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Fears v. Wilhelmina Model Agency

July 5, 2007

CAROLYN FEARS, ET. AL., PLAINTIFFS,
v.
WILHELMINA MODEL AGENCY, INC., ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION AND ORDER

Plaintiffs, by and through Lead Plaintiffs' Counsel Boies, Schiller & Flexner LLP, as well as Hayes & Hardy LLP and Berger & Montague, P.C., request that I raise this Court's prior award of attorneys' fees and expenses, as well as adjust this Court's distribution of residual settlement funds, following the Second Circuit's remand of this litigation to this Court. See Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423 (2d Cir. Jan. 4, 2007).

For the following reasons articulated below, Plaintiffs' requests are granted in part and denied in part.*fn1

I. BACKGROUND

Familiarity with the facts of this litigation, as set forth in prior opinions,*fn2 is presumed and those facts will not be restated here.

A. Approval of Settlement and Attorneys' Fees and Subsequent Reconsideration

On May 5, 2005, I approved the final proposed settlement of this litigation. See Fears v. Wilhelmina Model Agency, Inc., 2005 U.S. Dist. LEXIS 7961, 2005 WL 1041134 (S.D.N.Y. May 5, 2005). I awarded attorneys' fees on the basis of claims made against the Settlement Fund, rather than the amount of the total Settlement Fund. Fears v. Wilhelmina Model Agency, Inc., 2005 U.S. Dist. LEXIS 7961, at *11-17. Accordingly, I awarded attorneys' fees of $3,759,583.16, which represented 40 percent of the claims made against the Settlement Fund at that time.*fn3 Id. at *52. I noted that that award of attorneys' fees equaled 17.2% of the entire fund.*fn4 Id. I noted, when I considered the quality of representation by class counsel, the previous sanctions that had been imposed on Plaintiff's counsel. Id. at *27-29. I awarded Class Counsel all its claimed expenses, which Plaintiff's counsel represented at that time totaled $1,590,164.65. Id. at *52. I also found acceptable counsel's estimate of $75,000 to $100,000 for the cost of fund administration. Id. On June 6, 2005, I declined, upon Plaintiff's counsel's motion for reconsideration, to modify my award of attorneys' fees. See Fears v. Wilhelmina Model Agency, Inc., 2005 U.S. Dist. LEXIS 10764, at *13-14, 2005 WL 1325297 (S.D.N.Y. Jun. 6, 2005).

On May 5, 2005, I also provided for the cy pres distribution of unclaimed residual funds to several charities,*fn5 pursuant to the clear and unequivocal dictates of the Settlement Agreement. See Fears v. Wilhelmina Model Agency, Inc., 2005 U.S. Dist. LEXIS 7961, at *32-39; Settlement Agreement, October 12, 2004 ("Settlement Agreement") ¶ D.2(b)(4).*fn6 Since the majority of the Plaintiffs were female, I chose, after extensive interviews with a variety of doctors and hospital administrators, etc., and in accordance with cy pres doctrine since the majority of the class was female, those that would address maladies that primarily affect women, by directing the residual funds to, e.g. an ovarian cancer research program, an eating disorders program, and others.See Fears v. Wilhelmina Model Agency, Inc., 2005 U.S. Dist. LEXIS 7961, at *39-51.

Plaintiffs, in their motion for reconsideration, argued for the very first timethat I should have instead distributed residual funds to Plaintiffs pursuant to my authority to award treble damages for antitrust violations under the Clayton Act. I declined to modify the distribution of residual funds, based on the fact that the Settlement Agreement did not mention the possibility of an award of treble damages.*fn7 See Fears v. Wilhelmina Model Agency, Inc., 2005 U.S. Dist. LEXIS 10764, at *9-13. Interestingly, Plaintiffs' counsel had fought to achieve just this settlement and had urged me to review the terms of the settlementwith each Defendant separately just to make sure it was what eachDefendantunderstood to be the termsand would agree to.

Plaintiffs, and Plaintiffs' counsel, appealed to the Second Circuit Court of Appeals on October 25, 2005. See Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 433-34 (2d Cir. 2007).

B. Second Circuit Opinion and Remand

The Second Circuit, on January 4, 2007, vacated this Court's award of counsel fees. Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 426, 436-38. The Second Circuit clarified its prior holdings and held explicitly that an award of counsel fees in a class action must be based on the amount of the total Settlement Fund, rather than claims made against the Settlement Fund. Id. at 437.

The Second Circuit also held that it was error for this Court, when it awarded attorneys' fees, to take into account the conduct for which Plaintiffs' counsel had been sanctioned. Id. at 437. It reasoned that since the Magistrate Judge had already imposed a fine and ordered Plaintiffs' counsel to exclude certain charges from its fee petition, for me to consider those sanctions in a determination of attorneys' fees would be "double count[ing]." Id.

