ROBERT C. JONES, District Judge.
After four years of hard-fought litigation, the parties have reached a settlement to resolve all of Plaintiffs' claims as to the alleged harms they suffered in Clark County foster care, including any claims for attorneys' fees and costs. Under the settlement, the four minor Plaintiffs and three adult Plaintiffs are to receive a cumulative total of $1,575,000.
Plaintiffs and Clark County Defendants now petition this Court for approval of the negotiated fees and costs settlement pursuant to 42 U.S.C. Section 1988. As demonstrated below, Plaintiffs are entitled to recover their fees and costs, and the amount negotiated is fair and reasonable. The settlement amount does not come close to compensating Plaintiffs' counsel for the more than 17,000 hours of work expended on this case along with the roughly $306,439.06 they have spent out-of-pocket. There is a strong presumption that the lodestar method results in a reasonable fee, Perdue v. Kenny A., 559 U.S. 542, 552-53 (2010), and the compromise of $500,000 in fees represents less than 15 percent of Plaintiffs' counsel's lodestar, which is $3,355,260.50.
Plaintiffs are former foster children who were in the custody of Clark County's Department of Family Services ("DFS"). They filed suit on April 13, 2010, seeking redress for alleged harms suffered while in foster care.
Following four years of litigation, seven Plaintiffs remain in the case, four of whom are minors. A brief summary of the minor Plaintiffs' claims in the SAC are as follows:
These children's path to settlement has been long and complex. They initially sued County and State Defendants, who filed a total of five motions to dismiss at three different stages, along with multiple joinders and a motion for reconsideration. After the Court granted the initial motions to dismiss in October 2010, Plaintiffs appealed to the Ninth Circuit, which reversed in part and remanded the case. Based on the motion to dismiss rulings and the appeal, Plaintiffs amended their complaint twice.
The discovery that began in the summer of 2010 and re-commenced in the fall of 2012 was protracted and hard fought and filled with motion practice by Plaintiffs and Defendants. Plaintiffs took nearly forty depositions, and County Defendants deposed all but one Plaintiff in addition to taking six other depositions. County Defendants produced over 120,000 pages of documents that Plaintiffs' counsel organized and reviewed. Declaration of Mark W. Danis, Dkt. 389, filed under seal in support of Plaintiffs' Petition and Memorandum in Support of Negotiated Attorneys' Fees and Costs ("Danis Decl.") ¶ 6.
The parties' extensive litigation efforts are demonstrated by the 400-plus docket entries in this case to date.
As the case neared the close of discovery, Plaintiffs and Defendants engaged multiple expert witnesses in the following fields: child welfare systems, child psychology, child psychiatry, and life care planning.
On May 27, 2014, Magistrate Judge Leen convened the parties for a settlement conference. Dkt. 333. After an all-day in-person meeting and follow-up conference call discussions over a period of approximately one month, the parties reached agreement on settlement amounts. Declaration of Leecia Welch, Dkt. 390, filed in support of Plaintiffs' Petition and Memorandum in Support of Negotiated Attorneys' Fees and Costs ("Welch Decl.") ¶ 15. County Defendants have agreed to pay a total of $1.575 million to the seven Plaintiffs who remain in this case. Petition at 2. The settlement for the four minor Plaintiffs totals $925,000. Id. The remaining amount — $650,000 — represents the settlement amount for the three Plaintiffs who were minors when they filed this suit but who have now reached the age of majority.
The parties also reached a compromise on Plaintiffs' claim for attorneys' fees and costs pursuant to 42 U.S.C. Section 1988. The parties have agreed to settle the claim for fees and costs for a total of $500,000. Petition at 4. County Defendants have agreed to pay attorneys' fees and costs directly; thus, no fees or costs will be deducted from the recovery of the Plaintiffs. Id.; Welch Decl. ¶ 15.
