JAMES LAWRENCE KING, District Judge.
On September 16, 2011, Plaintiffs filed their Motion for Final Approval of Settlement, Application for Service Awards, Class Counsel's Application for Attorneys' Fees, and Incorporated Memorandum of Law
This matter came before the Court on November 7, 2011, pursuant to the Court's Preliminary Approval Order dated May 24, 2011, for a hearing on Plaintiffs' Motion for Final Approval of the Settlement ("Final Approval Hearing"). The Court carefully reviewed all of the filings related to the Settlement, including those discussed above, as well as responses to the Objectors filed by Class Counsel and by BofA respectively. See Plaintiffs' Response to Objections to Motion for Final Approval of Settlement and Class Counsel's Application for Service Awards and Attorneys' Fees
The Court denies the objections and rejects the arguments of Objectors in all respects, and finds that they are both completely unsupported in the record (no Objector having submitted even a single affidavit to provide facts or expert opinions supporting their positions) and unpersuasive as to the substance of their complaints.
The procedural and factual history of this Action is set forth in considerable detail in the Motion, and thus the Court will only briefly summarize the most important aspects of that history here. Further, this Court previously set forth the factual allegations and described the causes of action asserted against BofA (and a host of other defendant banks) in this multidistrict litigation. See In re Checking Account Overdraft Litig., 694 F.Supp.2d 1302 (S.D.Fla.2010). No party or Objector has offered contrary facts. The Court is quite familiar with this history, having presided over this case for the better part of the last two years. In that time, the Court has had the opportunity to observe both Settlement Class Counsel and BofA's counsel, and the work that both have done. These attorneys, several of whom have practiced before this Court for many years, are extremely skilled advocates, and all of them vigorously litigated this case up to and even after agreeing to the Settlement. The Settlement is quite obviously the result of arms-length negotiations, and the Court so finds.
In addition, the evidentiary record is more than adequate for the Court to consider the fairness, reasonableness and adequacy of the Settlement. The fundamental question is whether the district judge has sufficient facts before him to evaluate and intelligently and knowledgeably to approve or disapprove the settlement. In re General Tire & Rubber Co. Sec. Litig., 726 F.2d 1075, 1084 n. 6 (6th Cir.1984) (citing Detroit v. Grinnell, 495 F.2d 448, 463-68 (2d Cir.1974)). In this case, the Court clearly had such facts before it in considering the Motion, including the evidence and opinions of Class Counsel and their experts, and the sheer magnitude of the settlement sum, $410 million, making this one of the largest settlements of a consumer case ever. The record is both complete and sufficient, and the Court so finds.
Plaintiffs alleged a variety of business practices in the operative pleadings, including principally that BofA systemically re-sequenced Settlement Class Members' debit card transactions for the sole purpose of maximizing its overdraft fee revenue. According to the allegations in the operative complaints, BofA's practices violated the bank's contractual and good faith duties owed to its customers; BofA's acts resulted in unlawful conversion of depositor property; BofA's contractual provisions and practices were substantively and procedurally unconscionable; and BofA's conduct violated certain state unfair trade practices statutes, and resulted in its being unjustly enriched.
BofA, in turn, hotly contested each of these points, and raised arguments and defenses that went right to the core of Plaintiffs' case. These arguments and defenses posed a potentially mortal threat to Plaintiffs' claims. BofA argued that Plaintiffs' claims were preempted by the National Bank Act ("NBA") and regulations promulgated thereunder by the Office of the Comptroller of the Currency; that its posting order and related practices were permissible under governing federal law and policy; that its account agreements expressly authorized the very re-sequencing and overdraft practices Plaintiffs challenged; that it fully disclosed its practices to its customers; that BofA had other reasons for instituting its posting order and overdraft practices; that no unconscionability cause of action exists for damages; that no plausible conversion claim existed because Plaintiffs did not own the funds in their deposit accounts; that Plaintiffs could not maintain unjust enrichment claims because of the existence of an express agreement between the bank and its customers; that the consumer protection claims were defective; and that, moreover, the vast majority of the claims brought against it were extinguished based on a prior nationwide settlement of a class-action suit in California state court (Closson).
Plaintiffs sought monetary damages, restitution and declaratory relief. See generally Tornes Third Amended Consolidated Class Action Complaint ("TAC")
Following transfer, Class Counsel interviewed over 100 BofA customers and potential plaintiffs to gather information about BofA's conduct and its impact upon consumers. See Joint Declaration of Robert C. Gilbert and Michael W. Sobol
At the banks' request, this Court stayed discovery in the First Tranche actions pending resolution of the Omnibus Motion. An all-day argument on the Omnibus Motion took place before this Court on February 25, 2010.
On April 12, 2010, Plaintiffs filed amended complaints.
Class Counsel and counsel for BofA engaged in extensive discussions and negotiations regarding a proposed pretrial discovery plan and schedule. On May 13, 2010, after the parties were unable to reach agreement, the Court lifted the stay of discovery and entered a comprehensive Order Establishing a Schedule for the Discovery, Motion Practice, Final Pretrial Conference, and Trial for Selected Cases.
During the Summer and Fall of 2010, Class Counsel prepared objections and responses to BofA's extensive discovery requests to Plaintiffs, including requests for production of documents and interrogatories, Joint Decl. ¶ 23, and defended against BofA's motion to compel discovery.
