SHWARTZ, United States Magistrate Judge.
This matter is before the Court by way of Plaintiffs' motions for: (1) certification of the settlement class; (2) final approval of the class settlement embodied in the agreement dated February 11, 2010; (3)
The plaintiffs initiated two class actions against Defendants Volkswagen of America, Inc., Volkswagen AG, Volkswagen BG, and Volkswagen Group of America ("VWGoA") (collectively "VW") and Audi AG and Audi of America, LLC (collectively "Audi")
According to their Fourth Amended Complaints,
The defendants filed motions to dismiss and quash service upon the foreign defendants, (Dewey, Docket Entry Nos. 13, 24, 29, 41, 84; Delguercio, Docket Entry Nos. 16, 18), and the plaintiffs sought the issuance of letters rogatory and withdrew the same. (Dewey, Docket Entry Nos. 104, 108, 109, 110; Delguercio, Docket Entry No. 79.) The motions were denied with respect to all defendants except for Volkswagen de Mexico. (Dewey, Docket Entry No. 55.)
After more than two years of discovery, the parties notified the Court that they were engaged in serious settlement discussions, but time was needed to obtain confirmatory discovery. As a result, in September 2009, the Court suspended the pretrial deadlines and set deadlines for the parties to file a joint motion for preliminary approval of a settlement class and class settlement, and for the appointment of class counsel. (Dewey, Docket Entry Nos. 154, 155, 157, 160, 162; Delguercio, Docket Entry Nos. 113, 114, 116, 118, 120.) At the time, class and merits fact discovery were scheduled to close on September 30, 2009, expert discovery was scheduled to be completed by January 27, 2010, and the Final Pretrial Conference was to occur on February 25, 2010. (Dewey, Docket Entry No. 149; Delguercio, Docket Entry No. 110.)
On November 10, 2009, the United States District Judge approved the parties' request to consent to Magistrate Judge jurisdiction "to conduct all settlement proceedings and enter final judgment," pursuant to 28 U.S.C. § 636(c).
On January 29, 2010, the parties filed a joint motion for preliminary approval of a class settlement, preliminary approval of a settlement class, and appointment of class counsel. (Dewey, Docket Entry No. 163; Delguercio, Docket Entry No. 121.) A telephonic hearing on this motion was held on the record on February 3, 2010. The Court considered the written submissions, oral arguments, and governing law and directed that, no later than February 5, 2010, the parties submit revised proposed settlement documents that included certain provisions for notice to the putative class and changes to the type of documentation needed to obtain reimbursement (Dewey, Docket Entry No. 168; Delguercio, Docket Entry No. 125.) This deadline was ultimately extended until February 11, 2010. (Dewey, Docket Entry Nos. 171, 172; Delguercio, Docket Entry Nos. 125, 126.)
The Order granting preliminary approval of a settlement class, class settlement, and appointment of class counsel was signed on February 17, 2010, and entered on February 23, 2010. (Dewey, Docket No. 175; Delguercio, Docket No. 129.) The Order was amended on March 26, 2010, and again on April 14, 2010. (Dewey, Docket No. 176, 178; Delguercio, Docket No. 130.) The Amended Preliminary Approval Order provides for preliminary certification of classes described as:
and
The proposed settlement provides for: (1) educational preventative maintenance information for all class members; (2) inspection, modification, and repair of plenum and sunroof drain systems for certain qualifying class members; (3) monetary reimbursement for repair and vehicle damage for certain qualifying class members to be paid out of an $8 million reimbursement fund; (4) donation of all unclaimed reimbursement funds to an educational, charitable, or research facility after five years; and (5) payments of $10,000 to each representative plaintiff to be paid separate from the reimbursement fund. (Dewey, Docket Entry No. 174 Attach. 1 at 15-24; Delguercio, Docket Entry No. 128 Attach. 1 at 15-24.) The defendants also agreed to pay class counsel's fees and expenses, but no agreement concerning the amounts or method to calculate the fees was reached. (Id. at 36 ¶¶ 15.2-15.3.)
The Amended Preliminary Approval Order also directed that notice of the proposed settlement be communicated in the following ways: (1) direct mail to all original
The settlement administrator, Rust Consulting, established the court-ordered website which, as of July 22, 2010, had 19,891 unique visitors. (Id. ¶ 6.) As of July 22, 2010, Rust Consulting also received 1,961 emails and 14,918 claim forms. (Id. ¶¶ 6, 10.) Rust Consulting also established a toll-free number which, as of July 22, 2010, received 18,137 calls. (Id. ¶ 5.)
The Amended Preliminary Approval Order also appointed Mazie Slater Katz & Freeman and Schoengold & Sporn, P.C. (f/k/a Schoengold Sporn Laitman & Lometti, P.C.) as co-class counsel, and established deadlines for filing motions for final approval and for attorneys' fees and costs. (Dewey, Docket Entry No. 178 at 4-5; Delguercio, Docket Entry No. 130 at 4-5.) Subsequent Orders adjusted the deadlines to file motions for final approval of a settlement class and the class settlement, and for attorneys' fees and resolved disputes concerning confirmatory discovery. (Dewey, Docket Entry Nos. 181, 185, 191; Delguercio, Docket Entry Nos. 132, 134.)
Consistent with the Orders, on June 9, 2010, the plaintiffs filed their motion for attorneys' fees, seeking an award of $22.5 million. This number was based upon the plaintiffs' determination that the value of the settlement exceeded $142 million and their assertion that they were entitled to 15.83% of the settlement. (Dewey, Docket Entry Nos. 194-201.) On July 23, 2010, the parties notified the Court that the plaintiffs agreed to seek and the defendants agreed not to oppose having the settlement valued at $90 million. (Dewey, Docket Entry No. 238.) Despite the reduction in the value the plaintiffs assigned to the settlement, the plaintiffs repeated their request for the $22.5 million fee award
In support of their valuation figure, the plaintiffs have submitted the expert reports of economist Dr. George Eads and
On June 17, 2010, the plaintiffs filed their motion for final approval of the settlement class and class settlement. (Dewey, Docket Entry No. 213.) On June 28, 2010, the defendants filed a brief joining in the request for final approval of the settlement but disputing the plaintiffs' characterization of the pretrial process, the value of the settlement, and the likelihood that the plaintiffs could succeed with class certification or prevail at trial. (Dewey, Docket Entry Nos. 215, 217.) In addition to the positions of the parties, the Court considered objectors from 203 putative class members
On July 26, 2010, the Court conducted a Fairness Hearing. During the hearing, the Court heard oral arguments from the parties and objectors who sought to be heard and heard testimony from Dr. Eads.
Based upon the record and the governing law, the Court makes the findings and conclusions set forth in this Opinion.
The Class Action Fairness Act of 2005 (CAFA) grants district courts original jurisdiction over any civil action involving a proposed class of at least 100 members "`in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interests and costs, and is a class action in which ... any member of a class of plaintiffs is a citizen of a State different from any defendant.'" DiCarlo v. St. Mary Hosp., 530 F.3d 255, 261 (3d Cir. 2008) (citing the district court's application of 28 U.S.C. § 1332(d)(2)); see also 28 U.S.C. § 1332(d)(5)(B).
These requirements are satisfied here. First, the dispute involves more than one million class members. (Dewey, Docket Entry No. 213 Attach. 3 at 6.) Second, the amount in controversy exceeds $5,000,000 in the aggregate, exclusive of interest and costs. (Dewey, Docket Entry Nos. 86 ¶ 14 and 87 ¶ 12; Delguercio, Docket Entry No. 63 ¶ 12.) The monetary component of the settlement alone is $8,000,000. (Dewey, Docket Entry No. 174 ¶ 5; Delguercio, Docket Entry No. 128 ¶ 5.) Third, at least one named plaintiff is a citizen of a state different from the defendants. The named plaintiffs are citizens of
Personal jurisdiction exists over the parties because the defendants regularly do business in this District and the named plaintiffs have, by filing this action, voluntarily submitted to this Court's jurisdiction. As to out-of-state class members, sufficient notice of the settlement and an opportunity to object have been provided, (Dewey, Docket Entry Nos. 175, 176, 178, 181, 216), thereby satisfying due process and the requirements of Fed.R.Civ.P. 23(b)(3). Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812-13, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985); In re Prudential Ins. Co. of Am. Sales Practice Litig., 148 F.3d 283, 306 (3d Cir.1998) ("In re Prudential"); Varacallo v. Mass. Mut. Life Ins. Co., 226 F.R.D. 207, 224 (D.N.J.2005).
For the Court to certify a class, the plaintiffs must satisfy all of the requirements of Rule 23(a), and one of the requirements of Rule 23(b). Fed.R.Civ.P. 23(a)-(b). Class certification cannot be presumed and a class may be certified only after a rigorous analysis demonstrates that all Rule 23 requirements are met. See In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir.2008). Even where a plaintiff seeks certification of a settlement class,
Under Rule 23, a class action is appropriate when:
Fed.R.Civ.P. 23(a). These prerequisites are known as numerosity, commonality, typicality, and adequacy. Baby Neal v. Casey, 43 F.3d 48, 55 (3d Cir.1994). They are "meant to assure both that class action treatment is necessary and efficient and
The Court must first consider whether the class is so numerous that joinder of all members is impracticable.
Here, the estimated number of class members exceeds 5.5 million. (Dewey, Docket Entry No. 213 Attach. 3 at 6.) The class definition includes owners or lessees of approximately 3 million 1997-2009 VW and Audi vehicles. (Id.) A lawsuit involving such a large number of individual potential plaintiffs would be inefficient, unwieldy, and difficult for both the Court and the parties to manage.
Second, the Court must consider whether there are questions of law or fact shared among the named plaintiffs and all members of the class. For a class to satisfy the commonality requirement, "the named plaintiffs [must] share at least one question of fact or law with the grievances of the prospective class." In re Prudential, 148 F.3d at 310 (citing Baby Neal, 43 F.3d at 56). Though identical claims ease satisfaction of this requirement, "factual differences among the claims of the putative class members do not defeat certification." Id. at 311 (citations omitted). The key consideration is whether the class seeks a remedy to a grievance involving common questions of law and fact. Eisenberg v. Gagnon, 766 F.2d 770, 786 (3d Cir.1985). Thus, it is usually relatively simple to satisfy this requirement. In re Ikon Office Solutions,
While the Court acknowledges that the case involves multiple manufacturers, multiple car models, and multiple model years, some common factual and legal questions arise from complaints about the plenum and sunroof drain systems that each class member's vehicle contained. Factually, the systems serve the same purpose, namely to keep water from seeping into the vehicle, and the class representatives have all complained that the systems have failed to accomplish this purpose. (Dewey, Docket Entry Nos. 86 ¶ 3 and 87 ¶ 8; Delguercio, Docket Entry No. 63 ¶ 8.) Legally, the success of each claim hinges on similar facts and requires proof regarding the design of these systems and the maintenance instructions and whether they fulfilled their purposes. The named plaintiffs and the potential class members are situated such that the defendants owed them the same duties and the alleged failure to fulfill these duties allegedly caused the same damage to all class members. Accordingly, there are questions of law and fact common to the settlement class.
Third, the Court must determine whether the claims of the representative plaintiffs are typical of those of the class members. Specifically, "[t]ypicality lies where there is a strong similarity of legal theories ... or where the claims of the class representatives and the class members arise from the same alleged course of conduct by the defendant." In re Prudential, 962 F.Supp. at 518 (internal citations omitted). This factor also considers "whether the action can be efficiently maintained as a class and whether the named plaintiffs have incentives that align with those of absent class members so as to assure that the absentees' interests will be fairly represented." Baby Neal, 43 F.3d at 57. Like the commonality requirement, however, all putative class members need not share identical claims. In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 531-32 (3d Cir.2004) ("In re Warfarin"). Indeed, "cases challenging the same unlawful conduct which affects both the named plaintiffs and the putative class usually satisfy the typicality requirement irrespective of varying ... fact patterns." Stewart, 275 F.3d at 227 (citation omitted). Put differently, the typicality requirement is met, regardless of factual differences, as long as the same unlawful conduct was directed at or affected both the plaintiffs and the absent class members. In re Warfarin, 391 F.3d at 531-32; Cannon, 184 F.R.D. at 544 (claims are typical if they arise from the same course of conduct and are based on the same legal theory).
In the present case, the named plaintiffs and each potential class member is or was an owner or lessee of one or more of the vehicles that the defendants designed and/or manufactured. Additionally, the named plaintiffs and the potential class members each owned or leased cars with the plenum or sunroof drain systems that allegedly failed to prevent water infiltration, and each either suffered or risked suffering water damage as a result. Moreover, each was allegedly provided insufficient maintenance instructions to avoid damage. (Dewey, Docket Entry Nos. 86 at 2-9 and 87 at 8, 10; Delguercio, Docket Entry No. 63 at 8, 10.) Thus, each potential class member was subjected to the same conduct in which the defendants engaged and this conduct forms the basis of the named plaintiffs' claims. Accordingly, the named plaintiffs' claims are typical of the claims of the other class members.