Following agreement on the basic terms of the settlement, Plaintiffs' counsel spent substantial time over the next five months to bring the case to closure. Welch Decl. ¶ 16. The unique circumstances of each Plaintiff, coupled with several being minors and the fact that they live in three different states, necessitated a variety of different settlement structures. After several months of negotiation and research as to viable financial alternatives, the parties agreed that the four minor Plaintiffs will receive their settlement funds through one or more of: a special needs trust, an annuity, and a blocked financial account. Welch Decl. ¶ 16. In addition to selecting these settlement structures, the parties resolved numerous other issues before finalizing the settlement terms. Welch Decl. ¶ 16.
Given the resources expended over the course of nearly five years, the negotiated fee amount is fair and reasonable. Indeed, the amount that Plaintiffs have agreed to accept represents a reduction of more than 85 percent off Plaintiffs' lodestar claim. Further, the compromise is intended to cover Plaintiffs' costs, in addition to their fees, and Plaintiffs' counsel have expended more than $306,439.06 in costs and expenses litigating this case. Danis Decl. Ex. B, Welch Decl. Ex. B, Declaration of Bruno Wolfenzon, Dkt. 391, filed in support of Plaintiffs' Petition and Memorandum in Support of Negotiated Attorneys' Fees and Costs ("Wolfenzon Decl.") Ex. B.
Pursuant to 42 U.S.C. Section 1988, courts have authority to award attorneys' fees in actions brought under 42 U.S.C. Section 1983. The Ninth Circuit has interpreted this statute to mean that "a court's discretion to deny fees under Section 1988 is very narrow and . . . fee awards should be the rule rather than the exception." Mendez v. Cnty. of San Bernardino, 540 F.3d 1109, 1126 (9th Cir. 2008) (quoting Herrington v. Cnty. of Sonoma, 883 F.2d 739, 743 (9th Cir. 1989)). This interpretation supports Congress's intent that Section 1988 "provide many victims of civil rights violations with effective access to the judicial process." See City of Riverside v. Rivera, 477 U.S. 561, 576 (1986).
Through this settlement Plaintiffs are the prevailing party for purposes of recovering their reasonable fees and costs. The parties entered into a settlement providing for payments to each Plaintiff and for payment to Plaintiffs' counsel of an agreed amount for fees and costs under Section 1988. Pursuant to the settlement agreement, payment of the negotiated fees and costs will be made directly to Plaintiffs' counsel and will not be deducted from any individual Plaintiff's settlement amount.
Settlements involving minors require the court to play an oversight role "to determine whether the settlement serves the best interests of the minor." Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011) (citations omitted). The court's inquiry, however, should not "place[] . . . undue emphasis on the amount of attorney's fees provided for in a settlement. . . ." Id. The Ninth Circuit has clarified that when reviewing a settlement agreement involving minor plaintiffs, "[m]ost importantly, the district court should evaluate the fairness of each minor plaintiff's net recovery without regard to the proportion of the total settlement value designated for adult co-plaintiffs or plaintiffs' counsel — whose interests the district court has no special duty to safeguard." Id. at 1182 (citing Dacanay v. Mendoza, 573 F.2d 1075, 1078 (9th Cir. 1978)).
In Robidoux, the Ninth Circuit reversed where the court below looked to state law in reviewing the minors' settlement. 638 F.3d at 1182. The district court had rejected the proposed settlement because it allowed for 56 percent of the total settlement to go toward attorney's fees and the practice in state court was to award attorneys a maximum of 25 percent of the settlement. Id. at 1179-80. In reversing, the Ninth Circuit held that "[s]o long as the net recovery to each minor plaintiff is fair and reasonable in light of their claims and average recovery in similar cases, the district court should approve the settlement as proposed by the parties." Id. at 1182.
Here, the net amounts to the minor Plaintiffs are fair and reasonable. Each will receive between $100,000 and $350,000, with no deduction for attorneys' fees or costs. Petition at 3, 4. These awards match or exceed settlements that courts have approved in other litigation where foster children sued Clark County Department of Family Services for harms suffered while in County custody. See, e.g., Order on Petition for Compromise of Minors' Claims with Clark County, 4, Fullmer v. Brown, No. 2:09-cv-01442-BES-PAL (D. Nev. Dec. 7, 2011) (approving net awards of $20,000; $30,000; and $100,000 to minor plaintiffs); Order at 3, Johnson v. Clayton, No. 2:08-cv-01810-RCJ-LRL (D. Nev. Dec. 28, 2010) (approving net awards of $36,769.17 and $33,407.09 to the two minor plaintiffs); Order on Amended Petition to Approve Compromise Settlement and Distribution at 4, Mix v. Jones-Johnson, No. 2:06-cv-411-RLH-LRL (D. Nev. Aug. 19, 2009) (approving net awards of $11,500; $34,500; and two awards of $92,000 to the four minor plaintiffs).
