Robert M. Dow, Jr., United States District Judge.
Before the Court are Class Counsel's petition for an award of attorneys' fees and reimbursement of expenses [613], Schreiber Foods, Inc.'s ("Schreiber") sealed motion for Rule 11 sanctions [676], and Schreiber's amended bill of costs [694]. Ancillary to these motions are Defendant Dairy Farmers of America's ("DFA") motion for leave to file a response to the Direct Purchaser Plaintiffs' reply memorandum in further support of Class Counsel's fee petition [649], and Direct Purchaser Plaintiffs' motions for leave to file a surreply in further opposition to Schreiber's motion for Rule 11 sanctions [703] and to seal exhibit 1 to that motion [701].
For the reasons stated below, the Court grants Class Counsel's fee petition [613], awarding them one-third of the $46 million common fund ($15,333,333.33) with interest thereon at the same rate paid on the Settlement Fund, plus $488,491.24 in costs and expenses. The Court grants DFA's motion for leave to file a response to Direct Purchaser Plaintiffs' reply memorandum in further support of Class Counsel's fee petition [649]. The Court denies Schreiber's motion for Rule 11 sanctions [676]. The Court grants in part and denies in part Direct Purchaser Plaintiffs' motion to file a surreply [703] and Direct Purchaser Plaintiffs' motion to file exhibit 1 to their surreply under seal [701], granting Plaintiffs leave to file only the exhibits to their motion to file a surreply, which will remain under seal on the Court's docket as currently filed. Finally, the Court grants Schreiber's bill of costs [694], and awards it $32,215.23.
A more complete factual and procedural history can be found in this Court's order granting Schreiber's motion for summary judgment. [652, available at In re Dairy Farmers of Am., Inc., Cheese Antitrust Litig., 60 F.Supp.3d 914, 2014 WL 4083938 (N.D.Ill. Aug. 18, 2014).]
Direct Purchaser Plaintiffs filed their first class action complaint against various DFA-related defendants on March 13, 2009. After a heavily-briefed motion-to-dismiss phase, Judge Hibbler (to whom this case previously was assigned) allowed certain of Plaintiffs' claims to proceed [see 141 (Feb. 4, 2011)], after which the parties began engaging in a series of settlement discussions and proceedings. On or about March 18, 2012, Plaintiffs and DFA agreed to a payment of $46,000,000 in cash as consideration for a proposed settlement (the "Settlement Fund"). [634, ¶ 6.] It was approximately one year later that Direct Purchaser Plaintiffs moved for preliminary approval of the settlement [327 (Mar. 21, 2013)], which the Court granted on
Three years after filing their first class action complaint against DFA—and just weeks prior to reaching an agreement regarding the monetary component of their settlement with DFA—Direct Purchaser Plaintiffs filed a second amended consolidated class action complaint, adding Schreiber as a defendant. [245 (Mar. 22, 2012).] Approximately six weeks later, on May 9, 2012, Schreiber's counsel sent a letter to Class Counsel, claiming that Plaintiffs had no reasonable basis for the factual allegations in their complaint and requesting that Plaintiffs withdraw their complaint, citing the sanctions provision of Federal Rule of Civil Procedure 11(c)(2). [688, ex. A.] Five days after sending this letter, Schreiber moved to dismiss Plaintiffs' complaint [265], which the Court granted in part and denied in part on January 18, 2013[314]. Then, after a year's worth of discovery transpired, Schreiber moved for summary judgment [430 (Dec. 13, 2013)], which the Court granted [652 (Aug. 18, 2014)]. Prior to the Court's ruling on Schreiber's motion (but while the motion was still pending), Schreiber's counsel sent another letter to Class Counsel [see 676-1, ex. A (Mar. 19, 2014)], reiterating its Rule 11 objections and attaching a draft of its Rule 11 motion for sanctions. Schreiber filed an amended version of its Rule 11 motion shortly after its victory on summary judgment. [See 673 (Sept. 18, 2014).] Schreiber also filed a bill of costs, seeking reimbursement of fees as the prevailing party. [679; revised at 694.]
Prior to being sued by Plaintiffs, Schreiber purportedly was the largest member of the settling class. [See 619, at 1.] But Schreiber was not officially a class member at the time of Plaintiffs' settlement with DFA; as of March 23, 2012, Schreiber was a named defendant in this action, and thus arguably excluded, at least in part, from participating as a class member. As the Court noted in its summary judgment order, this straddling of the line between class member and defendant put Schreiber in an uncomfortable position, having to wear both its class member hat and its defendant hat simultaneously. After prevailing on its motion for summary judgment, Schreiber looked to end any disputes regarding its right to participate as a class member, moving the Court for such a declaration. [654 (Motion for Order Declaring Schreiber a Class Member).] The Court granted Schreiber's motion, leaving no dispute that Schreiber currently is a member of the settling class. [See 670, at 1 ("Schreiber is no longer a defendant in this action and, pursuant to the notice to the Class dated March 17, 2014, is fully able to participate as a Member of the Class ***.").]