Fourth, the Court must be satisfied that the representative parties will "fairly and adequately protect the interests of the class." In re Warfarin, 391 F.3d at 532. This inquiry "has two components designed to ensure that absentees' interests are fully pursued." Id. (quoting Georgine v. Amchem Prods., Inc., 83 F.3d 610, 630 (3d Cir.1996)). First, the Court must assess whether the named plaintiffs' counsel will adequately represent the class. In re Warfarin, 391 F.3d at 532; In re Gen. Motors, 55 F.3d at 800. To this end, courts consider whether the plaintiffs' counsel is qualified, experienced, and able to conduct the litigation. In re Prudential, 148 F.3d at 312. Second, courts must evaluate "conflicts of interest between named parties and the class they seek to represent." In re Warfarin, 391 F.3d at 532. This requires the Court to determine whether or not there is "`antagonism between [the named plaintiffs'] objectives and the objectives of the [class]', [which constitutes] a `legally cognizable conflict of interest' between the two groups." In re Ins. Brokerage Antitrust Litig., Civ. No. 04-5184, 2007 WL 542227, at *15 (D.N.J. Feb. 16, 2007) (quoting Jordan v. Commonwealth Fin. Sys., Inc., 237 F.R.D. 132, 139 (E.D.Pa.2006)). A conflict will not be sufficient to defeat class certification "unless [that] conflict is apparent, imminent, and on an issue at the very heart of the suit." Id. (internal quotation marks omitted).
In the present case, the first prong of adequate representation is met. Class counsel Adam M. Slater and Samuel P. Sporn and their respective law firms are experienced in class action litigation and have prosecuted numerous class actions throughout the United States. (See Dewey, Docket Entry No. 195 Attach. 1 ¶ 4; Dewey, Docket Entry No. 196 Attach. 1 ¶¶ 1, 5.) Their conduct in this case is consistent with their well-deserved reputations. They conducted extensive discovery, investigated public and private sources of information relating to the claims, examined the evidence produced during discovery, consulted with a variety of technical automotive experts, and researched the law of all fifty states. (Dewey, Docket Entry No. 194 at 26-28; see Dewey, Docket Entry No. 196 Attach. 1 at 4-7.) Moreover, the record reflects hard fought motion practice on both discovery and merits issues that has continued even through the Fairness Hearing. (See, e.g., Dewey, Docket Entry Nos. 43, 46, 49, 51, 53, 70, 72, 73, 74, 75, 77, 78, 97, 99, 100, 102, 105, 111, 115, 117, 119, 124, 128, 129, 130, 131, 132, 138, 144, 145, 146, 147, 152, 153, 217, 219; Delguercio, Docket Entry Nos. 15, 26, 29, 30, 32, 47, 48, 53, 57, 58, 59, 69, 71, 72, 77, 103, 104, 111, 112, 114, 132.) In addition, they engaged in lengthy and complex settlement negotiations in an effort to resolve an alleged defect afflicting more than 3 million cars. (Dewey, Docket Entry No. 194 at 26; see Dewey, Docket Entry No. 196 Attach. 1 at 6-7; see also Dewey, Docket Entry No. 213 Attach. 3 at 6.) Together with the well-represented defendants, they devised a plan to address these alleged defects by offering class members, depending on their vehicle, repair of existing problems, reimbursement for past repairs, and information to prevent future damage. Accordingly, the Court finds that the attorneys are qualified, experienced, and able to conduct the litigation of this class action.
The second prong is also satisfied as there are no conflicts of interest between the named plaintiffs and the class members. The named plaintiffs are in the
Accordingly, the Court appoints Jacqueline Delguercio, Lynda Gallo, Francis Nowicki, Kenneth Bayer, John M. Dewey, Patrick DeMartino, Patricia Romeo, Ronald B. Marans, and Edward O. Griffin as class representatives and Adam M. Slater and his firm Mazie Slater Katz & Freeman LLC and Samuel P. Sporn and his firm Schoengold & Sporn, P.C. as co-lead class counsel.
Having determined that the class satisfies Rule 23(a)'s requirements of numerosity, commonality, and typicality, and it has adequate representation, the Court now considers whether the proposed class falls within one of the categories set forth in Rule 23(b). The named plaintiffs seek class certification under Rule 23(b)(3) and, as such, must demonstrate that "questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3); see, e.g. Dal Ponte v. Am. Mortgage Express Corp., Civ. No. 04-2152, 2006 WL 2403982, at *4 (D.N.J. Aug. 17, 2006); Cannon, 184 F.R.D. at 545. The Court will address the predominance and superiority requirements in turn.
To determine whether common issues predominate over questions affecting only individual members, the Court must look at each claim upon which the plaintiffs seek recovery and identify the law that applies to the claim. See In re Hydrogen Peroxide, 552 F.3d at 311 (noting that the predominance inquiry requires an examination of the elements of the plaintiffs' claims "through the prism of Rule 23"). Once the court identifies the applicable law, it must determine whether generalized evidence exists to prove the elements of the plaintiffs' claims on a simultaneous, class-wide basis, or whether proof will be overwhelmed by individual issues. Lyon v. Caterpillar, Inc., 194 F.R.D. 206, 210 (E.D.Pa.2000). While the "presence of individual questions ... does not mean that the common questions of law and fact do not predominate," In re Ins. Brokerage Antitrust Litig., 2007 WL 542227, at *15 (quoting Eisenberg, 766 F.2d at 786), the predominance requirement demands that the issues in the class action be applicable to the class as a whole, and support at least one cognizable common cause of action, and involve common proof. See Sullivan v. DB Invs., 613 F.3d 134, 152 n. 15 (3d Cir.2010); Szczubelek, 215 F.R.D. at 120.
In their Fourth Amended Complaints, the named plaintiffs seek relief for violations of the CFA, breach of express and implied warranties, negligent misrepresentation, fraud, unjust enrichment, breach of the duty of good faith and fair
Next, the Court considers whether or not a class action is a superior method of fairly and efficiently adjudicating the controversy. Rule 23(b)(3) provides a non-exhaustive list of factors to be considered when making this determination. These factors include;
Fed.R.Civ.P. 23(b)(3). An analysis of each factor demonstrates that a class action is a superior method of addressing this dispute.
With regard to the first factor, it is not clear that the individual class members would have an interest in controlling the prosecution of individual actions given the limited amount each plaintiff could recover. The maximum recovery of each individual is likely the actual value of the repair and clean up for damage that actually occurred. Given the cost to file an individual suit ($350.00) and the expenses required to litigate the case, which would require retention of design experts, it is not apparent that the money potentially recoverable by an individual class member is large enough to make individual litigation
The other factors also each weigh in favor of certification. Regarding the second factor, there is no evidence of any other litigation involving the claims asserted in the present case. The third factor also favors certification because efficiency makes it "`desirable to litigate similar, related claims in one forum.'" Florence, 2008 WL 800970, at *14 (quoting Cannon, 184 F.R.D. at 546); In re Ford Motor Co. Ignition Switch Prods. Liab. Litig, 174 F.R.D. 332, 351 (D.N.J.1997). The fourth factor points to the superiority of a class approach because there is nothing before the Court to suggest difficulty in managing this case as a settlement class action. In fact, "litigating all claims together avoids the risk of inconsistent results for [the defendant and for all direct purchasers." In re Wellbutrin, 2008 WL 1946848, at *10. In short, a class action here promotes judicial efficiency, avoids inconsistency, and provides a single forum to resolve numerous common claims.
For these reasons, the Court finds that the plaintiffs have satisfied Rule 23(a) and 23(b)(3). Thus, the Court certifies the class for settlement purposes. The Court next turns to the question of whether the settlement agreement should be approved.
Rule 23(e) requires court approval of any class action settlement and sets forth procedures to be followed for deciding whether approval should be granted.
Here, the settlement requires the defendants to provide certain benefits to owners or lessees of particular VW and Audi vehicles. The benefits available to the class members vary depending upon the frequency of drain problems for the make and model of their vehicle. Under its terms, all class members receive educational preventative maintenance materials, including mailings that recommend inspections and cleaning of the sunroof and plenum drain systems. (Dewey, Docket Entry No. 173 Attach. 1 at 16; Delguercio, Docket Entry No. 127 Attach. 1 at 16.) Some class members who own particular vehicle models receive vehicle cleaning and inspection, while others may have valves in the sunroof drain removed, and still others may receive reimbursement from an $8 million fund for expenses incurred for repairs, carpet cleaning, or carpet replacement. (Dewey, Docket Entry No. 173 Attach. 1 at 15-19; Delguercio, Docket Entry No. 127 Attach. 1 at 15-19.) Certain vehicles will receive repair or replacement of the transmission control module and/or its attached wiring harness. (Dewey, Docket Entry No. 173 Attach. 1 at 17-18; Delguercio, Docket Entry No. 127 Attach. 1 at 17-18.)
Notice of the proposed settlement was transmitted to the settlement class pursuant to the Amended Preliminary Approval Order, using the best practicable notice methods under the circumstances. (Dewey, Docket Entry No. 178 at 5-6; Delguercio, Docket Entry No. 130 at 5-6.) Specifically, notice was: (1) mailed to more than 5 million owners and lessees, using vehicle registration records from all fifty states to identify those in possession of vehicles covered by the settlement; (2) published on two separate dates in USA Today; and (3) provided through a website established for the purpose of posting the notice, claims forms, settlement agreement, and other relevant documents. (Dewey, Docket Entry No. 178 at 6 ¶ 8; Delguercio, Docket Entry No. 130 at 6 ¶ 8; Dewey, Docket Entry No. 213 Attach. 4 ¶ 9; see also Dewey, Docket Entry No. 174 at 25-27; Delguercio, Docket Entry No. 128 at 25-27.) The effectiveness of the notice is demonstrated by the class members' responses. For instance, Rust Consulting's website had 19,891 unique visitors as of July 22, 2010. (Dewey, Docket Entry No. 241 ¶ 3.) Rust Consulting also received 1,961 emails, 14,918 claim forms, and more than 18,137 telephone calls as of July 22, 2010. (Dewey, Docket Entry No. 241 ¶¶ 5-6,10.)
The Amended Preliminary Approval Order and the settlement agreement also provide that any person included within the class may choose to be excluded from the class by submitting a written request for exclusion postmarked no later than June 15, 2010, (Dewey, Docket Entry No. 178 at 6-7 ¶¶ 9-10; Delguercio, Docket
Moreover, the claims process is reasonable. As stated above, as of July 22, 2010, Rust Consulting has received 14,918 claims forms, (Dewey, Docket Entry No. 241 ¶ 10), and a substantial number of eligible class members have already received concrete benefits from the settlement. For instance, as of July 23, 2010, 78% of those eligible for the P9 and P9/66C8 Service Actions, which benefit MY2002 and certain MY2001-2005 VW Passat vehicles, and 79% of those eligible for the JU service action, which apply to certain MY2002 Audi A4, Audi A6, and Audi allroad vehicles, have taken advantage of those service action benefits. In addition, 97,711 vehicles have taken advantage of the 60A7/S9 service action, which applies to MY2001-2007 New Beetles, MY 2001-2006 A4 Golf/ GTIs, and MY2001-2005 A4 Jettas. (Dewey, Docket Entry No. 240 at 5.) That so many class members have sought these inspections and repairs indicates the reasonableness of the claims process and the available relief. In addition, a claims form is available for those class members entitled to reimbursement for out-of-pocket expenses that does not require submission of receipts if they are not available, which thereby eases the burden on the claimants. (Dewey, Docket Entry No. 173 Attach. 4 ¶ 3.)
These events show that the putative class received valid, due, and sufficient notice of the settlement and these proceedings. Accordingly, the notice complies with due process requirements, and Rule 23(e) is thereby satisfied.
Furthermore, experienced counsel on both sides seek approval of the settlement. (See Dewey, Docket Entry No. 213 Attach. 4 ¶ 2; Dewey, Docket Entry No. 213 Attach. 5 ¶ 3; see also Docket Entry No. 217 at 25 (reflecting the defendants' agreement that the settlement should be approved).) Experienced class counsel's approval is entitled to considerable weight and favors finding that the settlement is fair. See In re Cendant Corp. Litig., 264 F.3d 201, 233 n. 18 (3d Cir.2001) ("In re Cendant") (quoting In re Gen. Motors, 55 F.3d at 785); In re Warfarin, 391 F.3d at 535; Varacallo, 226 F.R.D. at 240. Even with counsel's concurrence, however, the Court must carefully examine the fairness and reasonableness of the settlement, as it serves as a fiduciary that "guard[s] the claims and rights of the absent class members." Ehrheart, 609 F.3d at 593.
In this Circuit, the factors set forth in Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir.1975), are used to determine whether a class settlement is fair and reasonable. See In re Warfarin, 391 F.3d at 534-35. The Girsh factors are;
Girsh, 521 F.2d at 157 (quotation marks and alterations omitted). In addition, in In re AT & T Corp., 455 F.3d 160, 165 (3d Cir.2006), the appellate court observed that:
In re AT & T Corp., 455 F.3d at 165 (quoting In re Prudential, 148 F.3d at 323) (internal quotation marks omitted). The Court has considered all of these factors to the extent they are applicable to decide whether to approve or reject the proposed class action settlement.
First, the Court must consider the complexity, expense, and likely duration of the litigation. The purpose of this factor is "`to capture the probable costs, in both time and money, of continued litigation.'" In re Ikon Office Solutions Sees. Litig., 209 F.R.D. 94, 104 (E.D.Pa.2002) (hereinafter "In re Ikon II") (quoting In re Gen. Motors, 55 F.3d at 812). In short, "[b]y measuring the costs of continuing on the adversarial path, a court can gauge the benefit of settling the claim amicably." In re Gen. Motors, 55 F.3d at 812.
