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Fears v. Wilhelmina Model Agency

September 16, 2009

CAROLYN FEARS AND TIFFANY CONNOR, ON THEIR OWN BEHALF AND ON BEHALF OF SIMILARLY SITUATED PERSONS, PLAINTIFF,
v.
WILHELMINA MODEL AGENCY, FORD MODELS, INC., CLICK MODEL MANAGEMENT, INC., NEXT MANAGEMENT COMPANY, BOSS MODELS, INC., GERARD W. FORD, DNA MODEL MANAGEMENT, LLC, IMAGES MANAGEMENT, INC. AND IMG MODELS, INC. DEFENDANT.



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

OPINION AND ORDER

Counsel for the Plaintiffs in this action request that I increase the amount of the attorneys' fee award set by my July 5, 2007 Opinion and Order, Fears v. Wilhelmina Model Agency, Inc., No. 02 Civ. 4911 (HB), 2007 WL 1944343 (S.D.N.Y. Jul. 5, 2007) ("Fears II"), following the Second Circuit's remand of this action. Fears v. Wilhelmina Model Agency, 315 Fed. Appx. 333, 334 (2d Cir. 2009) ("Fears III"). For the reasons that follow, the request of Counsel is DENIED.

I. BACKGROUND

Plaintiffs are a class of models who alleged that the Defendants, model management companies, violated antitrust laws by colluding to set the commission-rates they paid to members of the class. The facts of the case are set forth in previous opinions and will not be restated here, although the instant request warrants a brief summary of the extensive proceedings that followed settlement of the case in 2004. The case was vigorously litigated from the filing of the initial complaint in June 2002 through the negotiation of preliminary settlement agreements that were signed in or about May 2004 and, as to a final settling Defendant Click Model Management, after a single day of trial in June 2004. Between June and October 2004, the parties engaged in extensive settlement negotiations in which the Court was integrally involved. On October 12, 2004 the parties signed a formal settlement agreement (the "Settlement Agreement"), which created a settlement fund of $21,855,000 (the "Settlement Fund") to be distributed to class members pro rata based on the amount of commissions they paid to the Defendants in excess of 10%. The Settlement Agreement also provided for several injunctive remedies designed to end practices that disadvantaged models, including, inter alia, prohibitions on the modeling agencies discussing their pricing with one another, and strict requirements that the agencies (i) disclose to each model the compensation received by the agency for booking him or her, (ii) use form contracts that fully disclose compensation terms and practices and (iii) inform their models that the percentage commission is negotiable. See Settlement Agreement ¶ B.7. Most of the non-monetary provisions were developed and pursued by the Court at several settlement conferences. The Settlement Agreement further provided that if monies remained in the Settlement Fund after Plaintiffs were compensated for their single damages (i.e. the amount by which the commissions actually paid to Defendants exceed 10% of their compensation), certain administrative costs were paid, and Plaintiffs' Counsel were paid their fees and expenses "if and to the extent allowed by the Court," then the Court "shall, in its discretion, determine the disposition" of such remaining funds (the "Residual Funds") "after hearing the views of the parties [to the Settlement Agreement] as to such disposition." See Settlement Agreement ¶ D.1-2.