"In a certified class action, the court may award reasonable attorney's fees *** that are authorized by law or by the parties' agreement." Fed.R.Civ.P. 23(h). To determine the reasonableness of
There are two predominant methods for calculating reasonable attorneys' fees in this district. The first is via the "lodestar" method, which considers "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); see also Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 550 (7th Cir.1999). The other method—which has emerged as the favored method for calculating fees in common-fund cases in this district—sets the fee award as a percentage of the recovered settlement fund, plus expenses and interest. See Blum v. Stenson, 465 U.S. 886, 900 n. 16, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984) (acknowledging the percentage method in common-fund cases). But see Florin, 34 F.3d at 566 ("We therefore reiterate the law of this circuit that in common fund cases, the decision whether to use a percentage method or a lodestar method remains in the discretion of the district court."); Stumpf v. Pyod, LLC, 2013 WL 5753829, at *3 (N.D.Ill. Oct. 23, 2013). For reasons that will become apparent below, the Court finds the percentage-of-the-fund approach to be the more reasonable one here.
If possible, it is preferable to establish a fee structure at the outset of a lawsuit. See Silverman, 739 F.3d at 958 (noting that ex ante agreements better approximate the prevailing market rate between willing buyers and willing sellers of legal services); Fed.R.Civ.P. 23(h) ("[T]he court may award reasonable attorney's fees *** that are authorized by law or by the parties' agreement." (emphasis added)). Unfortunately the parties did not reach an ex ante agreement here, and by the time
As a barometer for assessing the reasonableness of a fee award in common-fund cases, courts look to the going market rate for legal services in similar cases. Synthroid I, 264 F.3d at 718. To assist in this assessment, the Seventh Circuit has counseled that "[t]he judicial task might be simplified if the judge and the lawyers bent their efforts on finding out what the market in fact pays not for the individual hours but for the ensemble of services rendered in a case of this character." In re Cont'l Ill. Sec. Litig., 962 F.2d at 572. The Seventh Circuit noted that the "usual range for contingent fees is between 33 and 50 percent," while also noting that "in large commercial litigation with prospects of multimillion dollar recoveries the percentage frequently is tapered—it might be 33 percent of the first million, 25 percent of the next million, and so on down." Id.; see also Silverman, 739 F.3d at 959 ("Awarding counsel a decreasing percentage of the higher tiers of recovery enables them to recover the principal costs of litigation from the first bands of the award, while allowing the clients to reap more of the benefit at the margin (yet still preserving some incentive for lawyers to strive for these higher awards)."); Synthroid I, 264 F.3d at 721 ("This is not to say that systems with declining marginal percentages are always best. They also create declining marginal returns to legal work, ensuring that at some point attorneys' opportunity cost will exceed the benefits of pushing for a larger recovery, even though extra work could benefit the client.").
Coincidentally, the Seventh Circuit has delineated a seemingly tailor-made tiered-pricing arrangement for a $46 million settlement fund (as we have here), where the class counsel received 30% of the first $10 million, 25% of the next $10 million, and 22% for the $20-$46 million band. In re Synthroid Marketing Litig., 325 F.3d 974, 979 (7th Cir.2003) ("Synthroid II"). As applied here, that would result in an $11.22 million award, or 24.4% of the settlement fund (i.e., a reduction of approximately $4.1 million, or roughly 9% of the fund). But to be sure, this is not a one-size-fits-all recovery scheme, and there are many other factors to consider before declaring this pricing grid the Cinderella slipper.
That being said, a fairly recent study analyzed fee awards in 689 common-fund cases spanning 18 years, reporting results that account for myriad factors, including both case type and overall fee award. See Theodore Eisenberg & Geoffrey P. Miller, Attorneys' Fees & Expenses in Class Action Settlements: 1993-2008, 7 J. of Empirical Legal Stud. 248 (2010).
The Court is also mindful that "[a] district judge, looking out for the interests of all class members, sometimes must consider issues that the class representatives and their lawyers prefer to let pass." Silverman, 739 F.3d at 959. This is not one of those cases. As in Silverman, the plaintiffs here are sizable, sophisticated entities capable of reviewing (and objecting to) the proposed fee arrangement. Specifically, the settlement administrator distributed the settlement notice to more than 3,000 potential class members, including (a) large traders in Class III milk futures, (b) clearing brokers on the Chicago Mercantile Exchange, and (c) the 100 largest dairy companies in the United States—i.e., entities likely to have attorneys and other advisors counseling them on such matters. But beyond the objection filed by Schreiber (which the Court reviews in detail below), none of the Plaintiffs has objected to Class Counsel's fee petition, either by filing a motion asking the judge to reduce the fees or by supporting Schreiber's objections.
In defending their proposed award, Class Counsel emphasize the magnitude, complexity, and cost of this case as proof of their fee-worthiness. See, e.g., Synthroid I, 264 F.3d at 721 (noting that market rate depends "in part on the amount of work necessary to resolve the litigation"); Isby, 75 F.3d at 1198-99 (listing "an assessment of the likely complexity, length and expense of the litigation" as factors that determine the reasonableness of a fee award); Arenson v. Bd. of Trade of City of Chi., 372 F.Supp. 1349, 1352 (N.D.Ill.1974) (noting that "[i]t would be difficult to imagine litigation presenting issues of greater subtlety and complexity" than those presented in a large antitrust matter involving commodity futures markets). Specifically, Class Counsel point to the esoteric nature of antitrust law in general, the specific complexities inherent in this six-year MDL antitrust matter, and the sizable legal and expert fees amassed in litigating these claims. These factors help paint the overall narrative of Class Counsel's undertaking, seemingly meant to show the Court that counsel are deserving of the requested fee.