Here, at the time the parties executed a settlement agreement, more than two and a half years had already passed since the lawsuit commenced and, without a settlement, the "adversarial path" would have stretched for years longer. The parties had yet to complete expert discovery, engage in dispositive motion practice, go to trial, or pursue any potential appeals. Accordingly, in the event this settlement is not approved, the parties will be forced to re-commence contentious litigation, which would undoubtably result in the expenditure of significant resources. Avoiding these potential protracted proceedings favors settlement. Id. at 812; In re Cendant Corp. Derivative Action Litig., 232 F.Supp.2d 327, 333 (D.N.J.2002) ("In re Cendant Derivative") (stating that disputed questions of liability and damages "`would involve fairly complex and protracted litigation'") (quoting In re Cendant, 264 F.3d at 234). Therefore, this factor weighs in favor of approving the settlement.
The second factor the Court must consider is the reaction of the settlement class to the settlement. Under this factor, courts "attempt [] to gauge whether members of the class support the settlement."
In the present case, with the potential class of over 5 million members,
Under Rule 23(e)(5), "[a]ny class member may object to the proposal if it requires court approval under this subdivision (e)...." Fed.R.Civ.P. 23(e)(5). As previously noted, notice was sent to more than 5 million class members, and the Court received 203 objections to the settlement. More than 180 objections were submitted directly by putative class members. In addition, nine attorneys presented objections on behalf of approximately sixteen objectors.
Thirty-five class members question the merits of this case.
One hundred and six objectors
Five class members objected to an award of $10,000 to each of the nine class representatives.
One hundred and four class members assert that the settlement provides inadequate relief for their injuries.
While the Court recognizes the dissatisfaction these class members have expressed, their objections do not show that the settlement is unreasonable or unfair. When evaluating the fairness of settlements,
Several objectors asserted that the division of class members into subclasses produced conflicts of interest which led to inequitable remedies.
Fourteen class members objected to the adequacy of the notice provided to the class.
None of these concerns warrant rejection of the settlement. First, the settlement and notice explained how to object, opt out, and make a claim. (Dewey, Docket Entry No. 173-1 at 27, 30-32.) The clarity of the notice is reflected in the language used and the number of putative class members who responded through 203 objections, 1,119 requests for exclusions, 14,918 claims, 1,961 emails, website inquiries from 19,891 unique visitors, and 18,137 telephone inquiries, which totaled more than 55,000 contacts. (Dewey, Docket Entry No. 241 ¶¶ 5-6, 8-10.) Second, the notice included a telephone number and the names of counsel to whom questions could be posed or from whom additional information could be secured. Thus, the absence of a direct link to a brief does not mean the class lacked access to the information. Third, mindful that the fee issue was in dispute, the Court issued an order available to all class members and parties that required the plaintiffs to file their fee petition on June 9, 2010, more than six weeks before the July 26, 2010 Fairness Hearing, and set a deadline for filing opposition of June 29, 2010, which superseded L. Civ. R. 7.1(d)(2) and which provided sufficient opportunity for review of the
One objector contested the procedure by which objections are made, proposing an online system in its place.
Seven class members objected to the requirements for submitting a claim.
The Attorney General for the State of Texas objects to the term of the settlement agreement that terminates the defendants' obligation to make payment to a class member if the class member fails to cash their reimbursement check within 120 days. The State of Texas argues that, under Texas unclaimed property law, settlement checks that are not cashed should be turned over to the Texas Comptroller who would hold the property in trust and take affirmative action to locate the rightful owner. See Tex. Prop.Code Ann. §§ 72.101(a), 74.101 (2010).
In this case, however, the distribution of unclaimed settlement funds is governed by Rule 23, not Texas state law. In re Lease Oil Antitrust Litig. (No. II), MDL No. 1206, 2009 WL 5195977, at *5 (S.D.Tex. Dec. 22, 2009) (holding that application of federal law was proper in governing distribution of unclaimed class action settlement funds given that Rule 23 and the Texas Unclaimed Property Statute are in direct conflict and that, even if the statutes did not conflict, application of federal law over the unclaimed settlement funds would not "disserve the so-called `twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws'"). Therefore, Rule 23 governs and this Court need not withhold approval of this class action settlement based on the Texas Unclaimed Property Statute.
During the Fairness Hearing, two objectors
Second, there is no evidence of collusion. Indeed, the opposite is indicated. Although the defendants agreed to pay the plaintiffs' attorneys' fees and expenses, they have vigorously opposed the fees and expenses sought before, during, and after the Fairness Hearing,
Furthermore, for the reasons set forth herein, the settlement reached is reasonable and there is nothing to show that the attorneys compromised the interests of the class to only further their own economic interests. For all these reasons, none of the objections "presented sufficient basis for this Court to reject or modify the Settlement presently before the Court." McCoy v. Health Net, Inc., 569 F.Supp.2d 448, 475 (D.N.J.2008) (approving settlement over nine objections raised by well over two million class members).
Given the method by which notice was provided, the fact that less than 1% of the class filed objections, and no objections warrant a finding that the settlement is unreasonable, the Court can infer that the supermajority of the class supports the settlement.
Under the third Girsh factor, the Court must consider the stage of the proceedings and the amount of discovery completed. This factor "captures the degree of case development that class counsel have accomplished prior to settlement." In re Cendant, 264 F.3d at 235 (quoting In re Gen. Motors, 55 F.3d at 813). This factor allows courts to "determine whether counsel had an adequate appreciation of the merits of the case before negotiating." In re Gen. Motors, 55 F.3d at 813.
Here, a nearly one-year investigation preceded the actual filing of the lawsuits. After the lawsuits were filed, the parties engaged in significant motion practice, protracted and contentious discovery, which included more than fifty depositions throughout the United States, the exchange of thousands of documents, some of which were in a foreign language, and consultation with numerous automotive experts. (Dewey, Docket Entry No. 163 Attach. 13 ¶ 3; Delguercio, Docket Entry No. 121 Attach. 13 ¶ 3; Dewey, Docket Entry No. 163 Attach. 2 ¶¶ 16-18; Delguercio, Docket Entry No. 121 Attach. 2 ¶¶ 16-18; Dewey, Docket Entry No. 196 Attach. 1 ¶ 7.) In addition, more than two years of discovery produced more than 30,000 paid warranty claims and thousands of internal customer care records together with technical vehicle information and hundreds of schematics written in German. (Dewey, Docket Entry No. 196 Attach. 1 ¶ 7; Dewey, Docket Entry No. 197 Attach. ¶¶ 65-68.) At the time the parties reported that they had reached a settlement, fact discovery was set to conclude in approximately two weeks and the parties were about to commence disclosure of expert reports. (Dewey, Docket Entry No. 149 at 4; Dewey, Docket Entry No. 163 Attach. 2 ¶ 20; Delguercio, Docket Entry No. 121 Attach. 2 ¶ 20.)
Given the information they gathered, class counsel clearly possessed sufficient information to assess the factual and legal strengths and weaknesses of their case,
The fourth and fifth factors require the Court to consider the risk of establishing both liability and damages. These factors "survey the possible risks of litigation in order to balance the likelihood of success and the potential damage award if the case were taken to trial against the benefits of an immediate settlement." In re Prudential, 148 F.3d at 319. Stated differently:
In re Ikon II, 209 F.R.D. at 105-06 (quoting Lachance v. Harrington, 965 F.Supp. 630, 638 (E.D.Pa.1997)) (internal quotation marks omitted).
In the present case, class counsel recognizes the challenge in establishing that New Jersey law should be applied to the claims of class members from states other than New Jersey. (Dewey, Docket Entry No. 213 Attach. 3 at 12.) These challenges have existed both before and since the enactment of CAFA for plaintiffs who file nationwide class actions based upon state law claims that may require application of the law of the homestate of a particular class member that may differ from the law of the forum. See Chin v. Chrysler Corp., 182 F.R.D. 448, 454-55 (D.N.J.1998). For example, some state laws require proof of contractual privity to bring an implied warranty claim or proof of reliance to prove a fraud claim while others do not. Id. at 460. Similarly, the elements of an unjust enrichment claim vary among the states. See Sullivan, 613 F.3d at 150-51. In addition, at the Fairness Hearing, the plaintiffs conceded that certain states' consumer protection laws do not include a private right of action. (Fairness Hearing.) These differences could defeat class certification on such claims entirely or only permit certification on certain issues. See id., at 158. Moreover, counsel also acknowledges that statute of limitations and limitations in the warranties may limit the ability of certain class members to recover. Furthermore, much of the relief sought is not easily or simply quantified.
Counsel also acknowledges that making claims based upon "a variety of defects in the 8 different automobile models built on at least 20 different platforms, [over 12 model years,] corresponding to over 100 vehicle variations, manufactured by 2 different entities," presents factual differences that may have made it difficult to secure a nationwide, multi-model, multi-year, multi-manufacturer class in the face of challenges to commonality and predominance. (Dewey, Docket Entry No. 213 Attach. 3 at 12, 15.). Moreover, there could be challenges to "[p]roving a classwide defect where the majority of class members have not experienced any problems
Finally, even if the class were certified and succeeded at trial, class counsel astutely recognize that the defendants would likely appeal. All of these considerations may affect the chance of establishing liability, damages, or finality of the dispute, whereas the settlement guarantees recovery and a final disposition of the case. In light of these challenges, class counsel's analysis of the risks deserves some credence, see In re Ikon II, 209 F.R.D. at 108, and the balance of the costs of continued litigation against the benefits of settlement for each party weighs in favor of approving the settlement.
Sixth, the Court must consider the risk of maintaining the class action through the trial. Courts in the Third Circuit previously approached this factor with the understanding that "[t]he value of a class action depends largely on the certification of the class because, not only does the aggregation of the claims enlarge the value of the suit, but often the combination of the individual cases also pools litigation resources and may facilitate proof on the merits." In re Gen. Motors, 55 F.3d at 817. As a result, "the prospects for obtaining certification have a great impact on the range of recovery one can expect to reap from the action." Id. Therefore, "this factor measures the likelihood of obtaining and keeping a class certifi[ed] if the action were to proceed to trial." In re Warfarin, 391 F.3d at 537.
Based upon the facts of this case, and for the reasons just recited, there is no guarantee that the class would be or would remain certified throughout future litigation. Although each member of the class could have the same complaint against the defendants, namely that their vehicles' sunroofs leaked, the defendants argue that continued litigation may reveal divergent interests, such as between vehicles that have sustained no problem and those that were damaged, see Hubbard v. Gen. Motors Corp., Civ. No. 95-4362, 1996 WL 274018, at *9 (S.D.N.Y. May 22, 1996) (noting that a vehicle that never exhibits the alleged defect is fit and hence cannot provide a basis for a breach of warranty claim), and that differences in the design of the drains on the different vehicle models may make a finding of commonality difficult. (Dewey, Docket Entry No. 217 at 2, 8-9, 12.) In addition, as stated above, there may be challenges arguing that New Jersey state law should govern the claims of non-New Jersey plaintiffs and that differences in the applicable law may make it impossible to maintain a nationwide class on every claim. See Sullivan, 613 F.3d at 145-46. Because "[a] district court retains the authority to decertify or modify a class at any time during the litigation if it proves to be unmanageable," In re Warfarin, 391 F.3d at 537 (citing In re Prudential, 148 F.3d at 321), the specter of decertification makes settlement an appealing alternative. As class certification is not a certainty and there is no guarantee that the certified class would be maintained throughout trial or on appeal, this factor weighs in favor of approving the settlement.
The seventh factor for the Court's consideration, namely, the ability of the defendant to withstand a greater judgment, has been problematic for other courts within the Circuit to analyze. See, e.g., In re Prudential, 148 F.3d at 322 (noting it is
In the present case, there is nothing before the Court that suggests that the defendants would be unable to withstand a judgment greater than the relief that will be provided under the settlement. This factor, therefore, does not dictate that a settlement is necessary to ensure that the plaintiffs obtain relief for their alleged injuries.
Finally, the Court must consider the range of the reasonableness of the settlement in light of both the best possible recovery and the attendant risks of litigation. These factors are used to "evaluate whether the settlement represents a good value for a weak case or a poor value for a strong case." In re Warfarin, 391 F.3d at 538. In assessing this factor, the Court should determine "whether the settlement is reasonable in light of the best possible recovery and the risks the parties would face if the case went to trial." In re Prudential, 148 F.3d at 322.
