NOEL L. HILLMAN, District Judge.
This case concerns a class action for constitutional and statutory harms suffered as a result of strip searches conducted at the Burlington County Correctional Facility ("BCCF"). Presently before the Court are four motions: (1) a Motion for Final Approval of the Class Action Settlement ("Motion for Final Settlement Approval"), (2) a Motion for Incentive Award on Behalf of Class Representative Tammy Marie Haas ("Motion for Haas Incentive Award Approval"), (3) a Motion for Attorneys' Fees and Expenses for Class Counsel Poplar and Riback ("Motion for Poplar and Riback Fee Approval"), (4) a Motion for Attorneys' Fees and Expenses for Class Counsel Lask, Goldman, and Novack ("Motion for Lask, Goldman, and Novack Fee Approval"). For the reasons explained herein, this Court will grant the Motion for Final Settlement Approval, grant the Motion for Haas Incentive Award Approval, and refer all counsel's attorneys' fees (and expenses) requests for further mediation before the assigned Magistrate Judge.
Plaintiffs claim BCCF and Burlington County had an unconstitutional and illegal policy of strip-searching all individuals entering their facilities without first establishing reasonable suspicion. Specifically, Plaintiffs Haas and Szczpaniak brought claims on behalf of individuals being detained on non-indictable offenses who were subject to this alleged policy. The claims were brought under 42 U.S.C. § 1983 and the New Jersey Civil Rights Act ("NJCRA"). Plaintiff Haas filed her class action complaint in this Court in February 2008. Plaintiff Szczpaniak filed his class action complaint in the Superior Court of New Jersey, Burlington County in December 2009. Plaintiff Szczpaniak's complaint was removed to this Court shortly thereafter.
On November 24, 2009, both of these class action complaints were stayed pending the outcome of
As a result, the Court instructed the parties to focus briefing on the pending state law claims under the NJCRA. Oral argument was again held in March 2015. Decision was reserved, but the Court did request additional briefing on class definition for the class certification motion. Shortly thereafter, the Court ordered the parties to begin mediation before the able Magistrate Judge John Hughes (Ret.). Mediation occurred between June 2014 and February 2016, but was ultimately stalled because a dispute arose between Defendants and their insurance carrier concerning coverage.
The equally able Magistrate Judge presently assigned to the matter, the Hon. Joel Schneider, instructed the parties in March 2017 that settlement discussions would continue under his supervision. After resolving the dispute between Defendants and their insurance carrier, Judge Schneider was successful in bringing the parties together on settlement terms. A memorandum of understanding was drafted in June 2017, and a settlement agreement was executed on October 4, 2017.
That same day, Plaintiffs filed a motion to certify the class for preliminary approval. After extensive briefing, the Court held a hearing on this motion on January 31, 2018. During that hearing, this Court appointed Carl D. Poplar and David J. Novack as co-class counsel. The Court also appointed Strategic Claim Services ("SCS") to act as the class claims administrator. Finally, the Court certified the settlement class for purposes of settlement, preliminarily approved the settlement, and ordered notice to be sent to all putative class members. A formal Order was entered on April 20, 2018. Notice was sent in accordance with this Order and claims were received by SCS. In December 2018, the instant motions described
The settlement agreement under review in this case was executed on October 4, 2017 (the "Settlement Agreement"). The Court granted preliminary approval of the Settlement Agreement and certified the settlement class on April 20, 2018. Now, considering notice to class members has been completed, it is time for the Court to consider whether the terms of the Settlement Agreement meet the standard under Federal Rule of Civil Procedure 23(e). Before engaging in the legal analysis required, this Court lays out the terms of the settlement agreement.
The members of the settlement class (the "Class" or "Class Members") include:
Class Members are entitled to a share of the settlement's value. A settlement fund has been established in the amount of $1,475,000, paid into by both Burlington County and its insurer. Class Members are eligible to receive up to $400 per claim. If the Class Members exceed 3,487, the amount per claim will be reduced on a pro-rata basis. If the settlement fund is not entirely exhausted by claimants, the remaining funds will revert back to Defendants and their insurance carrier.
In addition to monetary relief, the Settlement Agreement also discloses that Burlington County has revised its strip search policies effective February 28, 2013. The new policies prohibit strip searches of all non-indictable pretrial detainees in the absence of reasonable suspicion. The officers who will be implementing this policy have been appropriately trained. The new policy, according to the parties, is in accord with statutory and constitutional obligations, state and federal.