Even if the Court were to look to the customary fee percentage taken from settlements of minors in Nevada, the fee proposal here — less than 25 percent of the total settlement amount — is less than what courts have approved in other cases. Order at 2, Johnson v. Clayton (approving a settlement where 33 percent of the total award is made as payment for attorneys' fees); Order at 6, Mix v. Jones-Johnson (approving settlement where 35 percent of the total award is designated as attorneys' fees).
On November 21, 2014, Plaintiffs separately filed a petition for this Court's approval of the minors' settlement. Plaintiffs outline below the reasonableness of the attorneys' fee settlement in an effort to assist the Court's inquiry into whether the overall settlement agreement is in the minors' best interests. For the reasons set forth below, there can be no question that the fees and costs portion of the overall settlement is reasonable and should be approved along with the petition to approve the minors' compromise.
The Supreme Court explained in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), that the "most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." This figure, the "lodestar," is the presumptive reasonable fee. Id. at 433. Once the lodestar is reached, the court may adjust it upward or downward based on the factors that the Ninth Circuit outlined in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975). Fed. Deposit Ins. Corp. v. Lake Elsinore 521, LLC, No. 2:11-cv-00386-GMN-LRL, 2011 U.S. Dist. LEXIS 126866, **6-7 (D. Nev. Nov. 1, 2011) (explaining that "[c]alculation of reasonable attorney's fees is a two-step process" consisting of first calculating the lodestar and second examining the award in light of the Kerr factors); see also LR 54-16(b)(3).
Here, Plaintiffs have agreed to settle their claim for attorneys' fees and costs for a fraction of the full amount to which their counsel are entitled based on the lodestar calculation. To achieve the results in this case — obtaining payment of over $1.5 million to their clients — Plaintiffs' counsel expended 17,480.20 hours of compensable time. Danis Decl. ¶ 12; Welch Decl. ¶ 13; Wolfenzon Decl. ¶ 5. This equates to a lodestar of $3,355,260.50 at reasonable hourly rates for the Las Vegas Market. Danis Decl. ¶ 12; Welch Decl. ¶ 13; Wolfenzon Decl. ¶ 5. The fees and costs settlement also constitutes less than 25 percent of the total recovery in the case, far below what courts in Nevada have held to be reasonable percentages when taken as a contingency fee.
Complete time records and hourly rate information are attached as exhibits to the declarations in support of this Petition.
For purposes of this case, Plaintiffs' counsel have calculated their lodestar using reasonable hourly rates charged for similar work in the Clark County legal market. These rates range from $200 per hour for a junior associate with 0-3 years of experience to $250 per hour for a senior partner. Wolfenzon Decl. ¶ 7; Declaration of Karie Wilson, Dkt. 392, filed under seal in support of Plaintiffs' Petition and Memorandum in Support of Negotiated Attorneys' Fees and Costs ("Wilson Decl.") ¶ 4. The Clark County rates that Plaintiffs use here are at or below rates that courts in the District of Nevada have approved in other cases. See, e.g., Mendez v. Reinforcing Ironworkers Union Local 416, No. 2:09-cv-02332-LRH-NJK, 2013 U.S. Dist. LEXIS 120893, **11-12 (D. Nev. Aug. 23, 2013) (awarding $415 per hour to an attorney with 16 years of experience); Van Asdale v. Int'l Game, Tech., No. 3:04-cv-00703-RAM, 2011 U.S. Dist. LEXIS 56715, *8-11 (D. Nev. May 24, 2011) (awarding $450 per hour for an attorney with 40 years of experience, $350 per hour for a 19-year attorney, and $120 per hour for paralegal work).
