed by
the Settling Defendants, and opened a settlement call center and website. The notice, which was
posted on the website, advised in pertinent part:
The Court will decide how much Class Counsel and any other lawyers will be
paid. Class Counsel will ask the Court for attorneys' fees, costs and expenses of
$1,093,000.... The Defendants will separately pay these fees and expenses and
the payment will not reduce the benefits available for the Class.
Notice at 8. The Notice further advised that the Court would hold a Fairness Hearing on
December 13,2012, at which time the Court would "consider how much to pay Class Counsel."

Id. at 9. Following publication of the class notice, no class members objected to the proposed
award of attorneys' fees and expenses. On December 13,2012, the Court held the final Fairness
Hearing.
3.

The Settlement Agreement provides in pertinent part: "Settlement Class Counsel

may seek from the Court a cash award of fees and expenses from the Settling Defendants, in an
amount not to exceed the Maximum Attorneys' Fee Award, to which the Settling Defendants
will not object." Settlement Agreement § II.E.1. The Settlement Agreement defines the
Maximum Attorneys' Fee Award as $1,093,000. Settlement Agreement Definitions. The
Settlement Agreement further provides that "the Settling Defendants shall deposit any attorneys'
fee award approved by the Court, which shall not exceed the Maximum Attorneys' Fee Award,
into the interest-bearing escrow account established with U.S. Bank in New York, New York, no
later than ten (10) days after the date on which the Order and Judgment becomes Final."
Settlement Agreement § II.E.2.

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4.

The escrow account established with U.S. Bank is a Qualified Settlement Fund

within the meaning of Treasury Regulation § 1.468B. The escrow account is maintained by U.S.
Bank in New York, New York, with the Garretson Firm Resolution Group, Inc. ("GFRG")
serving as the Fund Administrator. These arrangements are consistent with the terms of an
Escrow Agreement entered into as of August 26, 2011 between certain Settlement Class
Counsel, U.S. Bank, and GFRG.
5.

Settlement Class Counsel estimate that a minimum of$2,660,000 in cash benefits

are available for class members to claim. Administrative costs Settling Defendants -

to be paid separately by the

in creating and updating a sophisticated database to notify class members,

implement the Settlement, and process claims, are estimated at an additional $542,000. The
agreed-to attorney's fees and non-taxable costs of approximately $1,093,000 reduce benefits payable to class members -

which will not

bring the total gross value of the Settlement to

roughly $4,295,000.

Conclusions of Law
6.

Rule 23(h) provides that, "[i]n a certified class action, the court may award

reasonable attorney's fees and nontaxable costs that are authorized by ... the parties'
agreement." The Rule further provides that "[a] claim for an award must be made by motion
under Rule 54(d)(2)," notice of which must be "directed to class members in a reasonable
manner" and that the Court "must find the facts and state its legal conclusions under Rule 52(a)."
Fed. R. Civ. P. 23(h)(1) and (3). In turn, Rule 54(d)(2) requires a claim for fees to be made by
motion, and specifies its timing and content, including, in relevant part, "the grounds entitling the
movant to the award" and "the amount sought." Fed. R. Civ. P. 54(d)(2)(B). Notice of this feeaward motion was provided in the class notice and on the website.

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7.

"In a common fund case the judge exercises equitable powers to compensate

attorneys from the recovery won for plaintiffs." Harman v. Lyphomed, Inc., 945 F.2d 969, 973
(7th Cir. 1991) (citing Alyeska Pipeline Servo Co. v. Wilderness Soc 'y, 421 U.S. 240 (1975)).
"When a class suit produces a fund for the class, it is commonplace to award the lawyers for the
class a percentage ofthe fund, in recognition of the fact that most suits for damages in this
country are handled on the plaintiffs side on a contingent-fee basis." Gaskill v. Gordon, 160
F.3d 361, 362 (7th Cir. 1998) (citations omitted). "When a fee is set by a court rather than by
contract, the object is to set it at a level that will approximate what the market would set." !d. at
763 (citing In re Continental Ill. Securities Litig., 962 F.2d 566, 572 (7th Cir. 1992); Kirchoffv.
Flynn, 786 F.2d 320 (7th Cir.1986)).

8.

Under the percentage-of-the-fund approach, the agreed-to fee-and-expense

request is reasonable as a matter oflaw. Here, Settlement Class Counsel estimate that, based on
the miles of rights of way covered by the Settlement, ifeach class member were to claim the
available cash benefits, approximately $2,660,000 would be paid to qualifying class members,
assuming that no land-grant class members seek the higher non-land grant benefits. (To the
extent those class members do seek and receive the higher amounts, the amount available to the
class will increase.) When estimated administrative costs of$542,000 -

to be borne by the

Settling Defendants - and the agreed-to attorneys' fees and expenses of $1 ,093,000- also to be
paid separately by the Settling Defendants - are factored in, the gross value of the Settlement is
approximately $4,295,000. The $1,093,000 fee-and-expense award therefore represents
approximately 25 percent of the estimated fund as a whole.
9.