The Settlement Agreement — and this Court's Order — required all putative class members to submit their claims by October 15, 2018. Notice was sent in the manner described — and previously approved by the Court —
While the Court will examine the legal basis for accepting these claims
As a result of the email sent by SCS after the claims period closed in this case, there were numerous claimants who filed late claims.
In exchange for the above benefits, the settlement provides for the dismissal with prejudice of the claims asserted in this action, and that all Class Members will fully release Defendants from all federal and state law claims that could have been asserted in this action, including those claims relating to the practice of unlawful strip searches during the class period. Any Class Members who opt-out of the settlement within the time period prescribed in the agreement will not receive an award and do not release any related claims they may possess.
In addition to the $1,475,000, Defendants also agree to pay $900,000 in attorneys' fees and $25,000 in costs. The attorneys' fees, although paid into the general settlement fund, do not reduce funds available to the class members. Out of the $1,475,000 fund for class members, however, the Settlement Agreement directs that $80,000 will be paid to the class representatives as an incentive award. Plaintiff Haas is slated to receive $50,000 and Plaintiff Szczpaniak agreed to receive $30,000. In addition to the Settlement Agreement, the class representatives Haas and Szczpaniak signed a separate agreement reflecting that they would receive the above amounts in consideration for the release of all claims they may have against Defendants, among other things. (
In addition to the attorneys' fees and class incentive fees described
After preliminary approval by this Court, notice was published in accordance with the Settlement Agreement. The Settlement Agreement required the settlement administrator, SCS, to mail notices approved by the Court to each putative class member and publish advertisements for the settlement in print, online through various websites, and via a news release. SCS also maintains a website to provide information about the settlement to Class Members. Putative class members, totaling almost 14,000 individuals, were given constitutionally adequate notice within the time prescribed in the Settlement Agreement. Additionally, as described
As of January 16, 2019, Plaintiffs have received 2,429 claims.
One objection
(emphasis in original). The Court construed this as an objection to the proposed incentive award of $50,000 for Plaintiff Haas. The Court notes here that Haas's incentive award is 125, not 1,000, times larger than an individual class claimant.
A class action, pursuant to Federal Rule of Civil Procedure 23(e), cannot be settled without the approval of the Court and a determination that the proposed settlement is fair, reasonable, and adequate.
In assessing the fairness of a class action settlement, a district court should consider several factors — called the
Where "negotiations were conducted at `arms' length by experienced counsel after adequate discovery, . . . there is a presumption that the results of the process adequately vindicate the interests of the absentees.'"
This factor "is intended to capture `the probable costs, in both time and money, of continued litigation.'"
This is a class action concerning claims by 13,895 potential claimants. To bring this action to judgment via trial, this Court would likely need to consider a class certification motion, summary judgment motions, and pre-trial motions. In addition, more discovery would likely be requested and multiple appeals would likely be taken. Trial would likely be long, complex, and burdensome upon the Court and the parties. Plaintiffs estimate this process, including trial, would take another three years. This, Plaintiffs assert, could lead to less class members being able to claim a benefit. For these reasons, the Court finds this factor weighs in favor of approving the Settlement Agreement.
The second
The third
Discovery in this case included:
This discovery took place over the course of approximately one year, between November 2012 and September 2013. As the parties know, this case has been pending before the Court for nearly a decade.
This Court finds this factor weighs in favor of approving the settlement. This Court finds this case is similar to the
The fourth and fifth
The risks of litigating this case to its conclusion, as in many of the cases before this Court, are manifest and multifaceted. The parties are likely to contest certification, liability, and whether damages
Even if Plaintiffs were successful on all of these issues, the parties will still be left to determine which claimants are properly within the Class. These are precisely the reasons why settlement is favored by the parties in the vast majority of cases before the Court and why it should be favored in this specific case. Accordingly, these factors favor approving the Settlement Agreement.
The sixth
The seventh
Plaintiffs here explain that Defendants are likely unable to sustain a larger judgment. In this case, a significant dispute erupted between Defendants and their insurance carrier. This, according to Plaintiffs, imposed the risk of a complete denial of coverage, which would have left the burden of this judgment solely on Defendants, a public entity with limited coffers. The Court finds this factor also favors approving the Settlement Agreement.