The proposed settlement in Closson v. Bank of America, San Francisco Sup.Ct., No. CGC-04-436877, posed a significant threat to the legal viability of class members' claims in these actions. The bar order in Closson was extremely broad, and would have released many, if not most (perhaps as much as 80% of the value) of the claims of the members of the proposed Settlement Class, all in return for a settlement of $35 million. See Joint Decl. ¶¶ 28, 71. As BofA argued in its motion to stay
Settlement Class Counsel and counsel for BofA first began preliminary settlement discussions in this Action in mid-October 2010. Joint Decl. ¶ 31. The full history of these negotiations, including three separate mediation sessions, and the specific terms of the Settlement, are set out in Class Counsel's Joint Declaration and in the Motion, as well as in the Settlement itself, and need not be repeated in detail here. What is clear from that history is that success was never assured on Class Counsel's appeal in Closson; the parties negotiated in good faith and at arms-length; and but for the efforts of the parties and Professor Eric Green, this Settlement would never have been achieved and the Court and the parties would still be expending tremendous resources on these cases.
On May 13, 2011, Plaintiffs filed their Motion for Preliminary Approval of the Settlement.
Pursuant to the Preliminary Approval Order, notice of the Settlement was mailed to over 13 million Settlement Class Members.
Of particular note, Settlement Class Members do not have to submit claims or take any other affirmative step to receive
Federal courts have long recognized a strong policy and presumption in favor of class action settlements. The Rule 23(e) analysis should be "informed by the strong judicial policy favoring settlements as well as the realization that compromise is the essence of settlement." In re Chicken Antitrust Litig. Am. Poultry, 669 F.2d 228, 238 (5th Cir. Unit B 1982); see also Isby v. Bayh, 75 F.3d 1191, 1196 (7th Cir.1996). In evaluating a proposed class action settlement, the Court "will not substitute its business judgment for that of the parties; `the only question ... is whether the settlement, taken as a whole, is so unfair on its face as to preclude judicial approval.'" Rankin v. Rots, 2006 WL 1876538, at *3 (E.D.Mich. June 27, 2006) (quoting Zerkle v. Cleveland-Cliffs Iron Co., 52 F.R.D. 151, 159 (S.D.N.Y. 1971)). "Settlement agreements are highly favored in the law and will be upheld whenever possible because they are a means of amicably resolving doubts and uncertainties and preventing lawsuits." In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088, 1105 (5th Cir.1977).
This Court has personal jurisdiction over all of the Settlement Class Members because they received the requisite notice and due process required by the United States Supreme Court. The Court finds that the Settlement Class Members have received "the best practicable" notice which was "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections," and the Court so holds. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985) (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314-15, 70 S.Ct. 652, 94 L.Ed. 865 (1950)); see also In re Prudential Ins. Co. of Am. Sales Practice Litig., 148 F.3d 283, 306 (3d Cir.1998). The Court has subject matter jurisdiction
Notice of the Settlement was mailed to over 13 million Settlement Class Members. See Decl. of Joel Botzet
The Court finds that the Notice approved previously
Several Objectors nonetheless contend the Notice was insufficient.
The Settlement was widely known and appreciated, and any Settlement Class Member who wished to express comments or objections had ample opportunity and means to do so. There were only 352 timely exclusion requests (0.0027%), and only 49 timely objections (0.0004%). Supp. Botzet Decl.
Contrary to what certain Objectors suggest, the law does not require that notice be given of the amount an individual class
Likewise, disclosure in the Notice of all the risks of continuing the litigation and corresponding percentages would have required describing a series of possible eventualities that depend on legal assumptions and guesswork, and this easily could have led to a garbled or misleading Notice, contrary to the purpose of Rule 23(e)(1). There was simply no meaningful way to disclose all these details briefly, to non-lawyers, without provoking confusion. Nor was there any requirement to make such an extensive disclosure in the Notice. "Class members are not expected to rely upon the notices as a complete source of settlement information." Grunin v. Int'l House of Pancakes, 513 F.2d 114, 122 (8th Cir.).
Here, the Notice was adequate because it informed the Settlement Class Members of the principal Settlement terms, including that BofA was paying to create the $410 million Settlement Fund, and because it explained that the amount of the distributions to Settlement Class Members will be "based on the number of people in the Settlement Class and the amount of additional overdraft fees each Settlement Class Member paid as a result of Bank of America's posting order."
In determining whether to approve the Settlement, the Court considers whether it is "fair, adequate, reasonable, and not the product of collusion." Leverso v. SouthTrust Bank of AL., N.A., 18 F.3d 1527, 1530 (11th Cir.1994); see also Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir.1984). A settlement is fair, reasonable and adequate when "the interests of the class as a whole are better served if the litigation is resolved by the settlement rather than pursued." In re Lorazepam & Clorazepate Antitrust Litig., MDL No. 1290, 2003 WL 22037741, at *2 (D.D.C.
The Eleventh Circuit has identified six factors to be considered in analyzing the fairness, reasonableness and adequacy of a class action settlement under Rule 23(e):
Leverso, 18 F.3d at 1530 n. 6; see also Bennett, 737 F.2d at 986.
As discussed above, the Court readily concludes that there was no fraud or collusion leading to this Settlement. See, e.g., In re Sunbeam Sec. Litig., 176 F.Supp.2d 1323, 1329 n. 3 (S.D.Fla.2001); Ingram v. Coca-Cola Co., 200 F.R.D. 685, 693 (N.D.Ga.2001) (court had "no doubt that this case has been adversarial, featuring a high level of contention between the parties"); In re Motorsports Merchandise Antitrust Litig., 112 F.Supp.2d 1329, 1338 (N.D.Ga.2000) ("[t]his was not a quick settlement, and there is no suggestion of collusion"); Warren v. City of Tampa, 693 F.Supp. 1051, 1055 (M.D.Fla.1988) (record showed no evidence of collusion, but to the contrary showed "that the parties conducted discovery and negotiated the terms of settlement for an extended period of time"), aff'd, 893 F.2d 347 (11th Cir.1989). None of the Objectors seriously contended otherwise.