At 25 percent of the value of the fund as a whole, the fee-and-expense award

would be well within the range of reasonable percentage-fee awards in this Circuit. In approving

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the Illinois fiber-optic-cable right-of-way fee award, Judge Rebecca Pallmeyer of the Northern
District of Illinois found that the 24.4% fee requested was "well within -

and indeed below-

the market rate for high-risk, contingent-fee cases like this one." McDaniel v. Qwest Commc 'ns

Corp., Civil Action No. 05 C 1008, Order Awarding Attorneys' Fees and Reimbursing Expenses
to Settlement Class Counsel and Approving Payment of Incentive Awards to Class
Representatives at 7 (N.D. Ill. Aug. 29, 2011). As Judge Pallmeyer explained:
Counsel's request for an award of attorneys' fees and expenses ... is well
justified under the percentage approach. Indeed, the evidence shows that, under
the percentage approach, the market would have set a higher fee, equivalent to at
least one-third of the recovery. As decisions of the Seventh Circuit have
confirmed, the real-world market range for contingent fee cases is 33% to 40%.
Gaskill, 160 F.3d at 362-63 (affirming award of38% of recovery); KirchofJv.
Flynn, 786 F .2d 320, 323 (7th Cir. 1986) (observing that "40% is the customary
fee in tort litigation" and noting, with approval, contract providing for one-third
contingent fee if litigation settled prior to trial). Furthermore, the requested fee
here includes the reimbursement of litigation expenses, which in most cases are
the subject of an additional award. See Conte, Attorney Fee Awards, § 2.8 at 38
(Cum. Supp. May 2002) ("The prevailing view is that expenses are awarded in
addition to the fee percentage.").

Id.; see also, e.g., Uhl v. Thoroughbred Technology and Telecommunications, Inc., No. IPOO1232-C-B/S, 2001 WL 987840, at *4-5 (S.D. Ind. Aug. 28,2001) (approving fee of25% of value
created for class in multi-state fiber-optic-cable right-of-way litigation), afJ'd, 309 F.3d 978 (7th
Cir. 2002).
10.

A lodestar crosscheck is also appropriate. See Williams v. Rohm and Haas Pension

Plan, 658 F.3d 629,636 (7th Cir. 2011). In terms oflodestar, the overlapping nature of fiberoptic-cable right-of-way discovery, motions practice, research, litigation, and settlement efforts
across the country for more than a decade settlement agreements -

which culminated in this and the other state

have prevented Settlement Class Counsel from segregating their fees and

expenses into a "Wisconsin-only" category or similar categories for other states. See Declaration

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of Settlement Class Counsel Dan Millea ~ 16; Declaration of Settlement Class Counsel Irwin
Levin ~ 22. Nonetheless, it is apparent that the Wisconsin fee-and-expense request is amply
supported by a lodestar crosscheck based on the time and expense incurred, and fees available, in
resolution of all the state-by-state settlements of the fiber-optic-cable right-of-way litigation.
11.

The total attorneys' fees and expenses incurred by Settlement Class Counsel in the

decade-plus of right-of-way litigation culminating in this Settlement, excluding local counsel fees
and expenses, were just over $60,000,000 as of March 31, 2011; that number has since increased
as Settlement Class O;mnsel have performed substantial work in seeking approval of the
settlements in courts around the country, and it will continue to do so until the settlements are fully
administered. See Millea Decl.

~

17; Levin Decl.

~

23. The Settling Defendants in the right-of-

way litigation have agreed to pay a total of$41,500,000 in attorneys' fees and expenses in
settlement of the forty-six state actions (and the District of Columbia) nationwide. Millea Dec!.
~

17; Levin Dec!.

~

23. Therefore, the incurred fees and expenses are subject to a negative

multiplier - roughly .70 12.

on a nationwide basis and with a pro-rata Wisconsin allocation.

Here, there also are no objections to the proposed fee-and-expense award, a factor

for the Court's consideration. See Armstrong v. Bd. ofSchool Directors of City ofMilwaukee,
616 F.2d 305,326 (7th Cir. 1980); see, e.g., Maley v. Del Global Technologies Corp., 186 F.
Supp. 2d 358,373 (S.D.N.Y 2002) ("Not one person, company, or institution has filed an
objection to the fee request or the expense reimbursement sought. As was true with the
underlying settlement, this overwhelmingly positive response by the Class attests to the approval
of the Class with respect to the Settlement and the fee and expense application."). The Courtapproved notice stated that, at the conclusion of the fairness hearing, counsel would seek a feeand-expense award up to $1,093,000. The notice also informed class members of their ability to

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object to the fee-and-expense request. No class member objected to it. The absence of
objections or disapproval by class members to Settlement Class Counsel's fee-and-expense
request further supports finding it reasonable.

WHEREFORE it is ORDERED that the motion for an award of attorneys' fees and
expenses to Settlement Class Counsel is GRANTED.
It is further ORDERED that the Court approves a fee-and-expense award of$I,093,000

to Settlement Class Counsel,
It is further ORDERED that the Settling Defendants shall deposit the fee-and-expense

award approved by the Court into the interest-bearing escrow account -

established as a

Qualified Settlement Fund within the meaning of Treasury Regulation § 1.468B and as a trust
under state law - with U.S. Bank in New York, New York, no later than ten (10) days after the
date on which the Order and Judgment becomes Final, that any alleged or actual civil liability
against the Settling Defendants for attorneys' fees arising out ofthe tort claims resolved by the
Wisconsin Class Settlement Agreement approved by this Court is satisfied and extinguished
through the Settling Defendants' payment of the fee-and-expense award, and that any interest
earned on the escrow account shall be recognized as gross income of the Qualified Settlement
Fund; and
It is further ORDERED that appointment of GFRG as the Fund Administrator for the

escrow account is hereby confirmed and that the escrow account shall be governed by the
Escrow Agreement entered into as of August 26,2011 between Settlement Class Counsel, U.S.
Bank, and GFRG.

Honora Ie Stephen L. Crocker
United States Magistrate Judge

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