Although the plaintiffs' economic expert valued the settlement at approximately $142 million, (Dewey, Docket Entry No. 197 Attach. 10 at 20), class counsel has asked the Court to find that the settlement has a value of $90 million. (Dewey, Docket Entry No. 238.) For the reasons explained later in this Opinion, the Court finds both figures to be inflated. Nonetheless, there is no doubt that the settlement provides real and valuable relief to the class members. It requires the defendants to provide service for nearly 3 million vehicles with the highest failure rates as well as maintenance information to prevent clogs. (Dewey, Docket Entry No. 213 Attach. 4 ¶ 6.) In addition, it provides an $8 million fund to reimburse certain class members who incurred expenses repairing the drain problem and cleaning the interior of certain vehicles that sustained water damage. (Dewey, Docket Entry No. 213 Attach. 3 at 32; Dewey, Docket Entry No. 213 Attach. 4 ¶ 6.) Although a victory at trial may have resulted in modification or service actions for all vehicles, which the plaintiffs assert is worth more than $77 million, and reimbursement for the costs of all repairs and clean-up due to water damage each class member sustained, (Dewey, Docket Entry No. 213 Attach. 4 ¶ 8), the proposed settlement achieves a great deal of relief sooner than would be received had the class succeeded on all claims at trial and is fair to the class even though it does not provide full compensation. See Careccio, 2010 WL 1752347, at *6 (noting that "full compensation is not a prerequisite for a fair settlement"); McGee, 2009 WL 539893, at *6-7 (approving a class settlement considering the risks faced, the immediate benefits provided, and the absence of a guaranteed favorable verdict even though it does not provide full recovery). Indeed, given the likelihood of an appeal of the class certification ruling or trial verdict, many of the cars may suffer damage
Moreover, the criticisms about the attorneys' fees sought do not render the settlement unfair. First, both sides represent that the issue of attorneys' fees was not discussed until after the terms of the settlement were agreed upon. (Dewey, Docket Entry No. 213 Attach. 4 ¶ 3; Dewey, Docket No. 217 at 16.) Second, the amount of the fees will not reduce the benefits to the class. Although the value of the settlement to the class will be considered to determine the amount of the fee award, and although the money for the fees will come from the same source as the benefits to the class, the amount of the fees awarded has no impact on the cash and non-cash compensation to the class. Third, the defendants vigorously object to the fee award that the plaintiffs' counsel seek. The defendants' strong opposition to counsel's $22.5 million fee request shows that this is not a situation where the plaintiffs negotiated a settlement that was not favorable to the class in exchange for "red-carpet treatment" in their request for fees. In re Gen. Motors, 55 F.3d at 820. Thus, objections to or disagreements about the fee award sought do not render the settlement unfair as it appears that the settlement itself has been negotiated at arm's length by class counsel on behalf of the settlement class. Class counsel educated themselves about the facts and law sufficiently to evaluate the strengths, weaknesses, and the goals of the case. Further, the class representatives have acted independently and their interests are identical to the interests of the class members. Moreover, had the settlement of the class's claims not been achieved, all of the parties faced the expense, risk, and uncertainty of extended litigation.
Based upon the foregoing, and upon consideration of the submissions, record of proceedings, arguments, and representations of counsel, the Court finds that the proposed settlement of this class action is fair, reasonable, and adequate and the Court grants the plaintiffs' motion for final approval of the settlement.
The Court now turns to the motion for fees and expenses for class counsel.
Courts must thoroughly analyze an application for attorneys' fees in a class action settlement. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 299 (3d Cir.2005) ("In re Rite Aid"): Yong Soon Oh v. AT & T Corp., 225 F.R.D. 142, 146 (D.N.J. 2004); Fed.R.Civ.P. 23(h). This is so even where the parties have consented to the proposed attorneys' fees, Yong Soon Oh, 225 F.R.D. at 146; In re AremisSoft Corp. Sec. Litig., 210 F.R.D. 109, 128 (D.N.J. 2002), because of the risk that the "lawyers might urge a class settlement at a low figure or on a less-than-optimal basis in exchange for [as stated previously] red-carpet treatment for fees." In re Gen. Motors, 55 F.3d at 820.
The Court must first determine what law governs the application for fees. Under the so-called American Rule for attorneys' fees, "[t]here can be no recovery for counsel fees from the adverse party to a cause, in the absence of express statutory allowance of the same, or clear agreement by the parties, or some other
The fact that the parties agreed that New Jersey law governs the settlement agreement does not change the result. First, this choice of law provision appears only in the settlement agreement. Second, there is nothing in the settlement agreement about attorneys' fees other than an agreement that "class counsel fees and expenses shall be paid entirely and exclusively by the defendants" within thirty days of the entry of judgment and the amount paid "shall not diminish, invade or reduce or be derived or drawn from the Reimbursement Fund." (Dewey, Docket Entry No. 174 Attach. 1 at 36 ¶¶ 15.2-15.3.) As the defendants observe in their brief in opposition to the fee award, "there is no agreement concerning the amount of attorney fees to be paid or the method of computation." (Dewey, Docket Entry No. 219 at 6.) Third, according to all parties, the settlement agreement was signed before there were any discussions about the amount of fees or expenses the plaintiffs would seek. (Dewey, Docket Entry No. 213 Attach. 4 ¶ 3; Dewey, Docket Entry No. 217 at 16.) Thus, the choice of law clause could not be used to cover a topic that was not discussed as part of the settlement itself.
Under federal class action caselaw, to determine appropriate attorneys' fees, courts generally apply either the lodestar method or the percentage-of-recovery method. In re Rite Aid, 396 F.3d at 300; Yong Soon Oh, 225 F.R.D. at 146. Even
The lodestar method is usually applied in statutory fee-shifting cases because it "reward[s] counsel for undertaking socially beneficial litigation in cases where the expected relief has a small enough monetary value that a percentage-of-recovery method would provide inadequate compensation." In re Rite Aid, 396 F.3d at 300 (quoting In re Prudential, 148 F.3d at 333). The fees are "de-coupled" from the class recovery which "assures counsel undertaking socially beneficial litigation. . . an adequate fee irrespective of the monetary value of the final relief achieved for the class." In re Gen. Motors, 55 F.3d at 821. Although primarily used for statutory fee-shifting cases, "the lodestar rationale has appeal where . . . the nature of the settlement evades the precise evaluation needed for the percentage of recovery method." Id. The lodestar method calculates fees by multiplying the hours expended by an appropriate hourly rate. Id. at 819 n. 37. In fee-shifting cases, an upward adjustment of the amount is permitted in rare and exceptional circumstances.
The percentage-of-recovery method "awards counsel a variable percentage of the amount recovered for the class," In re Gen. Motors, 55 F.3d at 819 n. 38, and requires the Court "to determine a precise valuation of the settlement on which to base its award." Id. at 822. After the Court determines the overall value of the settlement, it must then "calculate an appropriate percentage of that fund to award in attorneys' fees based on a series of reasonableness factors that have been developed through [the Third Circuit's] jurisprudence." In re Diet Drugs, 582 F.3d at 536 n. 24; see also In re Prudential, 148 F.3d at 336-40; Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3d Cir.2000). The percentage-of-recovery method is preferred in "common fund" cases. In re Gen. Motors, 55 F.3d at 821. In a classic common fund case, an attorney is entitled to fees and costs from a fund set aside for class members.
In In re Gen. Motors, for example, the parties contended that the fee agreement and settlement fund were separate agreements and "thus superficially resembl[ed] the separate awards in statutory fee cases." Id. at 821. The Court of Appeals for the Third Circuit, however, determined that "private agreements to structure artificially separate fee and settlement arrangements cannot transform what is in economic reality a common fund situation into a statutory fee shifting case," Id. The Court concluded that the settlement was a "hybrid," which "more closely resemble[d] a common fund case" after determining that the fee was not made pursuant to a fee-shifting statute and the fund did not award the hard-to-value intangible rights that would justify using the lodestar method. Id. at 822.
In sum, the lodestar method generally applies to cases involving fee-shifting statutes or where the settlement "evades the precise evaluation needed for the percentage-of-recovery method." Id. at 821. The percentage-of-recovery method applies where there is a common fund or where the economic reality of the settlement is akin to a common fund. Id. at 821-22.
In In re Diet Drugs, the appellate court rejected the argument that the lodestar method should have been used to calculate fees in a class action settlement simply because a statutory fee shifting claim was involved. 582 F.3d at 540. In the context of a class settlement, the Court of Appeals for the Third Circuit determined that "there [wa]s no such [fee-shifting] statute at work here. [Defendant] voluntarily undertook the process of compensating opposing counsel, by establishing and funding various escrow accounts dedicated to the payment of claimants' legal costs." Id. at 540. Consequently, the Court determined that the case fell under the common fund doctrine and that the percentage-of-recovery method was appropriate. Thus, In re Diet Drugs and In re Gen. Motors teach that if a class action is brought under a fee-shifting statute but is resolved through a settlement, then the fees should be calculated based upon the percentage-of-recovery method if: (1) the benefits to the class can be valued; (2) the compensation to the class and counsel come from the same source; and (3) the source has voluntarily agreed to pay class counsel's fees.
Although the Fourth Amended Complaints filed in Dewey and Delguercio contain claims under the CFA, which contains a fee-shifting provision, (Dewey, Docket Entry Nos. 86 ¶ 1 and 87 ¶ 84; Delguercio. Docket Entry No. 63 ¶ 84), for reasons stated herein, this fee-shifting statute provision is not triggered here. Like in In re Diet Drugs and In re Gen. Motors, the defendants here voluntarily agreed to pay some portion of the attorneys' fees
Accordingly, the Court will apply the factors used to analyze attorneys' fee using the percentage-of-recovery method and then, in accordance with Circuit law, it will perform a crosscheck using the lodestar cross-check analysis.
The Court of Appeals for the Third Circuit has identified a non-exhaustive list of the factors for courts to consider when determining the reasonableness of attorneys' fees in a class action settlement where fees are calculated as a percentage of recovery. The factors are:
In re Rite Aid, 396 F.3d at 301; In re AT & T Corp., 455 F.3d at 164-65; Gunter, 223 F.3d at 195 n. 1 (citing In re Prudential, 148 F.3d at 336-40; In re Gen. Motors, 55 F.3d at 819-22). The appellate court identified three other factors to consider, namely:
In re AT & T Corp., 455 F.3d at 165 (citing In re Prudential, 148 F.3d at 338-40). Because the facts of each case are different, the factors "need not be applied in a formulaic way" and some factors may be afforded greater weight than others. In re Rite Aid, 396 F.3d at 301; Gunter, 223 F.3d at 195 n. 1.
In addition to considering these factors, courts are advised to cross-check the proposed attorneys' fees under the percentage-of-recovery method by comparing them to the amount the attorneys would have earned under the lodestar method. In re Rite Aid, 396 F.3d at 300; Gunter, 223 F.3d at 195 n. 1. The "crosscheck . . . [is] a means of assessing whether the percentage-of-recovery award is too high or too low." In re Diet Drugs, 582 F.3d at 545 n. 42. The "crosscheck is performed by dividing the proposed fee award by the lodestar calculation, resulting in a lodestar multiplier." In re AT & T Corp., 455 F.3d at 164. This cross-check calculation does not require mathematical precision, a "fullblown lodestar inquiry," or a review of actual time sheets. Id. at 169 n. 6. Indeed, where there have been no objections to the lodestar calculations, a full-blown lodestar analysis is an unnecessary and inefficient use of judicial resources. See Weber v.
The Court must first consider the size of the fund created and the number of persons benefitted. In re Rite Aid, 396 F.3d at 301. In cases where there is a large recovery, it is appropriate for the percentage of attorneys' fees to be smaller than the percentage would be in a case with a relatively modest recovery. Id. at 302. Stated differently, "as the size of a fund increases, the appropriate percentage to be awarded to counsel decreases." Yong Soon Oh, 225 F.R.D. at 151 (citation omitted). This principle reflects the belief that "`in many instances the increase [in recovery] is merely a factor of the size of the class and has no direct relationship to the efforts of counsel.'" Id. (quoting In re Prudential, 148 F.3d at 339). The "declining percentage concept," however, is a general guidepost and does not trump consideration of the other factors. In re Rite Aid, 396 F.3d at 303; see also In re Cendant Derivative, 232 F.Supp.2d at 337 (deciding not to decrease the fee percentage because a $54 million dollar award qualified as a "moderate" award and citing In re Aetna, Inc., MDL No. 1219, 2001 WL 20928, at *15 (E.D.Pa. Jan. 4, 2001) which noted that an $81 million award was "smaller than the large settlements for which courts decrease the percentage awarded").
In this case, the number of class members includes 5.5 million present and former owners and/or lessees of about 3 million cars. (Dewey, Docket Entry No, 197 ¶ 94.) For reasons set forth below, the Court has found that the proposed settlement agreement provides benefits to the class valued at $69,227,430 in the form of information, services, and/or reimbursement.
The issue of the settlement's value is relevant to two subjects: (1) the reasonableness of the settlement, see In re Gen. Motors, 55 F.3d at 806 (stating that the "primary touchstone of [the range of reasonableness] inquiry is the economic valuation of the proposed settlement"); and (2) the attorneys' fees request. See Weiss, 899 F.Supp. at 1304 (observing that "a percentage of the value of the settlement to the class is the appropriate method for calculating counsel fees"). As to the reasonableness of the settlement, the Court has already noted that while it questions the value that the plaintiffs and the value their expert have endorsed, the terms of the settlement are reasonable in light of the broad relief provided and the challenges that a full-blown litigation poses. As to the attorneys' fees, the value of the settlement must be examined so that the Court can determine the fee award. As stated previously, if the settlement's value is certain, the Court can use the percentage-of-recovery method to calculate attorneys' fees, but if the value is too uncertain, then the Court must use the lodestar method. See Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir.1998) (using a lodestar calculation because of the difficulty in gauging the net value of a settlement involving injunctive relief); see also Weber, 262 F.R.D. at 450 (using percentage-of-recovery method is inappropriate because of the uncertainty involved in valuing future claims). As a result, the Court is required to critically examine the valuation that the plaintiffs advocate to determine if it is quantifiable and reliable. See In re Gen. Motors, 55 F.3d at 810 (criticizing the district court for "uncritically accepting] such high estimates of the settlement's value"). To evaluate the plaintiffs' valuation of the settlement, the Court should consider:
The Court has considered each of these factors and has concluded that Dr. Eads's settlement valuation and the value that class counsel advocated are both inflated. According to his report, Dr. Eads assigned a value of $141,820,208 to the settlement. (Dewey, Docket Entry No. 194 Attach. 1 at 12.) The Court, however, notes several typographical and calculation errors in Dr. Eads's calculation summary.