In arriving at their lodestar, Plaintiffs' counsel exercised billing judgment. Senior attorneys have reviewed the time records from their respective firms to ensure that the services for which time is submitted were reasonable and were actually and necessarily performed in the prosecution of this case. Danis Decl. ¶ 10; Welch Decl. ¶ 11; Wolfenzon Decl. ¶ 5. For example, Morrison & Foerster has written off in excess of $600,000 of time in an exercise of billing judgment. Danis Decl. ¶ 9. The National Center for Youth Law similarly has not billed for time spent by legal personnel who worked fewer than 30 hours on the case. Welch Decl. ¶ 11. Morrison & Foerster has waived its claim to travel time and the National Center for Youth Law has charged only half-time for travel. Danis Decl. ¶ 9; Welch Decl. ¶ 11. Local counsel Alverson Taylor Mortenson & Sanders is waiving its right to recover fees. Wilson Decl. ¶ 3. The fees presented in this Petition were reasonably and necessarily incurred in the course of this four-and-a-half-year litigation, involving three rounds of motions to dismiss, significant additional motion practice, and extensive fact and expert discovery. Danis Decl. ¶ 6; Welch Decl. ¶¶ 8-11; Wolfenzon Decl. ¶¶ 4, 5; see also § II, supra.
In Kerr, the Ninth Circuit enumerated twelve factors for courts to consider in determining whether the lodestar should be adjusted in the course of awarding attorneys' fees. 526 F.2d at 70.
A.
Plaintiffs could not have achieved this result without significant expenditure of attorney time and resources, as demonstrated by Plaintiffs' counsel's lodestar, which totals $3,355,260.50 at rates typically charged in the Clark County legal market. § III(B)(1), supra. Plaintiffs have substantially achieved the goals of the lawsuit by winning significant monetary damages for the harms they allegedly suffered while in foster care.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
Since 2009, Plaintiffs' counsel have incurred significant costs and out-of-pocket litigation expenses in the prosecution of this case. Danis Decl. ¶ 8; Welch Decl. ¶ 10. "Costs" include those costs allowable under 28 U.S.C. Section 1920, as itemized in the Bill of Costs attached as exhibits to the Declarations of Mark Danis, Leecia Welch, and Bruno Wolfenzon. "Out-of-pocket litigation expenses" include those expenses that are ordinarily charged to fee-paying clients and thus are recoverable as part of the overall attorneys' fees award. Dang v. Cross, 422 F.3d 800, 814 (9th Cir. 2005); Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994); see also Woods v. Carey, 722 F.3d 1177, 1179 n.1 (9th Cir. 2013) ("Expenses normally charged to fee-paying clients include `photocopying, paralegal expenses, and travel and telephone costs.'") (quoting Thornberry v. Delta Air Lines Inc., 676 F.2d 1240, 1244 (9th Cir.1982)).
In total, Plaintiffs' counsel have incurred $124,064.84 in costs, including photocopying and hearing and deposition transcript charges, which are recoverable as a part of Plaintiffs' fees and costs award. Additionally, Plaintiffs' counsel have incurred $182,374.22 in other out-of-pocket litigation expenses that were necessary and reasonable for representation, including travel for depositions and court appearances, long-distance telephone costs, postage, and expert fees.
Plaintiffs' counsel is not seeking separate reimbursement of these amounts, and out-of-pocket litigation expenses and costs will be paid out of the negotiated fees and costs award. Welch Decl.; Petition at 4.
Plaintiffs have achieved significant results in this case, having reached a settlement of $1.575 million for the four children and three adult Plaintiffs. To reach a complete settlement of the case, the parties agreed to a negotiated compromise of $500,000 in attorneys' fees and costs, which will not come out of Plaintiffs' recovery. The amount that Plaintiffs' counsel will receive under the settlement agreement is fair and reasonable, and constitutes less than 25 percent of the total settlement. For the reasons set forth above, Plaintiffs respectfully request that the Court approve the parties' negotiated compromise of attorneys' fees and costs, to be paid as described in the Settlement Agreement and Release.
ORDER.
IT IS SO ORDERED.