Most of these facts cut in Class Counsel's favor. To be sure, this has been a long and arduous litigation, compounded by the intricacies of these particular commodities markets, the parsing of actions on a day-by-day basis over a long time period, and the inclusion of both traders and purchasers in the settlement class. Class Counsel have expended significant fees on expert work, retention of allocation counsel, and two separate mediations in order to allocate the settlement fund in a fair and reasonable manner. These facts buttress the reasonableness of Class Counsel's request and in no way justify a reduction of the requested one-third fee. On the other hand, as Schreiber is quick to point out, a good chunk of Class Counsel's efforts have been in conjunction with their now-dismissed claims against Schreiber, and thus played no part in reaching the settlement with DFA. But as explained in detail below, Class Counsel's efforts in pursuing claims against Schreiber—regardless of the outcome of those claims or the influence that those efforts had on the overall settlement amount—are not a significant enough detour to overshadow the indisputably meritorious work performed here.
When determining the reasonableness of a fee request, courts put a fair amount of
One proxy for assessing risk is whether the litigation followed on the heels of some prior criminal or civil proceeding involving the same parties or subject matter. This inquiry provides insight into whether class counsel benefitted from the work of others, which acts a red flag for judges assessing fee petitions. See, e.g., In re Lawnmower Engine Horsepower Mktg. & Sales Practices Litig., 733 F.Supp.2d at 1015 ("This is not a case in which a criminal prosecution against the defendants preceded the class's civil suit and established the defendants' liability, as is often the case in the antitrust context. Instead, class counsel had to build this case from the ground up, based on their own investigation."). Here, the Court has previously noted that Class Counsel benefitted from a large volume of documents and multiple deposition transcripts collected via a price-manipulation investigation by the Commodity Futures Trading Commission ("CFTC"). [See 652, at 3-5.] This raises a yellow, not red, flag. But deepening the hue, Plaintiffs allege in their second amended consolidated class action complaint that "Defendant DFA is a serial antitrust defendant" who has "entered into at least three consent decrees involving government allegations of violating laws prohibiting anticompetitive activities," where "[a]t least two of those orders relate to this matter," [245, ¶ 2], making Plaintiffs' endeavor seem like less of a risk than advertised.
Although Class Counsel undoubtedly benefitted from the CFTC's work, they nonetheless engaged in enough proprietary legal services to distinguish their efforts from a so-called piggyback lawsuit. Indeed, Class Counsel still managed to spend (albeit by their own, unaudited calculation) 18,617.59 hours on this matter over six years, indicating that while the CFTC's non-conspiracy-related investigation may have given Class Counsel a head start, the CFTC did not run the race for them. And although DFA's track record surely has them high on the target list for antitrust plaintiffs' attorneys, there is nothing indicating that DFA's legal history has somehow awarded Class Counsel an undue benefit mandating a reduction in their otherwise reasonable fee request.
Yet another litmus test for assessing reasonableness is quality of Class Counsel's performance in achieving the settlement—that is, whether this is the type of outcome that willing clients would have envisioned from the outset. Somewhat circularly, Class Counsel argue that the quality of their services "is best indicated by the substantial benefits Lead Counsel achieved for the Class." [616, at 11.] The benefits they speak of include the purported two-thirds share of the $46 million settlement fund (i.e., $30,666,666.67), plus a series of "remedial benefits," including (a) a non-reversionary provision stating that no matter how many class members fail to submit proofs of claim, none of the settlement monies will revert to the Defendants, (b) an agreement that DFA will only transact in Class III milk futures for legitimate business purposes, and (c) a provision that DFA may not purchase or sell Chicago Mercantile Exchange Cheese Spot Call contracts unless the proposed transaction has been reviewed and approved by at least two DFA officers. The theory is that these undertakings "will impose an economic discipline on DFA's market transactions that was lacking during the Class Period" which "should help conform and stabilize DFA's conduct in these sensitive markets so as to reflect economic demand and supply." [616, at 2.]
Schreiber is the only entity (or, if you prefer, class member) that objected to the fee petition, and it does not indicate whether the $30.67 million class award is above or below what the class anticipated. Hearing no other objections, and absent any other frame of reference for considering the adequacy of the monetary award, the Court is inclined to agree with Class Counsel that this award is at least adequate. However, Schreiber does object to Class Counsel's proposition that the value of injunctive and declaratory relief should be considered in the fee award, claiming that there is no evidence that this arguably pro forma (or boilerplate) relief is as significant as Class Counsel claim. To Schreiber's point, it couldn't have required much arm twisting to get DFA to agree, in writing, to act in accordance with "legitimate business purposes." And the self-policing provision seems a rather modest punishment for a so-called serial antitrust offender. But even if the Court were to disregard these clearly hyperbolized benefits, there are still no objections before the Court explaining why the award—exaggerated or not—is anything but a satisfactory result in the eyes of the class.
A district court is under no obligation to cross-check the requested fees against the lodestar. See Williams v. Rohm & Haas Pension Plan, 658 F.3d 629, 636 (7th Cir.2011) ("[C]onsideration of a lodestar check is not an issue of required methodology." (citing Cook v. Niedert, 142 F.3d 1004, 1013 (7th Cir.1998) ("[W]e have never ordered the district judge to ensure that the lodestar result mimics that of the percentage approach."))). Class Counsel nonetheless apprise the Court that their requested fee yields a lodestar multiplier of approximately 1.34, which falls on the lower end of the allowable range in comparable cases. See, e.g., Harman v. Lyphomed, Inc., 945 F.2d 969, 974 (7th Cir.1991) (noting that "[a risk] multiplier is, within the court's discretion, appropriate when counsel assume a risk of nonpayment in taking a suit" and "[m]ultipliers anywhere between one and four * * * have been approved"). Ultimately, the Court sees no utility in considering this somewhat-arbitrary (and under-vetted) calculation, and thus disregards this evidence for purposes of this fee petition.