In assessing the value for each component, Dr. Eads separated the class vehicles into seven subclasses based on the design characteristics and benefits each vehicle is eligible to receive under the settlement.
To calculate the value of the educational preventative maintenance information, Dr. Eads considered: (1) the future repair cost avoided; and (2) the future diminution of value avoided as a result of the informational materials. (Id. at 16.) Dr. Eads only considered subclasses 4, 5, 6, and 7 because he believed that only these subclasses would receive additional value from this information. (Id. at 15.)
To calculate the future repair cost avoided,
To calculate the future value diminution avoided, Dr. Eads relied on Richard Hixenbaugh's report on diminished value and data from the Kelley Blue Book concerning the effect that water damage has on a vehicle's value. (Id. at 13.) Dr. Eads employed a regression analysis to calculate future projected avoided diminished value for each vehicle and for each future year the car is expected to be in service. (Id. at 14.) He then calculated the present value of the benefit for each subclass of vehicles. (Id. at 15.) As a result, he opined that the diminished value avoided for subclasses 4, 5, 6, and 7 is $3,362,710, $2,489,858, $1,151,134, and $8,620,855, respectively, for a total of $15,624,557. (Id. at 16.)
Adding the future repair cost avoided of $13,108,887 and future diminution value avoided of $15,624,557 together, Dr. Eads arrived at a total value of $28,733,445 for the educational preventative maintenance information. (Id.)
The Court rejects these valuations for several reasons. First, Dr. Eads conceded at the Fairness Hearing that towing and loaner car costs would likely be paid by the dealer and not borne by the vehicle owner or lessee. (Fairness Hearing.) Because this is not a cost the class member would ever bear, this is not a value that the settlement provides. Thus, the future repairs cost avoided is inflated. Second, the direct value of the preventative maintenance portion of the settlement is the costs that the class members will not have to pay for repairs because they now have a means to prevent the damage for which repair would be needed. While this will have collateral benefits such as avoiding aggravation and inconvenience that interior water damage may cause and ensuring that the car's value is not diminished by water damage, these benefits are already covered by preventing them altogether and the value of the prevention is best estimated by the costs avoided by engaging in the repair and maintenance. Third, and relatedly, counting both the value of avoiding future repairs and the diminution of the value of the car if it suffered from water damage is akin to double counting. While the two components address different consequences of the avoided water damage, one of the two will never come about because the maintenance avoids it. If preventative maintenance information avoids the water damage the design problem allegedly causes, then no water damage will occur and the car's value will not diminish. If the Court were to also award the value of future diminution avoided, the Court would be assigning value for something that would not happen at all, and thereby provide a windfall. Finally, proving claims of diminished value is difficult because such claims have been viewed as "speculative" and not as readily ascertainable as out-of-pocket losses. Vaughn v. Am. Honda Motor Co., 627 F.Supp.2d 738, 749 (E.D.Tex.2007).
For these reasons, the Court assigns as the value for preventative maintenance the costs of repairs avoided. Because this is a non-cash component of the settlement and courts consider noncash components to be less valuable than cash and the defendants have not challenged the figure, the Court assigns a value of $13,108,887, or the value of future repairs avoided, to this portion of the settlement. See McCoy, 569 F.Supp.2d at 478 (applying the parties' lowest estimated value of the injunctive relief); see also Frankenstein, 425 F.Supp. at 764-65 (assigning the lowest estimated value to a settlement where the opinion of the plaintiffs expert was not challenged).
To calculate the value of the reimbursement funds for vehicle subclasses 4, 5, and 6, Dr. Eads assumed 100% participation in the claims process to calculate the expected total number of incidents eligible for reimbursement, multiplied this figure by the average total claim cost for each relevant vehicle, and subtracted the value of claims that had already been paid to arrive at the settlement value of these reimbursement funds.
Because Dr. Eads calculated a total of $14,581,035 in actual and potential reimbursements for subclasses 3-6, (see id. at 11), but the settlement agreement only allows class members a benefit of $8 million in reimbursements for these vehicles, (Dewey, Docket Entry No. 174 Attach. 1 at 19), Dr. Eads reduced the value of this portion of the settlement to $8 million by subtracting $6,581,035 from his value of the reimbursements. (Dewey, Docket Entry No. 197 Attach. 10 at 8.)
Dr. Eads calculated the value of reimbursements associated with Service Actions P9, P9/66C8, and JU mindful that some reimbursements had already been made under the terms of these service actions separate and apart from reimbursements paid from the $8 million reimbursement fund. (Dewey, Docket Entry No. 197 Attach. 1 ¶¶ 11-12; Dewey, Docket Entry No. 213 Attach. 4 ¶ 6.) For these reimbursements, Dr. Eads looked at both potential reimbursements and actual reimbursements that had already been made. (Dewey, Docket Entry No. 197 Attach. 10 at 10.) The dollar value of actual reimbursements, as of May 2010, was $949,838 for Service Actions P9 and P9/66C8 and $128,786 for Service Action JU. (Id.) To determine the value of potential reimbursements, Dr. Eads assumed a 100% response rate for the remaining vehicles eligible for service under Service Actions P9, P9/66C8, and JU and applied the average cost per claim to each vehicle.
The Court rejects some of the values assigned. The assumption of 100% participation that Dr. Eads employed is inappropriate. Because the actual reimbursements made represent 78% of the eligible vehicles for Service Actions P9 and P9/66C8 and 79% of the eligible vehicles for Service Action JU, (Dewey, Docket Entry No. 240 at 5), there is uncertainty as to whether every class member within the remaining 22% and 21%, respectively, will participate.
As to the portion attributed to vehicles not eligible for Service Actions P9, P9/66C8, and JU, the parties agreed to a reimbursement fund not exceeding $8 million. While Dr. Eads's valuation of this portion of the settlement is approximately $14.5 million and this arguably shows that the $8 million reimbursement fund is underfunded and more cash should be placed in the fund to ensure that all members of the class eligible for cash reimbursement receive it, these calculations cannot and do not increase the value of the cash portion of the settlement. The value of this part of the settlement is limited to $8 million because that is the total amount of cash available to eligible class members. No more and no less. Therefore, the Court will assign the reimbursements component of the settlement a value of $9,443,299, which is the sum of the $8,000,000 value for subclasses 3-6, $1,270,440 for Service Actions P9 and P9/66C8, and $172,859 for Service Action JU.
To calculate the value of a particular service action, Dr. Eads considered: (1) the value of the service work performed and to be performed; (2) the future repair cost avoided; and (3) the future value diminution avoided. (Dewey, Docket Entry No. 197 Attach. 10 at 17-19.)
Using the May, rather than July, information to determine the value of future repair costs,
To value the proposed new Service Action, Dr. Eads estimated the total number of applicable vehicles in service at the end of 2009 to be 624,429. (Id.) Using a predetermined time per service of 0.3 hours for Golf/GTI/Jetta vehicles and 0.5 hours for New Beetle vehicles and an average hourly labor rate of $91.52 per hour, he arrived at a cost per repair for each vehicle and calculated the total value of future repair costs for the new Service Action to be $20,155,221. (Id.)
More concrete information, however, became available after Dr. Eads issued his report. As of July 23, 2010, costs of $3,916,826.71 were incurred for services provided to 97,711 vehicles as part of the new proposed Service Action, representing a completion rate of 14.3%. (Dewey, Docket Entry No. 240 at 5.) This yields a cost per vehicle of $40.09. Applying this cost per vehicle to the 624,429 applicable vehicles Dr. Eads estimated to be in service at the end of 2009 and assuming a 100% participation rate, the total estimated value of future repair costs of $25,033,358.
The future repair cost avoided and the future value diminution avoided as a result of the service actions were calculated in the same manner as they were for the value of the educational preventative maintenance program. Because each of the service actions applied to specific subclasses of vehicles, Dr. Eads only considered subclass 1 for the value of Service Actions P9 and P9/66C8, subclass 2 for the value of Service Action JU, and subclass 3 for the value of the new Service Action. (Id. at 9-10.) Dr. Eads calculated the future repair cost avoided to be $13,405,253 for Service Actions P9 and P9/66C8, $110,880 for Service Action JU, and $10,936,681 for the new Service Action. (Id. at 17-19.) The
Dr. Eads also calculated the future value diminution avoided to be $10,734,618 for Service Actions P9 and P9/66C8, $194,801 for Service Action JU, and $13,217,591 for the new Service Action. (Id.) In total, not including monetary reimbursements already discussed, Dr. Eads calculated the value of the new Service Action, Service Actions P9 and P9/66C8, and Service Action JU to be $44,309,493, $56,931,372, and $2,649,551 respectively, for a total of $103,890,416. (Id. at 17-19.)
The Court finds that including the value of repair costs avoided, the value of diminution avoided, and the value of the repair being provided is akin to a triple count in this case. If a repair in connection with a service action is made, then there will be no future repairs needed and no loss of value to the car due to water damage since no damage will occur because the repair work was performed. Once service work has been performed on a given vehicle, the value of future repair costs
The Court, however, finds Dr. Eads's proposed value for the repair work to be inflated. Dr. Eads inappropriately assumes 100% participation by class members in the service actions. The present record of responses to the service actions indicates a response rate of 78% for Service Actions P9 and P9/66C8 and a response rate of 79% for Service Action JU. (Dewey, Docket Entry No. 240 at 5.) There is uncertainty as to whether the remaining 22% and 21%, respectively, will participate in Service Actions P9 and P9/66C8 and JU, and given that Courts do not assume a 100% participation rate, the Court will assign only the value to this portion of the settlement based upon the value of the service work already performed plus the value of the repair to be provided to 15% of the remaining class members who have not yet had service work performed. See Sylvester, 369 F.Supp.2d at 44; See also In re Mexico Money Transfer Litig., 267 F.3d at 748. Accordingly, Service Actions P9 and P9/66C8 will be assigned a value of $25,155,762 (calculated using $23,808,278.58 of service work already performed plus 15% of the difference between
Based upon the above, the Court values the settlement as totaling $69,277,430 comprised of the following values:
Educational preventative maintenance
information: $13,108,887
Value of reimbursements: $ 9,443,299
Value of service work for Service Actions
P9 and P9/66C8: $25,155,762
Value of service work for Service Action
JU: $ 1,918,296
Value of service work for the new proposed
Service Action: $19,651,186
Total: $69,277,430
Although the Court has discounted both valuation figures that the plaintiffs advanced, there is no doubt that class counsel's efforts secured valuable benefits for a large number of vehicle owners and lessees.
The second factor the Court must consider is the presence or absence of substantial objection by class members to the settlement terms and/or counsel's fee request. In re Rite Aid, 396 F.3d at 305. The "absence of large numbers of objections mitigates against reducing fee awards." Yong Soon Oh, 225 F.R.D. at 152 (determining this factor weighed in favor of approving fees where three of the thousands of potential plaintiffs objected to fees); In re Cendant Derivative, 232 F.Supp.2d at 337 (determining this factor weighed in favor of approving fees where six of the 200,000 shareholders noticed objected to fees); see also In re Rite Aid, 396 F.3d at 305 (describing two objections after notice to 300,000 class members as a low level). Indeed, the Court of Appeals has stated that "silence constitutes tacit consent to the agreement" to the proposed fees. In re Gen. Motors, 55 F.3d at 812 toting Bell Atl. Corp. v. Bolger, 2 F.3d 1304, 1314 n. 15 (3d Cir.1993).
As of July 26, 2010, 203 class members objected to the settlement or fees, (Dewey, Docket Entry No. 216 ¶ 11; Fairness Hearing), and 1,119 sought exclusion from the class. (Dewey, Docket Entry No. 241 ¶ 8.) Given the large number of class members, this reflects an objection or request for exclusion from less than 1% of the class. While a majority of the objections concerned counsel's fee request, this extraordinarily low percentage of class members voicing dissatisfaction about the settlement terms shows that the supermajority of the class consents to the settlement and/or does not oppose a fee award, and thus, this factor accordingly supports awarding class counsel fees.
Third, the Court considers the skill and efficiency of the attorneys involved in this case. In re Rite Aid, 396 F.3d at 301. Courts consider the result and an attorney's reputation, experience, and resume in assessing his skill and efficiency. See In re Cendant Derivative, 232 F.Supp.2d at 338.