This case involves millions of Settlement Class Members and alleged wrongful overdraft fees in the billions of dollars. The claims and defenses are complex; litigating them has been difficult and time consuming. Although this litigation has been pending for more than two years, recovery by any means other than settlement would require additional years of litigation in this Court and the appellate courts. See United States v. Glens Falls Newspapers, Inc., 160 F.3d 853, 856 (2d Cir.1998) (noting that "a principal function of a trial judge is to foster an atmosphere of open discussion among the parties' attorneys and representatives so that litigation may be settled promptly and fairly so as to avoid the uncertainty, expense and delay inherent in a trial."); In re Domestic Air Transp. Antitrust Litig., 148 F.R.D. at 317, 325-26 & n. 32 ("adjudication of the claims of two million claimants could last half a millennium").
In contrast, the Settlement provides immediate and substantial benefits to millions of BofA customers. See In re Shell Oil Refinery, 155 F.R.D. 552, 560 (E.D.La. 1993) ("The Court should consider the vagaries of litigation and compare the significance of immediate recovery by way of the compromise to the mere possibility of relief in the future, after protracted and expensive litigation.") (alterations in original) (quoting Oppenlander v. Standard Oil Co., 64 F.R.D. 597, 624 (D.Colo.1974)); see
Several Objectors complain that $410 million is not enough to adequately compensate the Settlement Class. The Court disagrees. By all accounts, the $410 million paid into escrow by BofA represents between 45 percent and 9 percent of the total potential damages.
Objectors' assumption that such relief was the inevitable result of this litigation, and their subsequent use of that figure as a basis to criticize the exemplary result here, is unfounded. Objectors neglect to consider that a fact-finder might not have used a low-to-high comparator to calculate damages but, instead, might have calculated damages by comparing the fees actually assessed with the fees that would have been assessed under a chronological posting order, as another court did following the trial of an action involving similar legal claims against another bank. See Gutierrez v. Wells Fargo Bank, N.A., 730 F.Supp.2d 1080, 1138-39 (N.D.Cal.2010) (rejecting a damage calculation based upon a low-to-high posting order, and instead calculating damages based on the finding that chronological posting of debits "would have tracked the ordinary and reasonable expectations of depositors."). The use of such a chronological comparison, as opposed to a low-to-high comparison, significantly reduces BofA's total potential liability and, in turn, significantly increases the percentage of recovery for the Settlement Class that the $410 million settlement sum represents. Moreover, standing alone, nine percent or higher constitutes a fair settlement even absent the risks associated with prosecuting these claims. See Behrens v. Wometco Enters., Inc., 118 F.R.D. 534, 542 (S.D.Fla.1988) (King, C.J.) ("A settlement can be satisfying even if it amounts to a hundredth or even a thousandth of a single percent of the potential recovery."); Newbridge Networks Sec. Litig., 1998 WL 765724, *2 (D.D.C. Oct. 23, 1998) ("an agreement that secures roughly six to twelve percent of a potential recovery... seems to be within the targeted range of reasonableness"); In re Rite Aid Corp. Sec. Litig., 146 F.Supp.2d 706, 715 (E.D.Pa.2001) (noting that since 1995, class action settlements have typically "recovered between 5.5% and 6.2% of the class members' estimated losses"); In re Linerboard Antitrust Litig., 296 F.Supp.2d 568, 581 (E.D.Pa.2003).
Plaintiffs properly note that Objectors' argument regarding the sufficiency of the Settlement amount suffers from hindsight bias and an unduly sanguine view of Plaintiffs' litigation risks — risks that these Objectors never faced because they arrived on the scene after the Settlement was reached. A settlement fairness analysis must consider such risks at the time the settlement was reached, not after settlement.
First, whether Plaintiffs' claims are preempted by the NBA and related regulations remains an open question. Despite this Court's rulings that such preemption does not apply here, see Luquetta v. JPMorgan Chase Bank, N.A. (In re Checking Account Overdraft Litig.), 797 F.Supp.2d 1312 (S.D.Fla.2011), no federal appeals court has yet reached the NBA preemption issue in this specific context.
Second, high-to-low posting of debit card transactions is "by no means clearly unlawful." Decl. of Prof. Samuel Issacharoff in Support of Settlement
Third, while Objectors treat class certification as a foregone conclusion, it is anything but that. This Court had not certified any class in MDL 2036 when this Settlement was reached, nor had it done so before the Settlement Agreement was signed. BofA would undoubtedly have opposed class certification on multiple grounds, including manageability, as stated by BofA in its Response to Objections. [DE # 2029 at 20-26]. Had BofA defeated class certification, the value of this case would have decreased to near zero.