But perhaps more interesting than Class Counsel's reported reasonableness of their
It seems more likely that Class Counsel presaged the objection that Schreiber lodged shortly after counsel filed their fee petition. In that objection, Schreiber argued that Class Counsel's fees should be measured by the lodestar method and that Class Counsel should not receive fees for any of their efforts to inculpate Schreiber into the alleged price-fixing scheme. Schreiber maligned Class Counsel's fee request as an effort "to reduce the class's recovery from the settlement fund in order to finance Class Counsel's frivolous post-settlement litigation." [619, at 1.] Schreiber requested that the petition be denied without prejudice until the case has been fully adjudicated and after Class Counsel have submitted detailed time records evincing that their fee request excludes time spent on the case against Schreiber. As a point of reference, Schreiber filed its objections to Class Counsel's fee petition approximately three weeks before the Court granted Schreiber's motion for summary judgment [652] and approximately six weeks before the Court declared Schreiber to be a class member [670] (i.e., while Plaintiffs were still actively pursuing claims against Schreiber).
In support of its objections, Schreiber highlighted the fact that Class Counsel negotiated the amount of the settlement fund before they sued Schreiber as fodder for its argument that Class Counsel intended to use those funds to finance their claims against Schreiber. But this fact (both then and now) cuts more against Schreiber that in its favor—specifically with regard to Schreiber's argument underpinning its Rule 11 motion for sanctions (discussed below), which is that Plaintiffs' claims against Schreiber have always been without evidentiary support. In other words, in combination, Schreiber argues that Class Counsel expedited their settlement with DFA (disposing of their arguably meritorious claims at a potentially cut-rate price) in order to fund a satellite lawsuit—at their own expense—that they
Two objections were filed in response to Class Counsel's fee petition: (1) Schreiber's objection to the amount of the requested award [619], and DFA's objection (fashioned as a motion for leave to respond) to a purported misstatement in Class Counsel's reply brief in further support of their fee petition [649].
Regarding the latter objection, the Court grants DFA's motion for leave to file a response to Direct Purchaser Plaintiffs' reply memorandum in further support of Class Counsel's petition for an award of attorneys' fees and reimbursement expenses [649]. DFA's one-page proposed response is not a substantive objection to Class Counsel's fee request, but rather more of a ministerial objection to an alleged misstatement of facts. Specifically, DFA offers its response "for the limited purposed of objecting to Plaintiffs' misstatement of the contents and sequence of certain confidential settlement negotiations between DFA and Plaintiffs." [649-1, at 1 (citing 636, at 3, 7, n.7).] The Court offers no opinion as to whether DFA's corrections are accurate, but DFA is nonetheless permitted to voice its concerns on the record.
Schreiber, on the other hand, attacks Class Counsel's fee request on several fronts, including the method of calculation and the overall fee request. As a threshold matter, though, Class Counsel argue that Schreiber lacks standing to object to the fee petition because it is not a member of the class. [636, at 13-14 (citing Agretti v. ANR Freight Sys., Inc., 982 F.2d 242, 246 (7th Cir.1992) (noting "that a non-settling party does not have standing to object to a settlement between other parties" unless a "non-settling defendant in a multiple defendant case * * * can show plain legal prejudice resulting from the settlement").] Without getting too deep in the weeds, the Court notes that the Agretti body of law applies to objections to the approval of settlement agreements, not the reasonableness of fee petitions. Because
Complicating matters somewhat is the fact that Schreiber was still a defendant when it filed its objection on July 28, 2014[619]. It wasn't until three weeks later, on August 18, 2014, that the Court granted Schreiber's motion for summary judgment [652], and another month after that, on September 12, 2014, that the Court granted Schreiber's motion declaring it a member of the class. [670, at 1 ("Schreiber is no longer a defendant in this action and, pursuant to the notice to the Class dated March 17, 2014, is fully able to participate as a Member of the Class ***.").] Plaintiffs added Schreiber as a defendant on March 23, 2012[248], approximately three years into this litigation, and just days after the Direct Purchaser Plaintiffs and DFA had reached their settlement agreement, at least as to the monetary component. [See 335, at 9 ("By early March 2012, Settling Defendants and the Plaintiffs had agreed to $46,000,000 as the cash consideration."); 634, ¶ 6 ("On or about March 18, 2012, DFA agreed to the $46,000,000 cash consideration aspect of the proposed Settlement.").]. The question, then, is whether Plaintiffs successfully stripped Schreiber of its class affiliations simply by naming it as a defendant.