The final two
It is difficult to ascertain what the best possible recovery would be in this factual scenario, especially for an individual plaintiff outside of the class context. Cases concerning this particular type of constitutional or statutory harm are usually tried in the class context. It appears that this would be a reasonable settlement in light of the best possible recovery and is certainly within the range of recoveries in other, similar class actions. (
Considering the relatively old age of the case and the dispute between Defendants and their insurer, it appears Plaintiffs are correct in asserting this is reasonable in light of the best possible recovery and the attendant litigation risks. Thus, this Court finds these two factors weigh in favor of approving the settlement.
The analysis of the
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." A claim for an award must be made by motion,
"[A] thorough judicial review of fee applications is required in all class action settlements."
Since this case was settled under New Jersey law and is subject to a New Jersey fee-shifting statute, attorney's fees must be calculated using the New Jersey lodestar method articulated by the New Jersey Supreme Court in
The lodestar method requires the Court to calculate "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate."
Counsel has indicated that their usual billing rates were used for this case. This Court determines, because counsel charged at their standard billing rate, that the billing rates are reasonable. In aggregate, counsel claims to have billed 3,831 hours.
The Court finds the agreed to fees of $900,000 are reasonable in light of the raw lodestar amount. First, the fees agreed to are less than 40% of the raw lodestar. A negative lodestar suggests the fees requested are reasonable, even in light of the potential for manipulation of the lodestar. Second, this Court notes that "the absence of substantial objections by class members to the fee requests weigh[s] in favor of approving the fee request."
Finally, a cross-check of the lodestar method with the percentage-of-recovery ("POR") method
Accordingly, this Court finds the attorneys' fees requested in the settlement agreement are reasonable and approves the amount requested, in the aggregate. This Court also approves as reasonable the additional $25,000 set aside to cover out-of-pocket costs paid for by Plaintiffs' counsel throughout the decade of this litigation. This Court reserves decision on the amount of fees each counsel will receive. This Court will not — at this juncture — determine the merits of class counsel's disputes nor determine whether a
Since this case has been resolved pursuant to state law claims, this Court must look to New Jersey law to determine whether the incentive awards for the class representatives are appropriate in this case. Whether to grant an incentive award is "entirely within the trial court's discretion."
Both Plaintiff Haas's and Szczpaniak's role in this case show that the first factor weighs in favor of their respective incentive awards. Their willingness to act as class representatives required them to make public the fact that they were arrested (and the reasons for their arrest), strip searched, and detained. For Plaintiff Haas, this resulted in various personal assaults during the pendency of the litigation, and may have resulted in the same for Plaintiff Szczpaniak, as well as complications concerning the employment of Haas's immediate family member.
This litigation has spanned a decade, and Plaintiff Haas has been there from the start. Plaintiff Szczpaniak joined the litigation a year later, spending approximately nine years as a class representative. Their role required responding to discovery requests, being deposed, appearing in court, and participating in settlement discussions. Over a decade-long period, this amounts to a significant outlay of time and effort. The third factor weighs in favor of an incentive award. For the same reasons, the fourth factor also weighs in favor of an incentive award.
Finally, the Court considers the fifth factor. Plaintiffs Haas and Szczpaniak did not stand to personally benefit for their service as class representatives as a result of this litigation, absent the agreed to incentive awards. It is unlikely that either would be subject to a strip search again at BCCF (even though that unlikely event did allegedly occur to Plaintiff Haas). Therefore, a $400 award would be a rather small sum to compensate their service, which achieved the greater purpose of compensating the class and effectuating a meaningful change in policy at BCCF with a substantial public benefit. Thus, this factor favors an incentive award.
The Court must also note that one individual objected to the incentive award for Plaintiff Haas. Essentially, the individual stated he thought the amount was too high. Considering the facts discussed
This Court also examines the administrative fee that the Settlement Agreement contemplates for the claims administrator, SCS. Under the terms of the Settlement Agreement, SCS may be paid up to $300,000 for its services in providing notice to the class and processing claims, from receipt through payment. There is no special test for determining whether or not this amount of money is fair and reasonable.