In this case, class counsel secured a settlement that provides direct benefits to class members. While the Court has rejected the large figure Dr. Eads assigned to the value of the settlement and the
The fourth factor the Court must consider is the complexity and duration of this litigation. In re Rite Aid, 396 F.3d at 301. In evaluating this factor, courts consider numerous aspects of the case, including the complexity of both the factual and legal issues, the amount of discovery and depositions conducted, the length of the litigation, the amount and quality of work produced, and attempts to negotiate and settle. See id. at 305 (taking into consideration the legal and factual complexities, time incurred reviewing and analyzing hundreds of thousands of documents, the fact that settlement occurred after several years of litigation and with the assistance of mediation, and the numerous revised pleadings); In re Cendant Corp. PRIDES Litig., 243 F.3d 722, 735-36 (3d Cir.2001) (hereinafter "In re Cendant PRIDES") (criticizing the district court for failing to consider that the case was "relatively simple," defendant had conceded liability, settlement occurred at a very early stage of litigation, and there was minimal motion practice and little discovery); In re Cendant Derivative, 232 F.Supp.2d at 338-39 (noting that the case had been pending for four years and required a great deal of discovery, motion practice, and the development of new law); accord Yong Soon Oh, 225 F.R.D. at 152.
Some of these considerations support this fee application. Class counsel expended 12,195.5 hours on this case. (Dewey, Docket Entry No. 194 Attach. 1 at 28; Dewey, Docket Entry No. 195 Attach. 1 ¶ 12; Dewey, Docket Entry No. 196 Attach. 2 at 12.) A significant portion of these hours was spent obtaining and reviewing thousands of warranty claims and other documents, some of which were in foreign languages, conferring with experts, and conducting depositions. In addition, time was spent learning about the nature of the plenum and sunroof drain systems and the alleged defects. This involved reviewing design drawings, technical specifications, and even a chemical analysis of certain components so as to understand why certain components clogged. (Dewey,
Other considerations, however, do not support the amount of the fee requested. The award sought is largely based upon securing a fee based upon a settlement that the plaintiffs assert has a value exceeding $90 million.
Fifth, the Court must consider the risk that counsel would not receive payment for the services provided in this case. In re Rite Aid, 396 F.3d at 301. Courts generally do not consider counsel's risk of not being paid or receiving its contingency fee. See In re Cendant Derivative, 232 F.Supp.2d at 339 (recognizing that the risk of being unsuccessful and thus not getting paid is a risk confronted by all attorneys in every case taken on a contingency-fee basis and determining that the risk of nonpayment factor was "neutral" in the evaluation of approving fees); but see In re Pet Food Prods. Liab. Litig., Civ. No. 07-2867, 2008 WL 4937632, at *22 (D.N.J. Nov. 18, 2008) (noting that "[a]t the time that plaintiffs counsel undertook representation, they faced significant hurdles and the possibility of non-recovery. Courts have consistently recognized that the risk of receiving little or no recovery is a major factor in considering an award of attorneys' fees."). Rather, courts evaluating the factor focus on a defendant's financial health and the likelihood that it would be unable to satisfy a successful judgment against it. In re Cendant Derivative, 232 F.Supp.2d at 339 (determining this factor weighed in favor of approving fees where there was a chance that the defendant might go out of business and the plaintiffs confronted risks in establishing the defendant's liability); Gunter, 223 F.3d at 199 (indicating that this factor militated in favor of granting fees where "the defendants were close to insolvency, and . . . [other] plaintiffs in similar cases . . . had lost on similar legal theories"). Thus, the fact that class counsel took the case on a contingent fee basis with the chance that they might not be compensated for their efforts in the case if they lose is not relevant. (Dewey, Docket Entry No. 194 Attach. 1 at 30.)
In this case, while the foreign defendants initially challenged service in an effort to avoid litigation, there is nothing before the Court that indicates that the defendants would be unable to satisfy a judgment against them or that their financial health is in jeopardy. Thus, this factor is neutral.
The sixth factor that the Court considers is the amount of time that the plaintiffs' counsel devoted to the case. In re Rite Aid, 396 F.3d at 301. While courts may look to counsel's time sheets and affidavits, see Yong Soon Oh, 225 F.R.D. at 152, the district court "may rely on summaries submitted by the attorneys and need not review actual billing records." In re Rite Aid, 396 F.3d at 307; see also In re AT & T Corp., 455 F.3d at 169 n. 6 (courts have discretionary authority to request time sheets or may rely on declarations). The appellate court has also held
Here, class counsel expended over 12,000 hours on this case. (Dewey, Docket Entry No. 196 Attach. 2 at 12; Docket Entry No. 195 ¶ 18; Dewey, Docket Entry No. 240 ¶¶ 4-5; Dewey, Docket Entry No. 242 ¶ 3.) The defendants broadly assert that "a number of challenges could be made to individual items reflecting over-billing or overstaffing," (Dewey, Docket Entry No. 219 at 14), and appropriately challenge the high hourly rates requested, but they have not identified specific tasks that were unreasonably undertaken or on which too much time was spent. Considering the amount of time spent by the attorneys on this matter and the number of vehicles and designs; as well as the absence of specific objections by the defendants or the class to the hours expended on specific tasks, this factor weighs in favor of a finding only that the number of hours that class counsel spent is reasonable. See In re Cendant PRIDES, 243 F.3d at 734 (5,600 hours); In re AT & T Corp., 455 F.3d at 172 (48,000 hours); In re Rite Aid, 396 F.3d at 306 (12,906 hours). Moreover, the Court cannot ignore class counsel's ongoing obligation to the millions of class members for which additional time will be spent without further compensation.
Lastly, the Court compares the award requested in this action with the awards in similar actions. In re Rite Aid, 396 F.3d at 301. In doing so, the Court (1) compares the actual award requested to other awards in comparable settlements; and (2) ensures that the award is consistent with what an attorney would have likely received if the fee was negotiated on the open market. See In re Datatec Sys., Inc. Sec. Litig., Civ. No. 04-525, 2007 WL 4225828, at *8 (D.N.J. Nov. 28, 2007); In re Ins. Brokerage Antitrust Litig., Civ. No. 04-5184, 2007 WL 2916472, at *7 (D.N.J. Oct. 5, 2007).
The Court of Appeals for the Third Circuit has held that since percentages of attorneys fees awarded have varied considerably, the Court "may not rely on a formulaic application of the appropriate range in awarding fees but must consider the relevant circumstances of the particular case." In re Cendant PRIDES, 243 F.3d at 736. Accordingly, in most cases, the courts have held that the percentages will decrease as the size of the fund increases because "[i]n many instances the increase [in recovery] is merely a factor of the size of the class and has no direct relationship to the efforts of counsel." In re Prudential, 148 F.3d at 339 (quoting In re First Fidelity Bancorporation Sec. Litig., 750 F.Supp. 160, 164 n. 1 (D.N.J.1990)); see also In re Rite Aid Corp. Sec. Litig., 146 F.Supp.2d 706, 735 (E.D.Pa.2001) ("In re Rite Aid") (a review of 289 settlements demonstrating "average attorney's fees percentage [of] 31.71%" with a median value that "turns out to be one-third"); In re Cendant PRIDES, 243 F.3d at 736 (noting that most fee awards in common fund cases range "from nineteen percent to forty-five percent of the settlement fund").
The percentage of the plaintiffs' requested amount of $22,500,000 is 15.83% of the $142 million value that the plaintiffs originally assigned to the settlement. During the Fairness Hearing, the plaintiffs asked for the same award but said that it represented 25% of the $90 million value they now ask the Court to accept. The plaintiffs, however, provided no reason why the percentage should increase. The only change was the parties' private agreement reached just one business day before the Fairness Hearing to advocate for a settlement
Awards in similar cases are as follows:
Case Value of Attorneys' Attorneys' % of Lodestar Lodestar Settlement Fees Fees Fund Multiplier Requested Granted O'Keefe $32,645,220 $7,000,000 $4,896,783 15.00% $1,650,360 2.97In re $17,769,224 Requested $3,109,614 17.50% $1,647,155 1.89Chrysler multiplierTrew $24,000,000 $1,385,000 $1,385,000 5.77% $1,573,095 .88In re Gen. $1.98 to 21.8 $9,500,000 $9,500,000 .44% to $3,158,182 3.01Motors billion .48%Castillo $61,652,250 $4,425,000 $4,425,000 7.18% $907,147 4.88McGee $7,257,000 to $2,250,000 $2,250,000 22% to $860,138 2.62 $10,257,000 31%Vaughn $244,000,000 $9,500,000 $9,500,000 3.89% $4,206,545 2.26
Comparing this case to similar cases, the plaintiffs original request of 15.83% (assuming a maximum settlement value of $69,277,430) is within the range of even the highest awards in this type of litigation. In the absence of any explanation by class counsel why the percentage should be raised to 25%, and the given percentages found in other cases, no greater percentage than the 15.83% originally requested is warranted.
Application of the lodestar cross-check also shows why the full amount of the fees requested should not be awarded and why the percentage-of-recovery based on the Court's valuation of the settlement should be granted. The courts in this Circuit are directed to use the "lodestar method" to cross-check the reasonableness of a percentage-of-recovery fee award. In re AT & T Corp., 455 F.3d at 164. The lodestar is calculated by multiplying the hours expended by an appropriate hourly rate. In re Gen. Motors, 55 F.3d at 819 n. 37. Then, the requested fee award, determined using the percentage-of-fee recovery method, is divided by the lodestar. In re AT & T Corp., 455 F.3d at 164. The resulting number is the lodestar multiplier. Id. Judicial approval of the multiplier is "discretionary and not susceptible to objective calculation." In re Prudential, 148 F.3d at 340. The Third Circuit has recognized that "[m]ultiples ranging from one to four are frequently awarded in common fund cases when the lodestar method is applied." In re Cendant PRIDES, 243 F.3d at 742 (citing In re Prudential, 148 F.3d at 341). However, "when the multiplier is too great, the court should reconsider its calculation under the percentage-of-recovery method, with an eye toward reducing the award." In re Rite Aid, 396 F.3d at 306.
The multiplier that a district court accepts in any particular case must rest on a reasoned basis. In re Prudential, 148 F.3d at 340. The Court must articulate the particular facts of the case that justify applying that multiplier. Id. at 340-41. For example, "[multipliers may reflect the risks of nonrecovery facing counsel, may serve as an incentive for counsel to undertake socially beneficial litigation, or may reward counsel for an extraordinary result." Id. at 340; see also In re AT & T Corp., 455 F.3d at 164 n. 4 (observing that "[t]he multiplier is a device that attempts to account for the contingent nature or risk involved in a particular case and the quality of the attorneys' work"). Moreover, although the cross-check calculation does not require "mathematical precision," id. at 169 n. 6, applying multipliers for the risk that attorneys bore or for their expertise "require[s] particular scrutiny and justification." In re Prudential, 148 F.3d at 341 n. 121.
In In re Cendant PRIDES, the Third Circuit vacated an attorney fee award where the lodestar multiplier was seven and the lower court failed to calculate, explain, or justify the result. 243 F.3d at 742. The fund had a value ranging from $263.5 to $341.5 million and attorneys' fees constituted 5.7% to 7.3% of the total fund. Id. at 741 n. 25. The appellate court was "seriously troubled" by this result because the case was not legally or factually complex and required no significant motion practice or discovery. Id. at 742. The court stated that "[i]n all the cases in which high percentages were applied to arrive at attorneys' fees, the courts explained the extensive amount of work that the attorneys had put into the case, and appropriately the lodestar multiplier in those cases never exceeded 2.99." Id. at 742.
In In re AT & T Corp., the Third Circuit affirmed an award with a cross-check multiplier of 1.28 where there was "significant time and effort devoted to the case by class counsel." 455 F.3d at 173. Most importantly, "the District Court did not justify its approval of the fee by reference to high fees in the past. It justified its
In this case, class counsel state that their fees under the lodestar method are $6,535,696.16, (Dewey, Docket Entry No. 194 Attach. 1 at 38; Dewey, Docket Entry No. 240 at 2-3; Dewey, Docket Entry No. 242 at 2), for the 6,036.80 hours of work that the Dewey counsel performed, (Dewey, Docket Entry No. 196 Attach. 2 at Ex. B; Dewey, Docket Entry No. 240 at 2-3), and 6,158.7 hours of work that the Delguercio counsel performed, (Dewey, Docket No. 195 Attach, 1 at 12; Dewey, Docket Entry No. 242 at 2), multiplied by the hourly rates that the plaintiffs argue are appropriate.
This 1.68 multiplier results from the plaintiffs' counsel's proposed lodestar figure. The proposed lodestar figure, of course, is based on the high hourly rates that the plaintiffs' counsel contend apply to their work. The proposed rates are based not on the rates that the plaintiffs' counsel actually charge. Rather, the proposed rates are based upon their survey of the rates other attorneys charged in other cases. (Dewey, Docket Entry No. 195 ¶ 14.) Other than to say that they "infrequently bill clients on an hourly basis," (Id.), and argue that any rates previously presented to the Court are out of date, the plaintiffs' counsel have failed to provide a good reason for the Court to completely ignore their own past rates. As a result, the Court will consider the rates that plaintiffs' counsel had represented to this Court that they charged as of April, 2009.
In April, 2009, the Mazie Slater firm submitted a fee petition to this Court. Drazin v. Horizon Blue Cross Blue Shield of New Jersey, Civ. No. 06-6219, Docket Entry No. 268 at 11, Attach. 2 ¶ 16; Ex. O
These rates would apply equally to the services of the Sporn firm. The work the Sporn firm performed was for a case filed in the District of New Jersey, not New York. Furthermore, this was not a situation where no competent New Jersey counsel was willing or able to take the case. Interfaith Cmty. Org. v. Honeywell Int'l Inc., 426 F.3d 694, 717 (3d Cir.2005). In fact, competent New Jersey attorneys performed the same work as the Sporn firm in the same case.