Schreiber had standing to object to Class Counsel's fee petition. First, the Court believes that Schreiber was, at least in part, a member of the settlement class at the time it filed its objection, and Class Counsel have not provided any evidence to the contrary. Because Schreiber stands to receive more from the settlement fund if its objections are sustained, it has standing to raise them—"What more is required for standing?" Synthroid II, 325 F.3d at 976 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). Second, if Schreiber's objections were not ripe at the time of filing, they are now. See Blanchette v. Conn. Gen. Ins. Corp., 419 U.S. 102, 139-40, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974) ("[S]ince ripeness is peculiarly a question of timing, it is the situation now rather than the situation at the time of the District Court's decision that must govern."); Public Water Supply Dist. No. 8 of Clay Cty., Mo. v. City of Kearny, Mo., 401 F.3d 930, 932 (8th Cir.2005) ("Whether a case is ripe depends on the state of the case at the time of review, not at the time of filing."); Casden v. Burns, 306 Fed.Appx. 966, 972-73 (6th Cir.2009) (finding ripeness where the issue became ripe after filing but prior to adjudication, "and thus [plaintiff's] claims no longer involve `abstract disagreements' and there no longer is a concern that her alleged injuries `may not occur as anticipated.'" (quotations omitted)); Soni v. Holtzer, 255 Fed.Appx. 614, 616 n. 1 (3d Cir.2007). Third, on the policy front, it would be unjust to deny a party in limbo (i.e., a party that would be a class member but for its inclusion as a defendant) its right to object to a class counsel's fee petition; to hold otherwise would allow a settlement class to silence a dissenting voice amongst the class by drumming up a well-timed claim against them. While the Court does not endeavor to create an all-sweeping
Having established that Schreiber has standing to object to Class Counsel's fee petition, the Court now turns to the substance of Schreiber's objections. However, upon a thorough review, the Court does not find any substantive arguments raised by Schreiber that have not already been addressed above. To be sure, while Schreiber's objections are cogently presented, its main argument (i.e., that Class Counsel should not get credit for time spend pursuing claims against Schreiber) only carries weight if the Court were to apply the lodestar method of calculating fees, which it does not. The rest of Schreiber's objections call into question the reasonableness of Schreiber's fee request, raising many of the same points that the Court has addressed above (citing similar cases in support as well). Accordingly, the Court views Schreiber's objections as a credible backstop for the Court's own reasoning, but finds no unique arguments in need of further discussion or elaboration.
In addition to its one-third cut of the settlement kitty, Class Counsel also seek $482,749.95 in costs and expenses. See Fed.R.Civ.P. 23(h) ("In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement."). It is the Court's duty to ensure that the expenses are reasonable, whereby "[i]f counsel submit bills with the level of detail that paying clients find satisfactory, a federal court should not require more." Synthroid I, 264 F.3d at 722.
In their original petition, Class Counsel requested $487,881.24 in expenses, itemized (with little detail) in the declaration of Christopher M. McGrath [615]. Mr. McGrath made clear that Class Counsel were not seeking any expenses related to their work in connection with the prosecution of Plaintiffs' claims against Schreiber after December 24, 2012. Two weeks later—likely in response to Schreiber's objection that Class Counsel failed to provided sufficient documentation justifying their expense request [see 619, at 14 (citing Schulte, 805 F.Supp.2d at 600 (dismissing, sua sponte, class counsel's request for costs and expenses because counsel had "provided insufficient itemization and back-up documentation of the expenses so to allow the Court to make a meaningful assessment," noting that "the single page submitted thus far is simply not enough"))]—Mr. McGrath submitted a supplemental declaration in support of Class Counsel's expense request [634] in which he (a) reduced the expense request by $5,131.29 (approximately 1%), and (b) attached 64 pages of itemized bills and additional declarations in support of the requested expenses. Upon close examination of the supplemental records offered in support of Class Counsel's expense request, the Court finds the request to be reasonable,
Following its victory on summary judgment, Schreiber filed a bill of costs seeking reimbursement of litigation costs as a prevailing party. Rule 54(d) says that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." Fed. R.Civ.P. 54(d). Rule 54(d) creates a strong presumption in favor of awarding costs to the prevailing party. See Weeks v. Samsung Heavy Indus. Co., Ltd., 126 F.3d 926, 945 (7th Cir.1997) ("The presumption is difficult to overcome, and the district court's discretion is narrowly confined—the court must award costs unless it states good reasons for denying them."). A district judge's "award of costs is the type of discretionary ruling to which [the Seventh Circuit] give[s] `virtually complete' deference." O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 989 (7th Cir. 2001) (quoting Manley v. City of Chi., 236 F.3d 392, 398 (7th Cir.2001)). Schreiber became a prevailing party when the Court dismissed Plaintiffs' claims against Schreiber "with prejudice and with costs" [669], and thus is entitled to fees under Rule 54(d). Schreiber seeks $32,215.23 in costs plus interest [694, 695] and Plaintiffs object [700], claiming that Schreiber is entitled to, at most, $2,109.60 in costs.
As a preliminary matter, Plaintiffs argue that the Court should stay its decision regarding the bill of costs pending resolution of Plaintiffs' appeal of this Court's order granting summary judgment in Schreiber's favor. Plaintiffs argue that a stay is appropriate because there is an issue of first impression before the Seventh Circuit: "what does the term `commodity underlying' a futures contract mean for purposes of a private right of action under Section 22(a) of the Commodity Exchange Act, 7 U.S.C. § 25." [700, at 14-15 (citing George v. Junior Achievement of Cent. Ind., Inc., 2011 WL 5402418, at *1 (S.D.Ind. Nov. 4, 2011)).] First off, a district court is under no obligation to stay a bill of costs pending appeal, regardless of whether the appeal presents an issue of first impression. See, e.g., Kittler v. City of Chi., 2006 WL 1762036, at *2 (N.D. Ill. June 26, 2006); Sembos v. Philips Components, 2003 WL 22533579, at *1 (N.D.Ill. Nov. 6, 2003) (citing cases). However, while the Court declines to stay the adjudication of the bill of costs at this time, the Court will stay the enforcement of the bill of costs pending appeal.