This Court notes, however, various facts which support its decision to approve of the amount of fees paid to SCS. First, the Court notes that there has been no objection by any Class Member to the Settlement Agreement's provision granting $300,000 to SCS. Second, this Court notes that this payment is not taken from the settlement fund, but from a separate amount. The payment to SCS, therefore, will have no effect on the amounts available to class members. Third, the amount does not strike this Court as unreasonable. SCS was tasked with providing notice through various means, creating and maintaining a website, fielding calls and correspondence from putative class members, and receiving and organizing claims. This is no small task for a class containing almost 14,000 individuals.
Accordingly, this Court approves payment of up to $300,000 — as contemplated by the Settlement Agreement — to SCS to compensate it for the work it has done on behalf of the Class and counsel.
Finally, in a letter filed with this Court on January 11, 2019, Plaintiffs' counsel requested this Court to preemptively consider whether it would accept untimely claims. The late claims this Court must consider are those first filed with SCS after the October 15, 2018 deadline.
The Court now finds that the Settlement Agreement, executed by all parties, requires SCS to accept all claims up to and including January 16, 2019 — the date of the final fairness hearing. The settlement agreement requires the parties to request the Court consider these untimely claims and include them in the class. Thus, the following decision concerning late claimants applies to all claims received by SCS as of 5 PM on Wednesday, January 16, 2019.
Plaintiffs assert that this Court must consider the
First, the danger of prejudice to the Defendants. The Court finds here there is no prejudice to Defendants. Defendants, after arms-length negotiations, agreed to accept claims up until the date of the final fairness hearing, which was January 16, 2019. The parties agreed that they would petition the Court to allow these late claimants into the Class. Since Defendants agreed to this procedure, the Court does not find any prejudice will result.
Second, the Court must consider the length of the delay and its potential effects on the judicial proceedings. The delay was — at most — three months, which equals the time between the October 15 deadline and the final fairness hearing. In a case that has spanned nearly eleven years, this is rather insubstantial. Moreover, it has no effect on the judicial proceedings. Besides occupying some argument time at the final fairness hearing and the time to form this Opinion, it did not delay the Court's final opinion in this matter nor does it delay payment of settlement monies to timely claimants.
Third, the Court must consider the reason for the delay. It appears the reason for the delay here is inherent in the unique nature of the class. The amount of time that had elapsed between a strip search and settlement ranged between a decade or more and five years. Records which may have been accurate at the time of their strip search at the BCCF may be inaccurate now. Thus, individuals were difficult to locate and provide notice to. While this Court still finds that constitutionally adequate notice was provided to the Class, there is reason to believe that the late claimants did not receive actual notice until direct emails were sent after the original claims period had closed. Late claimants should not be punished because SCS failed to send emails before the class period closed. This Court finds this factor favors inclusion of the late claimants.
Fourth, the Court must consider whether the late claimants acted in good faith. This Court finds the late claimants acted in good faith. The late claimants likely submitted claims after receiving an email from SCS advising them that, although their claim was late, it would still be brought before the Court for approval. This appears to show that late claimants submitted their claim with the good faith belief — created through the email — that untimely claims could still be made. Thus, this Court finds this factor also weighs in favor of inclusion of the late claimants.
Additionally, the Court notes two other facts motivating its decision here. First is the fact that the parties agreed to this process in advance of notice being provided. Therefore, there is no prejudice to Defendants — as articulated supra — but there was also an expectation created in the class members. As long as the claim was received on the date of the final fairness hearing, their counsel had a legal obligation to argue for their inclusion. Second is the fact that Defendants still stand to receive a substantial reverter. While that reverter has decreased because of the inclusion of late claimants, Defendants are still able to retain some funds originally pledged to Class Members. Finally, those claimants who filed timely claims will not be harmed because allowance of the late-filed claims does not diminish their award under the settlement.
Accordingly, this Court finds — within its equitable discretion — that all claimants who have filed claims by 5 PM on January 16, 2019 will be entitled to a share of the settlement fund as outline in the Settlement Agreement.
For the reasons stated herein, this Court will grant the Motion for Final Settlement Approval and the Motion for Haas Incentive Award Approval. The Court will refer the Motion for Poplar and Riback Fee Approval and the Motion for Lask, Goldman, and Novack Fee Approval to Magistrate Judge Schneider for further resolution.
An appropriate Order will be entered.