The Drazin plus CPI rate yields a lodestar of $4,606,086.95. Dividing the percentage-of-recovery fee award of $10,967,773 by this lodestar figure results in a lodestar multiplier of 2.38. For the reasons set forth below, this multiplier is higher than what is warranted for this case. To begin with, the Court does not consider this case to have achieved such an extraordinary result that the plaintiffs' counsel should be paid more than twice the
Moreover, the Court must look at the multiplier based on the risk of recovery with "particular scrutiny and justification." In re Prudential, 148 F.3d at 341 n. 121. Here, there were risks. For instance, there were risks that the nationwide class covering multiple car models, model years, and manufacturers based on varying state laws may not have successfully been certified. That said, much of the risk and work needed in this case was the direct result of the plaintiffs' decision to pursue a nationwide state law-based class action based upon multiple vehicle models, model years, and manufacturers. Thus, the massive amount of work in this case was the direct result of the plaintiffs' decision to file their complaints as they did. They are the masters of their complaints and all of the attorneys and their clients became servants to them. Thus, the challenges that the plaintiffs faced were, in part, self-imposed. Moreover, this case was initiated more than three years ago, and more than ten months were spent on settlement. (See Dewey, Docket Entry Nos. 154, 176.) Thus, this settlement does not represent a particularly speedy resolution. See, e.g., In re Cendant PRIDES, 243 F.3d at 725 (six months between filing and fairness hearing); In re Gen. Motors, 55 F.3d at 779-82 (less than one year between filing and fairness hearing).
Finally, while there is no doubt that a great deal of labor was expended in this case, counsel did not file this action on a "blank slate," Several other similar cases were filed and the work done in those cases served as a template for this case. For instance, the O'Keefe settlement provided a good example for resolving this case. See O'Keefe, 214 F.R.D. at 303-04; Weiss, 899 F.Supp. 1297. These prior cases and the lessons learned from them likely advanced the work done here. Moreover, given the number of warranty claims made even before this suit really got started, the plaintiffs' counsel had a pre-existing pool of available plaintiffs who would have likely satisfied the numerosity and commonality requirements for at least one claim. (Dewey, Docket No. 197, Attach. 1 ¶¶ 11-13) (describing service actions issued in August 2007, then expanded in June 2008, which, while issued after the suit, shows that a large number of customer complaints were present).
Accordingly, the Court cannot reconcile the requested multiplier of 3.44 or the 2.38 multiplier based upon the Drazin plus CPI rate on this record, especially in light of the Third Circuit's finding of a multiplier of 1.28 to be reasonable where there was "significant time and effort devoted to the case by class counsel." In re AT & T Corp., 455 F.3d at 173. As a result, the Court finds a percentage of recovery in the amount of 13.30% and the resulting lodestar multiplier of 2.0 are within the range the Circuit has approved and, as a result, fees in the amount of $9,207,248.19 will be awarded.
According to Paragraph 4.5 of the Amended and Superseding Settlement Agreement, the defendants agreed to pay each class representative a $10,000 incentive award, together with any other benefits to which he or she is entitled under the
According to class counsel, each plaintiff actively participated in this litigation by attending meetings, participating in telephone conversations, collecting documents, answering interrogatories, preparing for and attending depositions, being willing to testify at trial, and, for those who still had possession of their vehicles, surrendering them on two separate occasions for inspections. (See Dewey, Docket Entry No. 197 ¶¶ 2-3.) As in Cullen, "the assistance of these plaintiffs provided the foundation upon which this case was built. They were not in any sense figurehead plaintiffs as is sometimes the case in class action suits. They were active clients. As a result of their having come forward, thousands of passive class members will receive significant benefit[s] from the settlement fund." 197 F.R.D. at 146. For these reasons, and because the agreed upon amount is consistent with other cases, the Court will approve payment of $10,000 to each representative plaintiff: Kenneth Bayer, Jacqueline Delguercio, Patrick DeMartino, John M. Dewey, Lynda Gallo, Edward O. Griffin, Ronald Marans, Francis Nowicki, and Patricia Romeo. (Dewey, Docket Entry No. 173 ¶ 4.5); see also In re Ins. Brokerage Antitrust Litig., 579 F.3d at 285 (finding district court did not err in approving a settlement that included a $10,000 incentive award for each representative plaintiff).
Under Rule 23(h), "[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). Here, it is the parties' agreement and not Fed.R.Civ.P. 54(d) or any other statutory authority that gives rise to the plaintiffs' entitlement to reimbursement for costs. See Merck Sharp & Dohme Pharm., SRL v. Teva Pharm. USA, Inc., Civ. No. 07-1596, 2010 WL 1381413, at *4-7 (D.N.J. Mar. 31, 2010); Blake v. Nishimura, Civ. No. 08-00281, 2010 WL 1372420, at *10 (D.Haw. Mar. 31, 2010) (holding local rules to be inapplicable). Therefore, state law cost rules do not apply, The plaintiffs bear the evidentiary burden of showing that a particular claimed cost is reasonable.
While not governing here, Fed.R.Civ.P. 54(d), L. Civ. R. 54.1, 28 U.S.C. § 1920, and the case law provide guidance for assessing the reasonableness and recoverability of the expenses. For example, L. Civ. R. 54.1(g) permits recovery of the costs incurred securing interpreters and witnesses who are not parties to the suit, taking depositions, preparing visual aids admitted into evidence, and obtaining copies of documents. Section 1920 of Title 28 of the United States Code defines the costs a clerk or judge may tax as follows:
28 U.S.C. § 1920; see also Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987) (holding that "§ 1920 defines the term `costs' as used in Rule 54(d)"). Although some federal courts limit recoverable costs to those authorized by § 1920 or other statutes, Crawford Fitting, 482 U.S. at 445, 107 S.Ct. 2494, others have been more expansive and held that a witness's travel and lodging for court or deposition appearances, reasonable photocopying expenses, telephone and facsimile charges, postal, messenger, express mail service charges, witness and expert fees, and computer-assisted research are often deemed incidental to and reasonably incurred in connection with a large litigation and thus recoverable. Romero v. CSX Transp., Civ. No. 06-1783, 270 F.R.D. 199, 203-04, 2010 WL 2634312, at *4 (D.N.J. June 29, 2010) (explaining that 28 U.S.C. § 1821(c) contemplates reimbursement for witness travel at the most economical rate reasonably available or the mileage rate set for federal
Here, the plaintiffs' counsel seek reimbursement totaling $1,003,652.15. The evidence concerning expenses is set forth in the Certification of Mr. Slater dated June 9, 2010, (Dewey, Docket Entry No. 195 Attach. 1 ¶ 20), the Supplemental Certification of Mr. Slater dated July 8, 2010, (Dewey, Docket Entry No. 224 ¶ 18), the Certification of Mr. Sporn, dated June 9, 2010 (Dewey, Docket Entry No. 196 Attach. 3 Ex. C), the Second Supplemental Certification of Mr. Slater, dated July 23, 2010, (Dewey, Docket Entry No. 240 at 2-3), and the Supplemental Certification of Mr. Sporn, dated July 23, 2010. (Dewey, Docket Entry No. 242 at 2.) In further support of their request, Dr. Eads testified about the hours he and his staff spent preparing his valuation report and the time associated with testifying at his deposition and the hearing. (Fairness Hearing Ex. P-4.)
Mr. Sporn's Certification includes a detailed breakdown taken from the books and records of his firm that are kept in the ordinary course of its business and lists the payees and expenses as follows:
1. Investigation American Trademark Investigations, Inc. $ 804.17 Carfax, Inc. $ 95.092. Peter Van Suntum (Translator) $ 472.503. Research LexisNexis—Research $ 6,436.54 Thomson Reuters—Research $ 8,154.12 Pacer $ 394.244. Court Fees Filing Fee—U.S.D.C., District of New Jersey $ 150.00 N.J. Lawyers Fund for Clients' Protection $ 932.00 Pro Hac Vice Admission Charges $ 450.005. Service of Legal Papers and Witness Fees Demovsky Lawyer Service $ 6,885.106. Copying and Reproduction Costs Aero Photo Print, Inc. $ 45,976.59 Ricoh Business Solutions $ 24,810.487. Depositions Costs (Reporters, Videos, Transcripts) Vertiex/New York Reporting Co. $ 90,987.48 Legal Link, a Merrill Corporation Co. $ 145.00 Steno-Kath Reporting Services Ltd. $ 590.00 Kelly McArdle & Assoc. $ 936.25 Mazie Slater Katz & Freeman, LLC (Payment toward Deposition, Video Costs) $ 4,616.81 Reporters Ink Corp. $ 360.858. Expert and Consulting Fees David McLennan $ 15,722.56 The TASA Group, Inc. (Technical Advisory Service for Attorneys) $ 18,425.00 Collision Claims Associates, Inc. $ 3,506.25
Rimkus Consulting Group $ 2,400.00 Charles River Associates $ 23,700.35 Dr. Vinnies Auto Repair (Vincent M. Competello) $ 43,100.00 Edward Labaton $ 41,079.80 9. Travel, Lodging, Food $ 20,597.1610. Telephone, Fax, Postage $ 5,575.0011. Miscellaneous Federal Express $ 5,143.59 Delaware Division of Corporations $ 10.00 Edward Griffin (reimbursement for Travel, Lodging) $ 1,253.07 Keith Frederick, Esq. (Copy of Transcript) $ 101.30 Volkswagen Group of America, Inc. (parts purchase) $ 120.66 Expenses of Genova, Burns, & Vernoia (photocopying, telephone, travel) $ 1,989.34 Breakaway (Dart) Courier $ 51.40 Citistorage $ 61.08Total: $376,033.78 88
(Dewey, Docket Entry No. 196 Attach. 3; Dewey, Docket Entry No. 242 Attach. 2 at 2.)
While some of the expenses will be disallowed pursuant to the cases discussed herein or due to lack of sufficient explanation as to why they were incurred, Mr. Sporn's certification has detail that provides sufficient evidence to support the other expenses. Thus, based upon the above cited Rules, statutes, and case law, expenses for pro hac vice fees ($1,382), as well as travel, food, and lodging ($23,839.57) are all precluded. Pretlow v. Cumberland Cnty. Bd. of Soc. Servs., Civ. No. 04-2885, 2005 WL 3500028, at *9 (D.N.J. Dec. 20, 2005) (denying request for reimbursement for pro hac vice fees and noting that "under normal circumstances, a party that hires counsel from outside the forum of the litigation may not be compensated for travel time, travel costs, or the costs of local counsel") (citing Interfaith Cmty., 426 F.3d at 710 (stating that the plaintiff was not entitled to costs for outside counsel including train tickets from Virginia to New Jersey, lodging in New Jersey, rental cars, and meals)); see also Apple Corps Ltd. v. Int'l Collectors Soc'y, 25 F.Supp.2d 480, 499 (D.N.J.1998) (denying request for reimbursement for meals). In addition, plaintiff provided no basis to compensate Rimkus Consulting, a "nonretained expert," (Dewey, Docket Entry No. 224 ¶ 16), more than the $40.00 witness fee set forth in 28 U.S.C. § 1821. Therefore, the requested compensation of $2,400.00 will be reduced by $2,360.00.
As to the $41,079.80 in "Expert and Consulting Fees" for Edward Labaton, (Dewey, Docket Entry No. 242 Attach. 2), this expert submitted a certification, was deposed, and was mentioned at the Fairness Hearing as the individual involved in opining about the reasonableness of counsel's hourly rates. This expense is denied because it was not a basis upon which any relief was granted. Moreover, it was unnecessary given the volume of reported cases concerning reasonable rates in this District and available comparator's, including the Sporn's firm's local counsel and its New Jersey co-counsel. As a result, the Sporn firm's reimbursement request of $376,033.78 will be reduced by $23,839.57 for travel, food and lodging, $1,382 for pro hac vice fees, $2,360 for the work of Rimkus Consulting, $41,079.80 for the work of Edward Labaton, and for reasons discussed herein, $15,800.23 for the work Charles River Associates performed, resulting in a reimbursement award to Schoengold & Sporn, P.C. of $291,572.18.
As it relates to the $627,618.37 reimbursement for expenses that Mazie Slater seeks, Mr. Slater has presented his firm's printout of un-reimbursed expenses. These expenses are:
1. Attorney Travel/Disbursement/Expenses $ 3,549.89 2. Searches $ 122.56 3. Subpoena Fees $ 664.75 4. Telephone Services $ 1,477.57
5. Lawyer Service $ 281.32 6. Interpreter/Translations $ 5,680.50 7. Transcripts $ 58,630.55 8. Court Fees $ 399.28 9. Legal Research $ 7,034.44 10. Internal Copying Expenses $ 17,044.39 11. Outside Copying/Printing Expenses $ 29,985.37 12. Internet Investigation $ 7,902.12 13. Expert Fees $483,189.33 14. Federal Express $ 4,330.75 15. Messengers $ 728.64 16. Postage $ 239.16 17. Computer storage discs $ 30.49 18. Witness expenses $ 250.00 19. Bosch document production $ 6,365.13 20. Refunds $ (287.87) Total: $627,618.37
(Dewey, Docket Entry No. 195 Attach. 1 at 13; Docket Entry No. 224 ¶ 18.)