Fourth, the Class faced a large roadblock to recovery in the Closson settlement. Its release purported to subsume all BofA customers who incurred overdrafts between 2001 and 2007, as well as large numbers of BofA customers who incurred overdrafts after 2007. Yet Settlement Class Counsel "successfully navigated around the Closson Settlement and obtained an outstanding settlement for the class." Decl. of Roberto Martinez
Fifth, Objectors downplay the risk that BofA would have joined other First Tranche Banks in seeking arbitration based on the Supreme Court's recent decision in AT & T Mobility LLC v. Concepcion,
Finally, Class Counsel confronted not merely a single large bank, but "the combined forces of a substantial portion of the entire American banking industry, and with them a large contingent of some of the largest and most sophisticated law firms in the country." Decl. of Prof. Geoffrey Miller
It is easy enough for Objectors to claim in hindsight that Settlement Class Counsel could or should have obtained more. It is quite another thing to accomplish that result in the face of all these risks. "Successful outcomes often make risks seem less risky in hindsight than they were at the time," and, even though "inherent in compromise is a yielding of absolutes and an abandoning of highest hopes," final settlement approval orders "almost always override the wishes of some class members for a bigger slice of the pie." In re Abrams & Abrams, P.A., 605 F.3d 238, 248 (4th Cir.2010); Cotton, 559 F.2d at 1330 (citation omitted); Curtiss-Wright Corp. v. Helfand, 687 F.2d 171, 175 (7th Cir.1982). The point is that, but for the Settlement, Plaintiffs and the class faced a multitude of potentially serious, substantive defenses, any one of which could have precluded or drastically reduced the prospects of recovery.
Courts also consider "the degree of case development that class counsel have accomplished prior to settlement" to ensure that "counsel had an adequate appreciation of the merits of the case before negotiating." In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab.
According to Class Counsel's uncontested statement of facts, significant investigation and discovery occurred in this case prior to the Settlement. Joint Decl. ¶ 60. That was sufficient to give Settlement Class Counsel insight into the strengths and weaknesses of their claims against BofA. Id. That is, Class Counsel developed ample information and performed extensive analyses from which "to determine the probability of their success on the merits, the possible range of recovery, and the likely expense and duration of the litigation." Mashburn v. Nat'l Healthcare, Inc., 684 F.Supp. 660, 669 (M.D.Ala. 1988); Joint Decl. ¶ 60.
Certain Objectors imply, without any support in the record whatsoever, that Settlement Class Counsel entered into the Settlement without knowing BofA's total liability exposure. [E.g.,
The Court must also consider "the likelihood and extent of any recovery from the defendants absent ... settlement." In re Domestic Air Transp., 148 F.R.D. 297, 314 (N.D.Ga.1993); see also Ressler, 822 F.Supp. at 1555 ("A Court is to consider the likelihood of the plaintiff's success on the merits of his claims against the amount and form of relief offered in the settlement before judging the fairness of the compromise.").
Plaintiffs correctly note that they faced several major risks in this litigation, including those relating to (1) the Closson settlement release, (2) federal preemption, (3) the BofA account agreement, and (4) arbitration, as discussed above. Absent this Settlement, this litigation would have continued for some additional years, at tremendous expense to the parties. Given the myriad risks attending these claims, the Settlement is a fair compromise. See, e.g., Bennett v. Behring Corp., 96 F.R.D. 343, 349-50 (S.D.Fla.1982) (plaintiffs faced a "myriad of factual and legal problems" that led to "great uncertainty as to the fact and amount of damage," which made it
In determining whether a settlement is fair in light of the potential range of recovery, the Court is guided by the "important maxim[]" that "the fact that a proposed settlement amounts to only a fraction of the potential recovery does not mean the settlement is unfair or inadequate." Behrens, 118 F.R.D. at 542. This is because a settlement must be evaluated "in light of the attendant risks with litigation." Thompson v. Metropolitan Life Ins. Co., 216 F.R.D. 55, 64 (S.D.N.Y.2003); see Bennett, 737 F.2d at 986 ("[C]ompromise is the essence of settlement."); Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1242 (9th Cir.1998) ("[T]he very essence of a settlement is ... a yielding of absolutes and an abandoning of highest hopes.") (internal quotation omitted). Thus, courts regularly find settlements to be fair where "[p]laintiffs have not received the optimal relief." Warren, 693 F.Supp. at 1059; see, e.g., Great Neck Capital Appreciation Investment P'ship, L.P. v. PricewaterhouseCoopers, L.L.P., 212 F.R.D. 400, 409-410 (E.D.Wis.2002) ("The mere possibility that the class might receive more if the case were fully litigated is not a good reason for disapproving the settlement.").
The Settlement provides substantial value to the Settlement Class, and is well within the range of reasonableness. Under the Settlement, Plaintiffs and the Settlement Class have recovered $410 million, which represents between 45 percent and 9 percent of their anticipated total recovery, depending on how the Closson appeal was resolved as well as the future course of this litigation. See Joint Decl. [DE # 1885-3] at ¶ 68; Decl. of Prof. Samuel Issacharoff
The absence of a claims-made process further supports the conclusion that the Settlement is reasonable. See Decl. of Prof. Samuel Issacharoff [
The Court gives "great weight to the recommendations of counsel for the parties, given their considerable experience in this type of litigation." Warren, 693 F.Supp. at 1060; see also Mashburn, 684 F.Supp. at 669 ("If plaintiffs' counsel did not believe these factors all pointed substantially in favor of this settlement as presently structured, this Court is certain that they would not have signed their names to the settlement agreement."); In re Domestic Air Transp., 148 F.R.D. at 312-13 ("In determining whether to approve a proposed settlement, the Court is entitled to rely upon the judgment of the parties' experienced counsel. `[T]he trial judge, absent fraud, collusion, or the like, should be hesitant to substitute its own judgment for that of counsel.'" (citations omitted)). Settlement Class Counsel have made clear that they believe that this Settlement is extraordinary and deserving of Final Approval. Joint Decl. at 23.
The Court rejects the contention of certain Objectors that the release in the Settlement is improper.
The Court also rejects the complaints of those Objectors who lament the absence of injunctive relief. Contrary to their misstatements, it is no longer possible for BofA to continue the same overdraft practices.
A few Objectors argue for the establishment of subclasses based on certain Settlement Class Members' participation in the settlement in Closson.
