In Re Gulf Oil, 142 F.R.D. 588, 596-97 (S.D.N.Y. 1992) (using percentage method). While I discuss both methods below, I note that the Second Circuit has recently held that the lodestar method is appropriate for determining attorney's fees for prevailing parties in Title VII cases, and I keep that guidance in mind as well. Quaratino v. Tiffany & Co., 129 F.3d 702, 1997 WL 707047 (2d Cir. 1997).
Before determining whether plaintiff's counsel's fee request is reasonable, the Court must first determine the benchmark against which the fee request must be measured. The PSLRA is instructive in this regard as well. The Act states that "total attorneys' fees and expenses awarded by the court to counsel for plaintiff shall not exceed a reasonable percentage of the amount of any damages and prejudgment interest actually paid to the class." See 15 U.S.C. § 78u-4(a)(6); 15 U.S.C. § 77z-1(a)(6). This provision is intended to prevent the payment of attorney's fees based on an inflated settlement figure, where a large part of the settlement is later returned to the coffers of the settling defendant because of a low number of claims. Before awarding fees, therefore, the Court must determine what portion of the settlement fund will actually be paid to plaintiffs. Based on the claim information discussed above, it is apparent that the entire settlement fund will be paid out. That is, no money will revert back to Scitex. The full $ 2.875 million is therefore the appropriate figure against which any attorney's fee award must be measured.
Plaintiff argues that the 33% figure is in line with market rates for contingent fee cases and that the fee award should mirror the market. While plaintiff cites cases in which 33% was awarded, other courts have noted that between 20%-30% is a fair fee, with 25% as a "bench mark". In Re Crazy Eddie Sec. Litig., 824 F. Supp. 320, 326 (E.D.N.Y. 1993); see also In Re Union Carbide Consumer Prod. Bus. Sec. Litig., 724 F. Supp. 160, 170 (S.D.N.Y. 1989) (relying on lodestar method but noting that common fund attorney awards in this district typically range from 15% to 30%).
In assessing the appropriate percentage of the fund, the Court must also keep in mind the overall magnitude of the award sought as compared to the recovery for the average plaintiff. Here, plaintiff's counsel seeks close to $ 1 million in fees. Named plaintiff, by contrast, will recover nothing. Other plaintiffs, whose recovery comes from the same pot as plaintiff's counsel's fees, will recover at most 6%-11% of their losses. See supra. These figures will be reduced dollar for dollar for every dollar that is awarded plaintiff's counsel.
Plaintiff argues that the lodestar method also supports their fee request as reasonable. Here, plaintiff's proposed lodestar figure is $ 302,402.50, representing the hours spent by plaintiff's attorneys multiplied by their hourly rate. The figure represents the time of four partners (approximately 400 hours) and one associate (approximately 560 hours). The billing rates for the five attorneys are: $ 495, $ 395, $ 395, $ 375 and $ 210 per hour. Counsel correctly note that the appropriate hourly rate to be used in the lodestar calculation is the "market" rate. Cf. Blum v. Stenson, 465 U.S. 886, 895, 79 L. Ed. 2d 891, 104 S. Ct. 1541 (1984). Counsel claim the above rates are "competitive market hourly rates in their respective legal communities for cases involving complex class action securities litigation," Pl. Br. at 54. While they may be correct, they provide no evidentiary support whatsoever for this contention. They also failed to respond to Objectors' question at the fairness hearing regarding who actually pays these alleged rates, if counsel specializes in securities class actions in which they are paid on a contingent basis.
While the Court does not profess much expertise in the area, the New York State Bar Association ("NYSBA") 1997 Desktop Reference on the Economics of Law Practice in New York states that the median hourly billing rate for litigation attorneys in New York City is $ 200 per hour and the median hourly rate for all attorneys in the City--including all areas of practice--is $ 225. Id. at 3. In light of plaintiff's counsel's failure to provide any support for their claimed billing rate, the Court adopts the $ 225/hour figure reported by the NYSBA as the applicable "market" rate. Recalculating plaintiff's counsel's hours at this rate results in a lodestar figure of $ 156,600.
The fee request represents a figure 6.06 times the lodestar amount.
Courts often multiply the lodestar amount by a multiplier to account for the risk plaintiff's counsel assumed in prosecuting the action. Plaintiff has cited cases approving multipliers of between 3 and 4 times the loadstar value, believing this to be within the range of their request. Other cases, however, have used smaller multipliers. See, e.g., In Re Union Carbide, 724 F. Supp. 160 at 170 (using multipliers of 2.3 and 1.5); In Re Crazy Eddie, 824 F. Supp. 320 at 327 (1.72 multiplier).
Applying a hybrid of the percentage of recovery and lodestar method, I find that a fee of $ 300,000 is fair compensation. This amount represents 10.4% of the settlement fund and 1.92 times the revised lodestar amount. Such a multiplier is in line with other fee awards relying on the lodestar method. Although the 10% figure is low when compared to other fee awards utilizing solely the percentage-of-recovery analysis, it is appropriate here where class members will recover only between 6.4% to 11% of their losses.
For the reasons discussed above, the Court certifies the class for settlement purposes and approves the proposed settlement as fair. The Court grants plaintiff's counsel's attorney's fee and expense request in the amount of $ 300,000.
Dated: December 9, 1997
New York, New York
Harold Baer, Jr.