Plaintiffs raise a second threshold argument by claiming that Schreiber had no right to submit an amended bill of costs, and thus the Court should strike Schreiber's initial filing as improper and ignore its corrected filing as untimely. Local Rule 45(a) gives a party 30 days to file a bill of costs, where any costs not filed
The Court "may not tax a prevailing party's costs to the losing party under Rule 54(d) unless the specific expense is authorized by a federal statute." Little v. Mitsubishi Motors N. Am., Inc., 514 F.3d 699, 701 (7th Cir.2008); Manley, 236 F.3d at 398 ("As long as statutory authority exists for a particular item to be taxed as a cost, we shall not overturn a district court's determination that the cost is reasonable and necessary, absent a clear abuse of discretion." (citation omitted)). Recoverable costs include (1) fees of the clerk; (2) fees for transcripts; (3) fees for printing and witnesses; (4) fees for copies of papers necessarily obtained for use in the case; (5) docket fees; and (6) compensation of court appointed experts and interpreters. 28 U.S.C. § 1920.
Schreiber seeks $775.00 in fees for service of subpoenas, $30,500.13 in transcript fees, and $940.10 in copy fees. These are all taxable under § 1920. However, digging deeper into the itemized charges on the relevant invoices, Plaintiffs allege that there are certain sub-categories of charges that are not taxable.
First, Schreiber seeks $4,740.75 in "Realtime" (i.e., live transcript fee) charges associated with its transcript costs. Such fees have been deemed non-taxable because the service is for "the mere convenience" of the attorneys. See SP Techs., LLC v. Garmin Int'l, Inc., 2014 WL 300987, at *4-5 (N.D.Ill. Jan. 10, 2014). Absent any guidance from the Seventh Circuit, the Court respectfully disagrees. While Realtime (or LiveNote) service may be a convenience, it is a convenience that is becoming ubiquitous in the modern legal world. And perhaps more importantly, as Schreiber—the deponent in all of the depositions at issue—points out, "[t]he court reporters were all selected by the Plaintiffs at rates that Plaintiffs approved and over which Schreiber had no control," [693, at 3], meaning that Plaintiffs themselves deemed the Realtime service to be reasonable, and Schreiber incurred Realtime charges at Plaintiffs' behest. [See Birk Decl., 695, ¶ 4 ("Direct Purchaser Plaintiffs retained U.S. Legal Support to provide transcript services, and Schreiber
Second, Schreiber seeks $4,400.00 for video charges and $130.00 in processing and handling charges associated with video recordings of depositions. Plaintiffs object to the video charges, even though it was Plaintiffs' decision to have the depositions in question video-recorded. And under Seventh Circuit precedent, if a deposition is video-recorded, Rule 54(d) permits an award of costs "of both video-recording and stenographic transcription to be taxed to the losing party." Little, 514 F.3d at 702. It would be unfair to allow Plaintiffs access to video recordings of transcripts for possible use at trial and to deny Schreiber the right to obtain those same video tapes (and, of course, to tax the Plaintiffs for them upon prevailing). Plaintiffs also object to the processing and handling charges, citing case law claiming that courier costs are generally disallowed. [700, at 11 (citing Rogers v. City of Chicago, 2002 WL 423723, at *2 (N.D.Ill. Mar. 15, 2002)).] Courier fees are not the same as processing and handling charges from a court reporter. Plaintiffs offer no further support for this argument, and thus the Court rejects it.
Third, Schreiber seeks $932.10 in exhibit charges, $525.00 in handling/processing charges, $429.00 in E-CD litigation package charges, and $55.00 for miniscripts. Regarding the handling/processing charges, the Seventh Circuit has already held that such incidental costs are taxable. See Finchum, 57 F.3d at 534 ("We have * * * upheld the award of ["incidental"] costs in the past and we find no reason to disturb the district court's exercise of discretion to award such costs in this instance."). As to the exhibit charges, it is not unreasonable to request copies of the exhibits used during a deposition, for even if the exhibits have been produced in discovery, it could be that the deponent, attorney, or both marked on the exhibit during the deposition, making the deposition copy unique. Plus, exhibits are often authenticated during a deposition, and it may be necessary for attorneys to use the marked exhibit in order to benefit from that authentication. The remaining charges are so-called "convenience" costs related to transcript delivery. But again, this is an instance where Plaintiffs arranged for the depositions and thus set the bar for what they deemed reasonable and appropriate. [693, at 4 ("Schreiber ordered the exact same transcripts, at the same rates and with the same services, as Plaintiffs ordered.").] The Court will not penalize Schreiber for following in Plaintiffs' footsteps.
Fourth, in a similar vein, Plaintiffs object to additional transcript-related costs that they arranged for and Schreiber adopted: $5,995.48 in expedited charges, $2,932.80 in rough draft charges, and $740.00 in evening charges. For the reasons stated above, the Court also deems these charges taxable. See Finchum, 57 F.3d at 534.
Plaintiffs agree that § 1920 allows for the taxing of transcript copies, but they argue that Schreiber's rates exceed the maximum allowable rates in this district. Per this District's General Order 12-0003, approved transcript rates range from $3.65 to $7.25 per page, depending on delivery time, and parties can recover between $.90 and $1.20 for copies of transcripts. First, Plaintiffs argue that all of Schreiber's transcript costs are for copies, not originals.
Schreiber seeks Rule 11 sanctions against Plaintiffs for "submitting factual contentions in their pleadings and other papers lacking in evidentiary support, as required by Rule 11(b)(3)." [676, at 1.]