As it relates to the $483,189.33 sought to compensate their experts, Mr. Slater provided a supplemental certification setting forth the following experts' names, areas of expected expert testimony, and expenses:
Name Subject Cost of Services Donald Phillips Professional engineer who provided pre-complaint $2,500.00 advice. William E. Gest Automotive engineer who was expected to testify at trial $88,352.43 regarding design and engineering drawings. Joseph Bradley Warranty and customer service specialist expected to $6,600.00 testify at trial about warranties and customer service campaigns. Gerald Meyers Automotive industry specialist expected to testify at trial $17,163.75 about defendant's practices and potential remedies. Robert C. Keller Chemist expected to testify at trial about the chemical $21,944.46 properties of certain components used in the drain valves. Martin Potok Product engineer expected to testify at trial about design $13,707.33 flaws in the plenum and sunroof drain and provide alternate designs. Mark Allen Automotive technician expected to testify at trial about $21,254.00 the cause of water ingress, damages, and Volkswagen's maintenance instructions. Ian Hanson Automotive technician expected to testify at trial about $2,000.00 repair and maintenance procedures. Kilbourne Provided statistical analysis of customer complaint and $70,600.00 Company warranty data for use of settlement valuation experts and an alternative method to calculate the value of the settlement. Richard Automotive appraiser hired to provide data regarding $5,337.59 Hixenbaugh diminution of the value of water damaged vehicles. George C. Fads Economist hired to provide value of the settlement. $233,729.77
(Dewey, Docket Entry No. 224 ¶¶ 4-14; Dewey, Docket Entry No. 240 at 4.)
Some of the experts are duplicative. For example, the plaintiffs had two automotive industry experts (Messrs. Bradley and Meyers) prepared to testify about warranty and customer service issues, for a total of $23,763.75. There is no way to distinguish their testimony to know how each was reasonably necessary to pursue the plaintiffs' claim. See Baldi Bros. Constructors, 52 Fed.Cl. at 82. The same can be said of the two automotive technicians (Messrs. Allen and Hanson), both of whom would testify about repair and maintenance issues, for a total of $23,254. There is nothing to show that both were reasonably necessary for the plaintiffs to pursue their claims. Id.; see also In re Paoli R.R. Yard PCB Litig., 221 F.3d at 463 n. 4 (discussing cases disallowing costs for unnecessary witnesses or otherwise encumbering
The plaintiffs also seek compensation totaling $309,667.36 for the reports and settlement valuation opinions from Kilbourne Company,
Second, and as significantly, the major purpose for these experts was to justify the use of the percentage-of-recovery method to calculate the attorneys' fees. Unlike the other experts, who provided information to pursue the merits of the claims and thereby advance the interests of the class, these experts really only advanced the interests of the lawyers. Although Dr. Eads's opinion, for example, confirmed that the settlement had value and that there is a reasonable basis to provide different benefits to different class members, the other technical experts that the plaintiffs had engaged for trial would have been able to provide similar helpful information. As this expensive opinion was not reasonably necessary for the plaintiffs to pursue their claims, the Court declines to provide the full relief sought. Thus, the Court will award only one-third of the reimbursement sought for the expenses associated with the Kilbourne Company, Charles River Associates and Dr. Eads, and Mr. Hixenbaugh and will order reimbursement totaling $103,222.45 for the work of these experts and will disallow $206,444.91 for expenses associated with their services.
In addition, the reimbursement requests of $3,549.89 for what is labeled as "attorney travel/disbursement/expenses," $122.56 for what is labeled as "searches," $7,902.12 for what is labeled as "internet investigation," and $250 for what is labeled as "witness expenses" will be denied for lack of specific information to show that the expenses are reasonable or how they furthered the plaintiffs' pursuit of their claims. The remaining expenses are typical, recognized as compensable, and adequately documented. Therefore, Mazie Slater will be awarded reimbursement in the amount of $385,840.01.
For the reasons stated herein, the motion final approval of the settlement class and class settlement is granted, the amount of $9,207,248.19 shall be awarded as fees to class counsel, and reimbursement for expenses is granted in the amount of $385,962.57 for Mazie Slater Katz and Freeman, LLC and in the amount of $291,572.18 for Schoengold & Sporn, P.C. and $10,000 shall be awarded to each of the following class representatives: Kenneth Bayer, Jacqueline Delguercio, Patrick DeMartino, John M. Dewey, Lynda Gallo, Edward O. Griffin, Ronald Marans, Francis Nowicki, and Patricia Romeo.
A judgment consistent with this Opinion will be issued.
APPENDIX A Drazin Rates
(comparable atty's
or Dewey rates Drazin Rates
Position / Graduation Dewey Hourly used when Drazin (CPI-Adjusted) (not applied Dewey Year Rates Rates not available ) to retained Dewey rates) Hours Lodestar
David Mazie Partner (1986) $795.00 $560.00 $572.41 88.5 $ 50,658.16
Adam Slater Partner (1993) $695.00 $460.00 $470.19 1823.3 $ 857,302.42
Eric Katz Partner (1991) $650.00 $460.00 $470.19 156.6 $ 73,632.18
David Freeman Partner (1988) $650.00 $460.00 $470.19 750 $ 352,644.56
Jennifer Pawlak Associate (1994) $460.00 $260.00 $265.76 125.8 $ 33,432.75
Matthew Mendelsohn Associate (2005) $425.00 $215.00 $219.76 1602.9 $ 352,259.71
Karen Kelsen Associate (2008) $275.00 $215.00 $219.76 1292.9 $ 284,127.70
Irina Elgart Associate (1999) $275.00 $268.00 $273.94 11.2 $ 3,068.11
Steven Sederens Contract Assoc. (N/A) $150.00 $150.00 $150.00 77 $ 11,550.00
Cheryll Calderon Associate (2006) $225.00 $215.00 $219.76 105.1 $ 23,096.78
John Gagnon Associate (2007) $325.00 $215.00 $219.76 3.5 $ 769.16
6036.8 $ 2,042,541.53
Position/Graduation Dewey Hourly Drazin Rates
Year Rates (CPI-Adjusted) Hours Lodestar
Samuel P. Sporn Partner (1953) $790.00 $572.41 1334.8 $ 764,052.87
Joel P. Laitman Partner (1986) $650.00 $470.19 27 $ 12,695.13
Christopher Lometti Partner (1986) $650.00 $470.19 60.25 $ 28,328.95
Kurt Hunciker Of Counsel (1978) $650.00 $470.19 2.5 $ 1,175.48
Jay P. Saltzman Of Counsel (1994) $600.00 $470.19 2683.02 $ 1,261,529.17
Ashley Kim Associate (1999) $475.00 $265.76 669.08 $ 177,814.70
Frank Schirripa Associate (2002) $450.00 $265.76 420.05 $ 111,632.49
Daniel B. Rehns Associate (2005) $325.00 $219.76 162.5 $ 35,711.00
Pietro deVolpi Associate (2008) $250.00 $219.76 638.5 $ 140,316.76
Irena Shpigel Attorney (N/A) $215.00 $219.76 16 $ 3,516.16
Tom Santanello Attorney (N/A) $215.00 $219.76 72 $ 15,822.72
Marta Michael Law Clerk (N/A) $185.00 $150.00 53.5 $ 8,025.00
Nancy Ahern Law Clerk (N/A) $185.00 $150.00 19.5 $ 2,925.00
6158.7 $ 2,563,545.42
____________________________________________________________________________________________________________________________________________________
Total Lodestar $ 4,606,086.95
In class action lawsuits, unnamed class members generally "are not `parties' before the court in the sense of being able to direct the litigation," because in representational litigation procedural safeguards are in place to ensure that the representative adequately represents the interests of the class. Williams v. Gen. Elec. Capital Auto Lease, 159 F.3d 266, 269 (7th Cir.1998); Fed.R.Civ.P. 23(a)(3)(4). As such, the unnamed class members are "bound by the plaintiffs' decision to consent to the magistrate judge's § 636(c) jurisdiction." Stackhouse v. McKnight, 168 Fed. Appx. 464, 466 n. 1 (2d Cir.2006); Kingsborough v. Sprint Commc'ns Co., 673 F.Supp.2d 24, 30 (D.Mass.2009) (holding that unnamed class members are bound by the named class members' consent and are not "parties" for the purposes of § 636(c) despite their status as parties for the purpose of bringing an appeal); see Williams, 159 F.3d at 269. While the Supreme Court established that unnamed class members are "parties" for the purpose of appealing a ruling on their objection to a class action settlement and, thus, need not first intervene, the Court made clear that "considering non-named class members parties for the purpose of bringing an appeal [does not] conflict with any other aspect of class action procedure." Devlin v. Scardelletti, 536 U.S. 1, 14, 122 S.Ct. 2005, 153 L.Ed.2d 27 (2002). Thus, "the Court's decision in Devlin does not establish [that an unnamed class member is] a `party' for purposes of § 636(c)." Kingsborough, 673 F.Supp.2d at 30.
Relying on Stackhouse, 168 Fed.Appx. at 467, certain objectors raise the possibility that other objectors can "later vacate a magistrate judge's dispositive order by arguing that they are parties under § 636(c) and did not give consent to be heard by a magistrate judge." (Dewey, Docket Entry No. 232 at 5). Their reliance on Stackhouse is misplaced. First. Stackhouse addressed whether or not a motion to intervene is a dispositive motion that a magistrate judge in the Second Circuit can decide only with consent of the parties to the motion or whether it can only be addressed by way of a report and recommendation. There are no motions to intervene in the present case so this issue is not implicated. Second, even if there had been a motion to intervene filed, it is not viewed as a dispositive motion in this District. In re Gabapentin Patent Litig., 312 F.Supp.2d 653, 661 (D.N.J. 2004) (stating that "a motion to intervene is typically treated as non-dispositive"); United States. v. W.R. Grace & Co.-Conn., 185 F.R.D. 184, 187 (D.N.J.1999) (noting that it is "common practice in this district for a magistrate judge to hear and determine a motion to intervene" in accordance with L. Civ. R. 72.1(a)(2), regardless of whether the parties consent to magistrate jurisdiction). Third, objectors do not have a right to intervene in a class action because intervention as a matter of right is inconsistent with the goal of Rule 23. Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 551-52, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974); In re Cmty. Bank of N. Va., 418 F.3d 277, 315 (3d Cir.2005). Finally, because no Rule 24 intervention motion was filed, the Court need not address whether such a motion, if granted, gives rise to the presence of a new "party" whose consent would be needed.
For all of these reasons, the Court finds that the named parties' consent to magistrate judge jurisdiction permits it to decide all issues related to the motions for final approval of the class settlement and attorneys' fees, as well as objections to both.
Fed.R.Civ.P. 23(e).
Section 56:8-19 of the CFA requires a court to "award reasonable costs of suit" to the prevailing party. See also New Jerseyans for Death Penalty Moratorium v. N.J. Dep't of Corrections, 185 N.J. 137, 152, 883 A.2d 329 (2005) (observing that the CFA awards fees to the prevailing party). Federal courts addressing fee awards under the CFA look to federal civil rights cases for guidance. Vukovich v. Haifa, Inc., Civ. No. 03-737, 2007 WL 2596547, at *2 (D.N.J. Sept. 5, 2007) (citations omitted). To be deemed a "prevailing party" under § 1988, the "party must achieve a court-ordered change in the legal relationship between the plaintiff and the defendant." People Against Police Violence v. City of Pittsburgh, 520 F.3d 226, 232 (3d Cir.2008) (emphasis added and internal quotation marks omitted). A party "does not become a `prevailing party' solely because his lawsuit causes a voluntary change in the defendant's conduct." Id. As the Hon. Dickinson R. Debevoise observed, "[i]n such a situation, the change in legal relationships lacks the requisite judicial imprimatur of a court-ordered change." Singer Mgmt. Consultants, Inc. v. Milgram, 608 F.Supp.2d 607 (D.N.J.2009) (internal citations and quotation marks omitted). Because no court-ordered change in the legal relationship between the parties has occurred here, there is no "prevailing party" as that term is defined in § 1988 and, therefore, no fee shift under the CFA. While there are some circumstances in which a party may be deemed a "prevailing party" in a dispute resolved via settlement agreement that can be enforced through a consent order, see, e.g., Buckhannon Bd. & Care Home, Inc. v. W.Va. Dep't of Health & Human Res., 532 U.S. 598, 603-04, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001); H.I.P. (Heightened Indep. & Progress, Inc.) v. K. Hovnanian at Mahwah VI, Inc., 291 N.J.Super. 144, 154, 676 A.2d 1166 (L.Div. 1996), this case does not involve such a situation as there is no judicially ordered material alteration in the parties' legal relationship. The change in the relationship between the parties here occurred by virtue of a contract they voluntarily entered. Moreover, the case here is not settled by way of a consent decree. Buckhannon Bd. & Care Home, Inc., 532 U.S. at 604 n. 7, 121 S.Ct. 1835. Rather, the Court's Final Order will only dismiss claims, approve a settlement, limit its use, and state that the Court retains jurisdiction to enforce the terms of the settlement. The latter simply means that the parties will not need to institute a separate contract action if a party breaches the settlement agreement. As a result, the Court declines to find that this case has any "prevailing party" under the CFA and, thus, no court-ordered fee shift will occur. Rather, the only basis upon which the Court has deviated from the American Rule and awarded fees is the private agreement of the parties.