No material intra-class conflict exists that requires the establishment of subclasses. See In re Chicken Antitrust Litig. Am. Poultry, 669 F.2d at 237. "There are no conflicts in the representation of class members who all were subject to the exact same procedures by Bank of America. The relief afforded to class members
A variant on this objection notes that some number of BofA account holders who may belong to both settlement classes will receive a double recovery. [
Some Objectors contend that Settlement Class Members from the post-Closson period had stronger claims, unaffected by the Closson release, and should be in a separate subclass.
The subclass argument also has no logical stopping-point. Minor or speculative distinctions do not rise to the level of a material intra-class conflict. The Settlement correctly treats all Account holders the same, as BofA subjected all its consumer accounts to the same Debit Resequencing and all Settlement Class Members confronted several major litigation risks, each of which could have eliminated the claims of each and every Settlement Class Member in their entirety.
This Court previously found the requirements of Rule 23(a) and 23(b)(3) satisfied in this case. See In re Checking Account Overdraft Litig., 275 F.R.D. 654, 659 (S.D.Fla.2011) (analyzing Rule 23 class certification factors in granting preliminary approval) [
The Settlement provides for a cy pres program for (i) funds due Settlement Class Members who cannot reasonably be identified because certain of BofA's older transaction data is not in a form that is reasonably manipulable or searchable, Agreement ¶¶ 82, 91; and (ii) any funds that remain after distribution of Settlement Class Member payouts as a result of, for example, checks that are not cashed or returned as undeliverable. Id. ¶ 93.
The cy pres doctrine permits courts to distribute unclaimed settlement amounts to worthy charities, especially to charities whose purposes harmonize with the underlying lawsuit. See, e.g., In re Motorsports Merchandise Antitrust Litig., 160 F.Supp.2d 1392, 1394 (N.D.Ga.2001) (approving cy pres distributions of settlement residue, stating that "[w]here settlement funds remain after distribution to class members, courts have approved charitable donations to organizations geared toward combating harms similar to those that injured the class members. Such a donation may serve the cy pres principle of indirectly benefiting all class members.")
The Court finds that the proposal here comports with the law regarding cy pres and is approved. The American Law Institute recommends cy pres distributions "only when direct distributions to class members are not feasible — either because class members cannot be reasonably identified or because distribution would involve such small amounts that, because of the administrative costs involved, such distribution would not be economically viable." American Law Institute, Principles of the Law: Aggregate Litigation § 3.07, cmt. b (2010). In this case, because of impediments posed by the format of BofA's older records, it is not feasible to identify certain BofA customers who incurred overdraft fees between January 1, 2001 and December 31, 2003. Plaintiffs contend that because the claims being settled involve allegations of unfair treatment of customers by a large financial institution, it is reasonable to direct these funds to respected organizations that promote financial literacy. The Court agrees.
Some Objectors challenge this cy pres arrangement.
The Settlement Agreement's cy pres provisions are fully consistent with the law of cy pres, under which courts have approved
The Court asked several Objectors at the Final Approval Hearing whether they would instead direct that the money earmarked for Settlement Class Members who cannot be identified be returned to BofA. All of them affirmed that this is not their preferred outcome, establishing that their wishes and the outcome achieved by the Settlement align at least in part. Because of the cy pres provision, no funds will revert to BofA.
Significantly, as counsel for BofA explained at the Final Approval Hearing, the cy pres funds are not being "taken away" from those Settlement Class Members who can be identified. Instead, the share of the Settlement that would have gone to the unidentifiable Settlement Class Members is going instead to charitable organizations for the indirect benefit of unidentifiable Settlement Class Members. Stated another way, the identifiable Settlement Class Members will receive under this Settlement
Nor is the Fifth Circuit's recent decision in Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir.2011), an impediment to the proposed cy pres distribution here. The settlement agreement in that case "required the court to reallocate the funds among the subclasses of the class that generated the settlement fund," id. at 480, and the court of appeals specifically tied its holding to this contractual requirement, id. at 471 ("We hold that the district court abused its discretion by ordering a cy pres distribution in the teeth of the bargained for terms of the settlement agreement, which required residual funds to be distributed within the class."). Also, the Klier decision by its terms only "treat[ed] a distinct category of such cases, in which funds have gone unused by a particular subclass." Id. at 478. In contrast, there are no subclasses here, let alone unused money allocated to a subclass, and the Settlement Agreement explicitly and appropriately provides for cy pres distributions in light of the infeasibility of determining recipients. Objectors ask this Court to do precisely what the Fifth Circuit found to be error in Klier — ignore the Settlement Agreement and re-allocate the cy pres funds. This the Court will not do.
For all of the reasons set forth above, the Court concludes that the Settlement is fair, reasonable and adequate and finally approves it.
Service awards "compensate named plaintiffs for the services they provided and the risks they incurred during the course of the class action litigation." Allapattah Services, Inc. v. Exxon Corp., 454 F.Supp.2d 1185, 1218 (S.D.Fla.2006). "[T]here is ample precedent for awarding incentive compensation to class representatives at the conclusion of a successful class action." David v. American Suzuki Motor Corp., 2010 WL 1628362, at *6 (S.D.Fla. Apr. 15, 2010). Courts have consistently found service awards to be an efficient and productive way to encourage members of a class to become class representatives. See, e.g., Ingram v. The Coca-Cola Co., 200 F.R.D. 685, 694 (N.D.Ga. 2001) (awarding class representatives $300,000 each, explaining that "the magnitude of the relief the Class Representatives obtained on behalf of the class warrants a substantial incentive award."); Spicer v. Chi. Bd. Options Exchange, Inc., 844 F.Supp. 1226, 1267-68 (N.D.Ill.1993) (collecting cases approving service awards ranging from $5,000 to $100,000, and awarding $10,000 to each named plaintiff).