On May 5, 2005, I issued an Opinion and Order that approved the Settlement Agreement, awarded attorneys' fees and expenses to Plaintiffs' Counsel, and provided for the distribution of Residual Funds, which at the time exceeded $6 million. (At last count, less than half remains for cy pres purposes.) Recognizing a split in circuit authority on the issue, I determined that attorneys' fees should be calculated so as to bear a relationship to funds claimed by class members. Fears v. Wilhelmina Model Agency, Inc., No. 02 Civ. 4911 (HB), 2005 WL 1041134 (S.D.N.Y. 2005) ("Fears I"). Applying the factors set forth in Goldberger v. Integrated Res. Inc., 209 F.3d 43, 49 (2d Cir. 2000) ("Goldberger") which must guide a district court's determination of a "reasonable" attorneys' fee award from a common fund, I allocated to Plaintiffs' Counsel fees of $3,759,583.16, which represented 40% of the claims that had then been made on the Settlement Fund and 17.2% of the Settlement Fund itself.*fn1 Exercising my authority under the Settlement Agreement to determine the disposition of the Residual Funds, and after consultation with the parties and extensive investigation of my own, I ordered that the Residual Funds be distributed to seven nonprofit or charitable organizations that provide services likely to indirectly benefit members of the class, namely organizations that provide health and legal services primarily to the uninsured and to women. Fears I at *12. These organizations include, inter alia, Columbia Presbyterian Medical Center's eating disorder, substance abuse, and ovarian cancer programs, and "The Heart Truth," a national educational campaign for women about heart disease that has previously worked closely with leading models and modeling agencies to promote health awareness.*fn2 Id. at 12-16.

Plaintiffs appealed my decision, arguing, inter alia, that I erred in ordering that the Residual Funds be allocated tothe charities instead of to the class members who had already made claims as treble damages and prejudgment interest. See Masters v. Wilhelmina Model Agency, 473 F.3d 423 (2d Cir. 2007) ("Masters"). Plaintiffs' Counsel also objected to my award of attorneys' fees, which they contended was inadequate. The Second Circuit vacated the fee award set by my decision in Fears I, clarifying its earlier decisions to state expressly that "[a]n allocation of fees by percentage should . . . be awarded on the basis of the total funds made available, whether claimed or not." Masters, 473 F.3d at 437. The Second Circuit also found error in my fee award to the extent that my determination took into account conduct for which Plaintiffs' Counsel had already been sanctioned, noting without citation to case law that it "would be unfair to 'double count' for the sanctioned conduct." Id. The Second Circuit further held that I had authority to award treble damages to Plaintiffs and directed me to consider on remand my cy pres allocation in light of such authority. Id. at 436. It is interesting to note that at least to my recollection the Defendants made clear on more than one occasion that their contributions should in no way provide more money to the class members than was permitted by the formula.

Following remand and a request from Plaintiffs' Counsels' for an increase in their fee award, on July 5, 2007, I issued an Opinion and Order that reconsidered my initial allocation of the Settlement Fund in light of the Second Circuit's opinion. Fears v. Wilhelmina Model Agency, Inc., No. 02 Civ. 4911 (HB), 2007 WL 1944343 (S.D.N.Y. Jul. 5, 2007) ("Fears II"). In that decision I referenced the statements in Fears I that the award of attorneys' fees represented 17.2% of the entire Settlement Fund and my citations there to case law that supported the proposition that such an award is "within a 'reasonable' range for counsel fees." Id. at *5. I further noted that applying a "negative multiplier" to counsel's lodestar is "not out of the ordinary in common fund cases, particularly where awarding a positive multiplier of the lodestar may 'swallow up' a significant portion of the settlement funds." Id. (citing In re NTL, Inc. Sec. Litig., No. 02 Civ. 3013 (LAK), 2007 WL 1294377 (S.D.N.Y. May 2, 2007)). Adhering to the Circuit's directive that I not consider the conduct for which Plaintiffs' Counsel was previously sanctioned, I concluded that "I still find the initial award of 17.2% of the entire settlement funds was 'reasonable' upon new consideration of the quality of the representation, and the other five Goldberger factors, particularly the size of the requested fee in relation to the agreement." Id.

In Fears II I also noted that Plaintiffs' Counsel had expended additional time, effort and money on this litigation since the December 2004 fee application-a large majority of it in connection with the appeal of my Fears I decision to the Second Circuit, which concentrated, in large measure, on the sufficiency of that decision's award of attorneys' fees.*fn3 As a consequence, and with no little concern, I allocated to Plaintiffs' Counsel supplemental fees of $577,064.54, which represented 52% of the amount of their request for supplemental fees, the same proportion that the initial fee award bore to Counsel's claimed lodestar. This brought the total fee award to approximately 20% of the Settlement Fund. I also granted Counsel's request to be reimbursed for $70,835.36 in additional expenses and authorized a distribution to the claims administrator of $90,782.16 for additional administrative costs.