Before addressing Schreiber's motion for sanctions, the Court must determine the relevant world of memoranda to consider in deciding that motion. Specifically, Plaintiffs moved this Court for leave to file a surreply [703] relating to the Rule 11 issue, as well as a motion to file that surreply under seal [701]. Plaintiffs' surreply is currently under seal on the Court's docket at [703-1]. The decision whether to grant a motion for leave to file a surreply is within the Court's discretion. Johnny Blastoff, Inc. v. L.A. Rams, 188 F.3d 427, 439 (7th Cir.1999). Denial of a motion to file a surreply is appropriate "when the movant has had the opportunity to thoroughly brief the issues." Univ. Healthsystem Consortium v. United-Health Grp., Inc., 68 F.Supp.3d 917, 922, 2014 WL 4685753, at *3 (N.D.Ill. Sept. 19, 2014). There is no need for a surreply when "[e]ach brief in the sequence on the motion fairly responded to the arguments in the brief that preceded it." Franek v. Walmart Stores, Inc., 2009 WL 674269, at *19 n.14 (N.D. Ill. Mar. 13, 2009).
Plaintiffs argue that their surreply is warranted for three reasons: (1) to allow Plaintiffs to address a new argument that Schreiber made for the first time in its reply brief, (2) to correct "gross mischaracterizations" in Schreiber's reply brief, and (3) to provide the Court with a matrix to assist in reviewing certain relevant evidence. The first two reasons are, if meritorious, grounds for allowing the surreply—see Univ. Healthsystem Consortium, 68 F.Supp.3d at 922-23, 2014 4685753, at *3—and the third practices upon the Court's discretion. In response, Schreiber argues that Plaintiffs' three justifications are specious, and that Plaintiffs' surreply is just an attempt to take another bite at the apple. Schreiber points out that this is the eighth surreply that Plaintiffs have filed or attempted to file in this case, and that Plaintiffs filed it nearly a month after Schreiber filed its reply brief. The Court finds Schreiber's arguments persuasive.
Even a quick glance at Plaintiffs' surreply is enough to show that Plaintiffs' aim was not to correct errors in Schreiber's reply brief, but rather to respond (again) to Schreiber's core arguments. Indeed, Plaintiffs spend seven of the eight pages of their brief responding to Schreiber's argument that certain of Plaintiffs' allegations against it were "utterly void of support," whereby Plaintiffs (again) attempt to temper these accusations by providing contrary evidence. Of course it is not uncommon for adverse parties to feel that their opponent's briefs are replete with "gross mischaracterizations," and it would be unjust to allow Plaintiffs to rebrand Schreiber's
Plaintiffs also attach five exhibits to their proposed surreply, consisting of four documents that they cited but did not attach to their response brief and a summary chart laying out the location in the record of evidence cited in exhibit 1 to Plaintiffs' opposition to Schreiber's Rule 11 motion. While Plaintiffs should have attached these exhibits to their opposition brief, the Court finds the exhibits useful in reviewing the merits of Schreiber's motion, and will consider them.
Thus, Plaintiffs' motion for leave to file a surreply [703] is granted in part and denied in part: the Court grants Plaintiffs leave to file only exhibits A through E of its proposed surreply (i.e., not the surreply itself). Plaintiffs' motion to file its surreply under seal [701] is granted in part and denied as moot in part, such that exhibits A through E of Plaintiffs' surreply may remain under seal. Plaintiffs need not refile the exhibits on the docket; the Court will review and consider the documents as already provided. [See 703, ex. 1, exs. A-E.]
Plaintiffs argue that Schreiber's motion for sanctions is untimely because Schreiber filed it approximately 30 months after Plaintiffs sued Schreiber [245], and approximately 28 months after Schreiber first provided notice to Plaintiffs that their allegations violated Rule 11 [see 688, ex. A (letter from Schreiber's counsel to DFA's counsel, dated May 9, 2012)]. Plaintiffs add that Schreiber objects to comments that Plaintiffs made in their opposition to Schreiber's motion to dismiss [290], which was filed and ruled upon approximately two years ago.
Parties must request Rule 11 sanctions "as soon as practicable after discovery of a Rule 11 violation." Kaplan v. Zenner, 956 F.2d 149, 151 (7th Cir.1992). Ninety days after final judgment is the "outer parameter" for filing a Rule 11 motion for sanctions. Matrix IV, Inc. v. Am. Nat'l Bank & Trust Co., 649 F.3d 539, 552 (7th Cir.2011). The Advisory Committee Notes to Rule 11 say that "it is anticipated that in the case of pleadings the sanctions issue under Rule 11 normally will be determined at the end of litigation." Fed.R.Civ.P. 11 advisory committee's notes. Further, "[i]f the challenged conduct is the institution of the action itself ***, the question whether there has been a Rule 11 violation generally is not decided until after the litigation is completed, in order to avoid delaying the disposition of the merits of the case." 5A Wright & Miller, FEDERAL PRACTICE & PROCEDURE CIV. § 1337.1.