The factors for determining a service award include: (1) the actions the class representatives took to protect the interests of the class; (2) the degree to which the class benefited from those actions; and (3) the amount of time and effort the class representatives expended in pursuing the litigation. See, e.g., Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998). The Court notes that the class
Class Counsel request a fee of 30% (inclusive of expenses incurred in this litigation) of the common fund created through their efforts in litigating this case and reaching the Settlement, net of certain expenses identified in the Agreement. Agreement ¶ 102. The Court analyzes this fee request under the Eleventh Circuit's decision in Camden I Condominium Assn. v. Dunkle, 946 F.2d 768 (11th Cir.1991). Having done so below, the Court readily concludes that each of the Camden I factors supports Class Counsel's fee request, and the Court will therefore award the fee sought. As the Court noted at the Final Approval Hearing, "but for the high level of dedication, ability, talent and massive and incredible hard work by the Class attorneys, the Class representatives, ... I do not believe that the Class would have ever seen not nine percent, not five percent, but not a penny." Final Approval Hearing Tr. at 153.
It is well established that when a representative party has conferred a substantial benefit upon a class, counsel is entitled to an allowance of attorneys' fees based upon the benefit obtained. Camden I, 946 F.2d at 771; Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980). The common benefit doctrine is an exception to the general rule that each party must bear its own litigation costs. The doctrine serves the "twin goals of removing a potential financial obstacle to a plaintiffs pursuit of a claim on behalf of a class and of equitably distributing the fees and costs of successful litigation among all who gained from the named plaintiffs efforts." In re Gould Sec. Litig., 727 F.Supp. 1201, 1202 (N.D.Ill. 1989) (citation omitted); see also Ramey v. Cincinnati Enquirer, Inc., 508 F.2d 1188, 1195 (6th Cir.1974). The common benefit doctrine recognizes that those who receive the benefit of a lawsuit without contributing to its costs are "unjustly enriched" at the expense of the successful litigant. Boeing, 444 U.S. at 478, 100 S.Ct. 745; Mills v. Electric Auto-Lite Co., 396 U.S. 375, 392, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970). The Supreme Court, the Eleventh Circuit, and courts in this District have all noted that "[a] litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as whole." In re Sunbeam Sec. Litig., 176 F.Supp.2d 1323, 1333 (S.D.Fla. 2001) (citing Boeing Co. v. Van Gemert, 444 U.S. 472, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980)); see also Camden I, 946 F.2d at 771 ("Attorneys in a class action in which a common fund is created are entitled to compensation for their services from the common fund, but the amount is subject to court approval.").
In the Eleventh Circuit, class counsel is awarded a percentage of the fund generated through a class action settlement. In Camden I, the Eleventh Circuit held that "the percentage of the fund approach [as opposed to the lodestar approach] is the better reasoned in a common fund case. Henceforth in this circuit, attorneys' fees awarded from a common fund shall be based upon a reasonable percentage of the fund established for the benefit of the class." Camden I, 946 F.2d at 774.
This Court has substantial discretion in determining the appropriate fee
The Court finds, for the reasons set forth below, that Class Counsel are entitled to an award of 30% of the Settlement Fund net of the expenses in paragraph 82(a-c),(e-h) of the Agreement. Agreement ¶ 102. Class Counsel achieved an extraordinary result and overcome numerous procedural and substantive hurdles to obtain the Settlement for the Class. As Plaintiffs' several experts have noted, Class Counsel took on a great deal of risk in bringing this case, and turned a potentially empty well into a significant judgment. That kind of initiative and skill must be adequately compensated to insure that counsel of this caliber is available to undertake these kinds of risky but important cases in the future. See Muehler v. Land O'Lakes, Inc., 617 F.Supp. 1370, 1375-76 (D.Minn.1985).
The Eleventh Circuit's factors for evaluating the reasonable percentage to award class-action counsel are:
Camden I, 946 F.2d at 772 n. 3 (citing factors originally set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974)).
These twelve factors are not exclusive. "Other pertinent factors are the time required to reach a settlement, whether there are any substantial objections by class members or other parties to the settlement terms or the fees requested by counsel, any non-monetary benefits conferred upon the class by the settlement, and the economics involved in prosecuting a class action." In re Sunbeam, 176 F.Supp.2d at 1333 (quoting Camden I, 946 F.2d at 775). These factors are merely guidelines, and the Eleventh Circuit has "encouraged the lower courts to consider additional factors unique to the particular case." Id. (quoting Walco Inv., Inc. v. Thenen, 975 F.Supp. 1468, 1472 (S.D.Fla. 1997)).
As Class Counsel point out, prosecuting and settling the claims in the Action
Class Counsel offer unrebutted testimony that throughout the pendency of this case, the internal organization of Class Counsel, including assignments of work, weekly conference calls, and oversight of task-oriented subcommittees, ensured that Class Counsel were engaged in coordinated, productive efforts to maximize efficiency and minimize duplication of work. In-person meetings of Class Counsel were also held at various times during the course of the litigation. Class Counsel spent hundreds of hours investigating the claims of many dozens of potential plaintiffs against BofA in this MDL. Joint Decl. ¶ 85. Class Counsel interviewed more than 100 BofA customers and potential plaintiffs to gather information about BofA's conduct and its impact upon consumers. Id. Class Counsel note that this information was essential to their ability to understand the nature of BofA's conduct, the language of the account agreements at issue, and potential remedies. Id.