Finally, I considered the Plaintiffs' several proposed alternatives for disposition of the remaining Residual Funds and ordered distributions to certain late-filing claimants. Once more I extended the deadline for potential claimants to provide documentation of their claims, and I considered but rejected the Plaintiffs' proposals for disposition of the Residual Funds. These proposals, which, by the way, were never even mentioned in the Settlement Agreement, included a proposal to allocate the Residual Funds pro rata to class members who had already been compensated, either as treble damages, as compensation for claims that predated the applicable statute of limitations, or as compensation for claims submitted in another case in the state courts, Shelton v. Elite Model Management.*fn4 Ultimately, I concluded that cy pres distribution of the Residual Funds "remain[ed] the 'next best' compensation use for the indirect benefit of the class." Further, I providedseveral extensions of time for class members to submit lateclaims and time for theclaims administrator to make further attempts tolocate class members. In short the Court afforded them"every opportunity to make claims and be compensated" before the cy pres distribution. Fears II at *7.

Plaintiffs' Counsel appealed again and the Circuit vacated my Fears II decision. Fears v. Wilhelmina Model Agency, 315 Fed. Appx. 333, 334 (2d Cir. 2009) ("Fears III"). The Circuit found although I was "certainly . . . not required on remand to increase [the] fee award" the explanation in Fears II as to the reasonableness of the fee award was "incomplete." The Circuit remanded the case for reconsideration of the appropriate fee award. Id. at 335. The Circuit squarely held, however, that if upon such reconsideration Residual Funds remain, it would not be an abuse of discretion to allocate such funds to charities pursuant to the cy pres doctrine "rather than to the plaintiffs as treble damages or pursuant to the plaintiffs' other alternatives," i.e. the proposals discussed above. Id. at 336.

Plaintiffs' Counsel has reapplied for its requested fee award of 33% of the Settlement Fund. Plaintiffs' Counsel state that they have expended a total of $291,638.50 in fees and $10,464.86 in expenses since April 1, 2007, approximately 88% of which pertains to their second appeal. This brings Plaintiff Counsel's combined lodestar to $10,513,538.00. Because the additional fee distribution they seek exceeds the balance remaining in the Settlement Fund, Plaintiffs' Counsel request that I distribute to them the entire remaining balance of the fund.

II. DISCUSSION

A. General Considerations

As the history of this long-running dispute makes clear, the task of awarding attorneys' fees from a common fund places the district court inthe unique position of being required to exercise considerable discretion while essentially hearing from only one party. "Because the adversarial system breaks down at this point of the litigation, just as the interests of the class and its counsel begin to diverge, the Court effectively becomes a fiduciary whose charge is to protect the class against excessive fees." In re AOL Time Warner, Inc. Secs. and ERISA Litig., 02 Civ. 5575, 2006 WL 3057232, * 8 (S.D.N.Y. Oct. 25, 2006); Goldberger, 209 F.3d at 52 (the adversary system is "typically diluted-indeed suspended-during fee proceedings"). Here, the Defendants have settled and I have previously declined to return any Residual Funds to them. Fears I, 2005 WL 1041134, *10. Therefore, apart from Plaintiffs' Counsel, the only parties with any skin in this game are the potential recipients of the Remaining Funds, a fact which places the interests of the Plaintiffs as a class-both those who have made claims on the Settlement Fund, and those who have not-in some tension with the interests of their counsel. Ling v. Cantley & Sedacca, LLP, 04 Civ. 4566 (HB), 2006 WL 290477,*4 n.8 (S.D.N.Y. Feb. 8, 2006) (in fee application "interests of the class and their counsel are inexactly aligned"). As the Second Circuit stated in Goldberger, "a fee award should be assessed based on scrutiny ...


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