The Second Circuit also held, citing a single district court decision from Illinois, that this Court possessed the discretion, notwithstanding the fact that the parties had concluded not to include it in the Settlement Agreement, to award treble damages to Plaintiffs.*fn8 See id. at 435-36 ("[A] treble damages award did lie within. the District Court's discretion and should be considered on remand"), citing In re Folding Carton Antitrust Litig., 557 F. Supp. 1091, 1104-07 (N.D.Ill. 1983) ("Folding Carton"). Although the Second Circuit declined to hold that this Court's cy pres allocation of excess funds to charities constituted an "abuse of discretion," it directed me on remand to consider that cy pres allocation anew in light of my discretion to award treble damages to Plaintiffs. See id. at 436.

C. Plaintiffs' Instant Request

Following remand, Plaintiffs and Plaintiff's counsel submitted this instant request. Plaintiffs' counsel requested that I award additional attorneys' fees of $2,977,842.33, on top of my original May 5, 2005 award of $3,759,583.16, for a total of over $6.7 million dollars. See Points and Authorities In Support of Plaintiffs' Request For Adjustment and Supplementation of Class Awards, Attorneys' Fees, and Expenses, April 9, 2007, ("Pl. Mem.") at 11. Such an award would constitute 33% of the entire Settlement Fund, which echoes Plaintiff's counsel's original fee request of December 2004. Id. Of the additional almost three million dollars requested, $1,109,739.50 represents 2,744.3 hours of additional work by Plaintiffs' counsel since their original December 2004 fee request.*fn9

See Affirmation of Andrew W. Hayes, April 9, 2007, at ¶ 35. Plaintiff's counsel also has requested expenses of $70,835.36, representing counsel's expenses since its original fee request, and expenses of $90,782.16, representing additional costs incurred by the claims administrator.*fn10 Id. at 16.

Plaintiffs also proposed several alternative dispositions for the remaining residual funds, in light of the Second Circuit's holding that this Court possesses the discretion to award treble damages to Plaintiffs. (Plaintiffs noted that their proposed alternative dispositions were not mutually exclusive.)

First, Plaintiffs proposed that this Court award residual funds to claimants who filed late claims after September 15, 2006. Secondly, Plaintiffs proposed that already-compensated claimants receive a pro rata distribution of the residual funds in excess of the single damages already awarded to them. Third, Plaintiffs proposed that already-compensated claimants receive compensation for the portions of their claims that predated the statute of limitations in this action (i.e., claims that arose before 1998). Fourth, Plaintiffs proposed that claimants already compensated in this action receive compensation for state-law causes of action that were dismissed from this action, but have been brought in a separate, but factually similar, state court class action. (Many claimants in this action are also class members in the state court class action.) Lastly, Plaintiffs proposed that I simply allocate the residual funds to the state Court supervising that separate, but factually similar, state court class action to distribute as that Court sees fit.

D. Status of Settlement Fund

As of April 30, 2007, as reported by the Claims Administrator and certified by the Escrow Agent, the actual Settlement Fund comprises in total $21,705,000.*fn11 Five distributions to claimants have been made, totaling $11,039,822.71 (including interest). Notice was mailed to the claimants in October 2004, per my Order of October 12, 2004. After several extensions of the initial January 6, 2005 filing deadline, the first distribution to claimants occurred on October 28, 2005. Subsequent distributions were made per my Orders which granted extensions for late filing of claims by class members. Said Orders were signed on January 3, 2006, February 15, 2006, July 28, 2006, and October 17, 2006.After taking into account a) interest accumulated on the Settlement Funds, and b) expenses paid, e.g. attorneys' fees and expenses already awarded, taxes, bank charges, administrator fees, and awards to named plaintiffs, there remains, as of April 30, 2007, $6,032,083.72 of residual Settlement Funds available for distribution.*fn12

Additionally, it should be noted that although in my May 5, 2005 Opinion approving the settlement I awarded Plaintiffs' counsel its requested expenses of $1,590,164.65, Plaintiffs' counsel subsequently discovered that in its original expenses request it "double-counted" $240,701.38 of expenses, as well as $33,464.84 of associated accumulated interest. See Affirmation of Andrew W. Hayes, April 9, 2007, at ΒΆ 39; Letter of Ed Sincavage, June 26, 2007. Plaintiffs' counsel has returned that $240,701.38 of expenses, as well as $33,464.84 of associated accumulated interest to the Settlement Fund. Id. Thus, Plaintiff's counsel ...


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