Class Counsel obtained, reviewed, sorted, and analyzed dozens of BofA deposit account agreements. Joint Decl. ¶ 85. Class Counsel also expended significant resources researching and developing the legal claims at issue. For example, state-by-state legal surveys were necessary to determine which state common law doctrines and consumer protection statutes provided Plaintiffs with viable claims. Joint Decl. ¶ 86. Following the research, drafting and filing of the master Tomes complaint. Class Counsel soon faced a significant hurdle with the filing of the Omnibus Motion, as to which BofA was one of the moving parties. [
Discovery in the First Tranche actions was stayed — at the banks' request — pending resolution of the Omnibus Motion. [
BofA produced over one million pages of documents in response to Plaintiffs' discovery requests. Joint Decl. ¶ 89. It also asserted layers of blanket, boilerplate objections to Plaintiffs' discovery requests. Id. On July 16, 2010, Plaintiffs moved to compel discovery from BofA. [
During the Summer and Fall of 2010, Class Counsel began the process of negotiating with BofA's counsel (as well as counsel for other First Tranche Banks) regarding Rule 30(b)(6) deposition topics. Joint Decl. ¶ 91. In addition, Class Counsel expended significant time and effort to prepare responses to BofA's interrogatories and requests for production of documents directed to the Plaintiffs, and to successfully defend against BofA's motion to compel discovery. Id. (citing [
Beginning in mid-October 2010, Settlement Class Counsel began preliminary settlement discussions with BofA's counsel. Joint Decl. ¶ 92. In December 2010 and again in January 2011, Settlement Class Counsel prepared for and participated in three separate days of mediation in various locations in an attempt to settle this action. Id. After the parties executed the MOU in connection with the Settlement, Settlement Class Counsel engaged in extensive discussions over the terms of the Settlement Agreement as well as settlement-related analysis to determine, among other things, an appropriate plan for allocation of the Settlement funds. Joint Decl. ¶ 93. That process required Settlement Class Counsel and their experts to analyze transactional data concerning overdraft fees imposed upon Settlement Class Members, and to determine the most appropriate distribution formula in light of BofA's data. Id. In addition, Settlement Class Counsel directed and oversaw Class Counsel's post-MOU confirmatory discovery, including ongoing document review and coding as well as regular conference calls, pending final approval of the Settlement. Id.
Quite clearly, as even the Objectors acknowledged at the Final Approval Hearing, Class Counsel expended a large number of attorney work-hours in reaching the result for which they seek final approval. No one has offered any evidence to the contrary. Indeed, all of the evidence, and particularly the results achieved, point to the exemplary and sustained efforts of Class Counsel in this case. This factor therefore supports Class Counsel's fee request.
Several Objectors complain about Class Counsel's fee request.
As the Court noted at the Final Approval Hearing, Tr. at 87-89, one of the many problems with Objectors' argument that the Court should consider the lodestar of Class Counsel is that it encourages inefficiency. That is, if counsel knows that they can substantially enhance their fees by dragging out the litigation for years and pouring in billable hours, there is little incentive to obtain an early settlement even where, as here, that settlement is substantial and results in immediate relief for the class, and is thus in the class' best interest.
The lodestar approach should not be imposed through the back door via a "cross-check." Lodestar "creates an incentive to keep litigation going in order to maximize the number of hours included in the court's lodestar calculation." In re Quantum Health Resources, Inc., 962 F.Supp. 1254,
As the Court has noted, the attorneys on both sides of this case displayed an exceptional amount of skill in litigating on behalf of their clients. See Walco, 975 F.Supp. at 1472 (explaining that "[g]iven the quality of defense counsel from prominent national law firms, the Court is not confident that attorneys of lesser aptitude could have achieved similar results"); see also Camden I, 946 F.2d at 772 n. 3 (in assessing the quality of representation by Class Counsel, Court also should consider the quality of their opposing counsel.); Johnson, 488 F.2d at 718; Ressler v. Jacobson, 149 F.R.D. 651, 654 (M.D.Fla. 1992). Class Counsel's work is emblematic of the effort and outcomes witnessed by this Court on a regular basis in this MDL. Nor can there be any legitimate dispute that, based on the novel and very complex issues confronted by Class Counsel in this case, detailed here and elsewhere, that an extraordinary group of lawyers was required to prosecute this case. The Court knows many of these lawyers from years of presiding over cases in this district, and has come to expect this level of performance from them. That is not to say, however, that such performance should be taken for granted. Instead, the fact that this level of legal talent was available to the Settlement Class is another compelling reason in support of the fee requested. As with most things, you get what you pay for, and the Settlement Class received a truly impressive amount and quality of legal services. In the private marketplace, as pointed out by several of Plaintiffs' experts, counsel of exceptional skill commands a significant premium. So it must be here.
Prosecuting these claims was daunting. The risks involved in this case from the Plaintiffs' perspective have been discussed at length above, in the Motion for Final Approval, and elsewhere. The Objectors downplay these risks because it
"A court's consideration of this factor recognizes that counsel should be rewarded for taking on a case from which other law firms shrunk. Such aversion could be due to any number of things, including social opprobrium surrounding the parties, thorny factual circumstances, or the possible financial outcome of a case. All of this and more is enveloped by the term `undesirable.'" In re Sunbeam, 176 F.Supp.2d at 1336. In addition, "[t]he point at which plaintiffs settle with defendants... is simply not relevant to determining the risks incurred by their counsel in agreeing to represent them." Skelton v. General Motors Corp., 860 F.2d 250, 258 (7th Cir.1988), cert. denied, 493 U.S. 810, 110 S.Ct. 53, 107 L.Ed.2d 22 (1989). "Undesirability" and relevant risks must be evaluated from the standpoint of plaintiffs' counsel as of the time they commenced the suit, not retroactively, with the benefit of hindsight. Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102, 112 (3d Cir.1976); Walco, 975 F.Supp. at 1473.