The purportedly violative conduct at issue here concerns Plaintiffs' allegedly baseless allegations of wrongdoing against Schreiber as set forth in their second amended complaint [245], which Plaintiffs filed on March 22, 2012. Schreiber cites to similarly offensive statements in Plaintiffs' opposition to Schreiber's motion to dismiss [290] as illustrative of their continuing sanctionable conduct, but Schreiber focuses almost exclusively on Plaintiffs' complaint as the core violation. Schreiber first provided notice to Plaintiffs of its intent to file a Rule 11 motion on May 9, 2012 [688, ex. A],
Rule 11 includes a 21-day safe harbor, which says that a party seeking sanctions must inform the alleged offender 21 days prior to filings in order to give the alleged offender an opportunity to withdraw the purportedly false statement. Fed.R.Civ.P. 12(c)(2). Plaintiffs argue that "[a] motion for sanctions served after an allegedly offending paper has been ruled upon defeats the purpose of Rule 11's safe harbor." [687, at 3 (quoting Zahran v. Nat'l Guardian Life Ins. Co., 1999 WL 652052, at *3 (N.D.Ill. Aug. 16, 1999)).] But this is only true when both the notice and the Rule 11 motion are filed after the offending paper has been ruled upon. See Matrix IV, 649 F.3d at 552 ("[Matrix] claims that motions for Rule 11 sanctions filed after a final judgment, like the one at issue here, are not permissible. Matrix is incorrect ***."). Thus, the concern articulated in Zahran does not apply here.
The Court must decide whether giving notice approximately two weeks after the release of the offending paper but filing the motion two-and-a-half years later, after the offending paper has been ruled upon, is reasonable. "Reasonableness is necessarily dictated by the specific facts and circumstances in a given case." Kaplan, 956 F.2d at 152. In Matrix IV, the movant put Matrix on notice of its intent to seek sanctions two weeks after the offending paper (i.e., the complaint) was filed, but did not file its Rule 11 motion until two years later, after the district court dismissed the case. Matrix IV, 649 F.3d at 552. The court held that "[t]he 21-day window specified in Rule 11 is a floor, not a ceiling," and that just because the movant "filed its motion for sanctions 23 days after the district court dismissed the suit—and more than two years after the Rule 11 notice letter was sent—does not mean that the requirements of Rule 11 have not been satisfied." Id. at 552-53. This case is on all fours with Matrix IV, and Schreiber's Rule 11 motion is therefore timely.
Rule 11(b) requires an attorney to certify, to the best of his or her knowledge, that any pleading that the attorney presents to the court is not being presented for any improper purpose—such as to harass, cause unnecessary delay, or
"The decision to impose sanctions is left to the discretion of the trial court in light of the available evidence," and "[t]he application of Rule 11 to the facts and circumstances of a particular case is an exercise of the trial court's discretion, which [is] reviewed for abuse of discretion." Divane v. Krull Elec. Co., Inc., 200 F.3d 1020, 1025, 1028 (7th Cir. 1999). To win on a motion for sanctions, the movant must satisfy the "high burden of showing that Rule 11 sanctions are warranted." Lundeen v. Minemyer, 2010 WL 5418896, at *3 (N.D. Ill.Dec. 17, 2010) (citing Fed. Deposit Ins. Corp. v. Tekfen Const. & Installation Co., Inc., 847 F.2d 440, 444 (7th Cir.1988))). Rule 11 "imposes an objective standard of reasonable inquiry which does not mandate a finding of bad faith." Chambers v. NASCO, Inc., 501 U.S. 32, 47, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); Cuna Mut. Ins. Soc. v. Office & Prof'l Emps. Int'l Union, Local 39, 443 F.3d 556, 560 (7th Cir.2006) ("The Court must `undertake an objective inquiry into whether the party or his counsel should have known that his position is groundless.'" (quotation omitted)). Even when a court has ruled that a party has been "wrong on the law," sanctions against that party do not flow inevitably. Harlyn Sales Corp. Profit Sharing Plan v. Kemper Fin. Servs., Inc., 9 F.3d 1263, 1269 (7th Cir.1993).
To assess the reasonableness of a party's inquiry into the factual basis of its claims, the test is whether "competent attorneys performing a reasonable investigation could not have believed in the merit of the position taken in the complaint." Id. Courts also look to a number of other factors, including: "whether the signer of the documents had sufficient time for investigation; the extent to which the attorney had to rely on his or her client for the factual foundation underlying the pleading, motion or other paper; whether the case was accepted from another attorney; the complexity of the facts and the attorney's ability to do a sufficient pre-filing investigation; and whether discovery would have been beneficial to the development of the underlying facts." Brown v. Fed'n of State Med. Bds., 830 F.2d 1429, 1435 (7th Cir.1987).
Schreiber details nine specific statements in Plaintiffs' complaint as examples of how Plaintiffs lacked an evidentiary basis for bringing claims against Schreiber.
Under Rule 11(c)(2), "the court may award to the prevailing party [to a motion for sanctions] the reasonable expenses, including attorney's fees, incurred for the motion." Fed.R.Civ.P. 11(c)(2). Plaintiffs have not requested fees at this point, but
For the foregoing reasons, the Court grants Class Counsel's fee petition [613], awarding them one-third of the $46 million common fund ($15,333,333.33) with interest thereon at the same rate paid on the Settlement Fund, plus $488,491.24 in costs and expenses. The Court grants DFA's motion for leave to file a response to Direct Purchaser Plaintiffs' reply memorandum in further support of Class Counsel's fee petition [649]. The Court denies Schreiber's motion for Rule 11 sanctions [676]. The Court grants in part and denies in part Direct Purchaser Plaintiffs' motion to file a surreply [703] and Direct Purchaser Plaintiffs' motion to file exhibit 1 to their surreply under seal [701], granting Plaintiffs leave to file only the exhibits to their motion to file a surreply, which will remain under seal on the Court's docket as currently filed. Finally, the Court grants Schreiber's bill of costs [694], and awards them $32,215.23 plus interest, although enforcement of this award is stayed pending resolution of Plaintiffs' appeal of this Court's order granting summary judgment in favor of Schreiber.