The most undesirable part of this case was the long odds on success. Plaintiffs had to fight the Closson settlement and its potentially fatal release,
Class Counsel prosecuted the Action entirely on a contingent fee basis. Joint Decl. ¶ 105. In undertaking to prosecute this complex action on that basis, Class Counsel assumed a significant risk of nonpayment or underpayment. Id. Numerous cases recognize that the contingent fee risk is an important factor in determining the fee award. "A contingency fee arrangement often justifies an increase in the award of attorney's fees." In re Sunbeam, 176 F.Supp.2d at 1335 (quoting Behrens v. Wometco Enters., Inc., 118 F.R.D. 534, 548 (S.D.Fla.1988), aff'd, 899 F.2d 21 (11th Cir.1990)); see also In re Continental Ill. Sec. Litig., 962 F.2d 566 (7th Cir. 1992) (holding that when a common fund
Behrens, 118 F.R.D. at 548. The risks taken by Class Counsel have been discussed. It is uncontroverted that the time spent on the Action was time that could not be spent on other matters. Joint Decl. ¶ 108. This factor too supports the requested fee.
The Court has expressed its opinion that the Settlement is an outstanding result for the Settlement Class. Professor Silver sums it up well:
Expert Report of Prof. Charles Silver [
The Court rejects the Objectors' argument that this case was settled too early. The Settlement obtains immediate relief for millions of class members who have already waited years for this result. The Court agrees with Plaintiffs that this is one of the occasions when "an early resolution may demonstrate that the parties and their counsel are well prepared and well aware of the strength and weaknesses of their positions and of the interests to be served by an amicable end to the case." In re AT & T Mobility Wireless Data Servs. Sales Tax Litig., 789 F.Supp.2d 935 (N.D.Ill.2011) (citations omitted).
Numerous recent decisions within this Circuit have awarded attorneys' fees up to (and at times in excess of) 30 percent. See Allapattah Servs., Inc. v. Exxon Corp., 454 F.Supp.2d 1185 (S.D.Fla.2006) (awarding fees of 31 1/3 % of $1.06 billion); In re: Terazosin Hydrochloride Antitrust Litigation, 99-1317-MDL-Seitz (S.D. Fla. April 19, 2005) (awarding fees of 33 1/3 % of settlement of over $30 million); In re: Managed Care Litig. v. Aetna, MDL No. 1334, 2003 WL 22850070 (S.D.Fla. Oct. 24, 2003) (awarding fees and costs of 35.5% of settlement of $100 million); Gutter v. E.I. Dupont De Nemours & Co., 95-2152-Civ-Gold (S.D.Fla. May 30, 2003) (awarding fees of 33 1/3 % of settlement of $77.5 million); Waters v. Int'l Precious Metals Corp., 190 F.3d 1291 (11th Cir.1999) (affirming fee award of 33 1/3 % of settlement of $40 million); see also Decl. of Hon. Thomas E. Scott [
The record here establishes that Class Counsel's fee request is justified and comports with those in similar cases. As Professor Samuel Issacharoff notes:
Decl. of Prof. Samuel Issacharoff [
Judge Gold's rejection of the decreasing fee argument in Allapattah captures the flaw in the Objectors' argument, noting that:
Allapattah Servs., 454 F.Supp.2d at 1213 (emphasis in original); see also Decl. of Prof. Brian T. Fitzpatrick [
The Court finds that the remaining Camden I factors support Class Counsel's
For the reasons detailed above, the Court: (1) finally approves the Settlement; (2) certifies for settlement purposes the Settlement Class pursuant to Federal Rules of Civil Procedure 23(a), (b)(3) and (e); (3) appoints Plaintiffs Richard Blair; David Brull; Jonathan Bylin; Marco Chelo; Robert Conroy; Joshua DiFrances; Carolyn Gipson; David Hanny; Haneef Haqq; Joi Holloway; Stephen and Esther James; John and Anya Kopp; Deborah and Therese Marshall; Jason Molitor; Laura Morland; Bruce and Maria Mosley; Nelson Norman; Ronald and Dawyn Palmer; William Powell; Kristin Richards; Alvin Richardson; Caroline Sherman; Ralph Tornes; Elona Wagner; Kelly Weatherspoon; William Werking; and Steve Yourke as class representatives for this Settlement ("Settlement Class Representatives"); (4) appoints as Class Counsel and Settlement Class Counsel the attorneys and law firms listed in paragraphs 15 and 42 of the Agreement, respectively, except that Bruce Rogow, Esq. and the law firm of Bruce S. Rogow, P.A., are substituted for the Alters Law Firm, P.A., as one of the Settlement Class Counsel, as set forth above; (5) awards service awards to the Settlement Class Representatives in the amount of $5,000 per Settlement Class Representative or married couple; (6) awards Class Counsel attorneys' fees and costs in the amount of 30% of the Settlement Fund net of the expenses in paragraph 82(a-c),(e-h) of the Agreement; (7) directs Settlement Class Counsel, Plaintiffs, and BofA to implement and consummate the Settlement Agreement according to its terms and conditions; (8) retains continuing jurisdiction over Plaintiffs, the Settlement Class, and BofA to implement, administer, consummate and enforce the Settlement Agreement and this Order of Final Approval of Settlement; and (9) will separately enter Final Judgment dismissing the Action with prejudice. All objections to the Settlement or any component thereof or to the award of attorneys' fees are denied, and all pending motions related to the Settlement are denied.
