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Courtney Davis, et al., Individually and On Behalf of All Others v. Eastman Kodak Company

December 17, 2010

COURTNEY DAVIS, ET AL., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF(S),
v.
EASTMAN KODAK COMPANY, DEFENDANT(S). GLADYS ALSTON, ET AL., ON BEHALF OF THEMSELVES AND OTHERS SIMILARLY SITUATED, PLAINTIFF(S),
v.
EASTMAN KODAK COMPANY, DEFENDANT(S).



DECISION AND ORDER

Preliminary Statement

On September 3, 2010 this Court issued a Decision and Order (Docket # 351) approving the proposed settlement of a nationwide class action in which a putative class of over three thousand current and former African American Kodak employees, with Courtney Davis as lead plaintiff, had alleged systemic race discrimination in pay and promotions at Eastman Kodak Company. While the Court approved the settlement, it also specifically reserved decision on plaintiffs' counsel's motion for approval of attorney fees and costs which was initially filed on August 19, 2009. So as not to delay implementation of the relief approved in the class settlement, by stipulated Order signed and entered on October 1, 2010 (Docket # 352), the Court directed that final judgment be entered on the class settlement in order to start the time to appeal the Court's September 3, 2010 Decision and Order. The stipulated Order also confirmed that "because any decision concerning the amount of attorneys' fees and costs will not affect the total amount of funds available for distribution to the Class members," the pending motion for attorneys' fees and costs was deemed a "collateral matter" for which this Court would continue to retain jurisdiction. Judgment was thereafter entered on the class settlement (Docket # 353) on October 4, 2010. No appeal was filed as to the Court's approval of the class settlement and hence plaintiffs' counsel's motion for approval of attorneys' fees and costs is now ripe for decision.

Factual and Procedural History

Plaintiffs' counsel seek $8,068,091.83 in attorneys' fees and reimbursement of $1,631,908.17 for expenses and costs incurred in prosecuting this case, amounting to a total request of $9.7 million for legal fees and unreimbursed expenses. Both figures are based on calculations made as of August 19, 2009. It is undisputed that counsel has incurred additional and not insignificant costs and legal fees since the date their initial motion was filed.

In my earlier Decision and Order approving the class settlement I discussed in detail the history of this litigation and the process that eventually led to the settlement of all substantive claims. I specifically incorporate those findings and conclusions into this Decision and Order. In approving the settlement, I described the litigation as unusually complex and litigated aggressively but professionally by both sides. Those words seem inadequate as I believe the litigation had a profound effect on not only the named plaintiffs, the class members, and Kodak officials, but also on all counsel and, candidly, the Court as well. The nature of the instant application obliges the Court to make this point clear: In my fifteen years on the bench, no case has been litigated with more skill, tenacity and legal professionalism than this case. The clients, corporate and individual, should be proud of the manner in which their legal interests were brought before and presented to the Court by their lawyers and law firms.

The focus of this opinion is necessarily on plaintiffs' lawyers and accordingly, I turn now to their application for fees and costs. Because four separate law firms located in four metropolitan areas in three different states seek legal fees and costs, a brief summary of the genesis of plaintiffs' legal team is necessary. In August 2002, Clayborne E. Chavers, the founder and owner of "The Chavers Law Firm," was contacted by Andrea Green, then President of the Employees Concerned for Justice ("ECJ") and was asked if his firm could represent the ECJ plaintiffs on a contingency basis. According to Chavers, Ms. Green told him that the ECJ had conducted a search both within the Western District of New York and across the United States and had been unable to find a law firm willing to take the case on a contingency fee basis and advance the costs necessary to prosecute their claims of discrimination. Chavers agreed to take the case and a retainer agreement was signed. After taking the case, Chavers "immediately realized the immensity of filing an employment discrimination class action against Kodak and that it was necessary for me to co-counsel with a larger law firm or firms with the resources, experience, staff and reputation required to prosecute this type of highly complex case." See January 8, 2010 Affidavit of Clayborne E. Chavers (Docket # 343) at ¶ 26. For two years Chavers tried without success to find a law firm willing to be co-counsel in the case. In 2004, however, Chavers was referred to the law firm of Berger & Montague, P.C. in Philadelphia which agreed to take the case. Berger & Montague "is a plaintiff's class action law firm of more than 60 lawyers who practice in state and federal courts across the United States. Founded in 1970 and drawing on the talents of our nationally recognized and award winning attorneys, the firm has prosecuted and achieved a track record of success in class actions for almost 40 years." See January 8, 2010 Affidavit of Shanon J. Carson (Docket # 344) at ¶ 6. Although Berger & Montague was capable of and had previously litigated class actions of this type, it decided to seek the assistance of another "major class action firm[] willing to share the risk and the out-of-pocket expenditures." Id. at ¶ 28. Berger & Montague contacted the law firm of Garwin Gerstein & Fisher, LLP in New York City. Garwin Gerstein & Fisher "has decades of experience litigating a wide variety of complex cases, from antitrust to securities to consumer protection cases." See January 7, 2010 Affidavit of Bruce E. Gerstein (Docket # 342) at ¶ 3. With respect to this case, "Berger & Montague co-counseled with Garwin Gerstein & Fisher, LLP specifically to share the risk and the expenses." See January 8, 2010 Affidavit of Shanon J. Carson (Docket # 344) at ¶ 28.

Because the case was pending in the Western District of New York, Berger & Montague and Garwin Gerstein & Fisher contacted Jules L. Smith, Esq., a partner with the local law firm of Blitman & King LLP to ask if his firm would join the plaintiffs' legal team. Mr. Smith has been practicing law since 1971 exclusively in the area of employment law. He has "substantial experience" litigating discrimination cases and is a former Chair of the New York State Bar Association's Labor and Employment Law Section. See January 8, 2010 Affidavit of Jules L. Smith (Docket # 341) at ¶¶ 17-18. Mr. Smith has served as local counsel throughout the litigation. For much of the active litigation before this Court, Shanon Carson, Esq. and Bruce Gerstein, Esq. acted as co-lead counsel for the named plaintiffs and the class. Mr. Chavers stopped billing for his time in the case in September 2006 due to health, financial and other reasons. See August 19, 2009 Declaration of Clayborne E. Chavers annexed to Docket # 320 at ¶ 6.

As set forth in my Decision and Order approving the class settlement, after several years of contentious litigation before this Court, and while an appeal on a unique and complex issue involving releases was pending before the Second Circuit, the parties engaged mediator Eric D. Green to explore whether the litigation could be resolved. After an extended mediation and post-mediation negotiations between the parties, a settlement was reached which resolved both the class claims and claims by counsel for attorneys' fees and costs. As part of the negotiated settlement, Kodak specifically agreed not to object to the pending attorneys' fees application, but is not representing to this Court that the amount sought is (or is not) fair and reasonable. See December 1, 2009 Hearing Transcript (Docket # 338) at p. 49.

Attorneys' Fees in Class Actions

In determining appropriate attorneys' fees in class actions, federal courts have historically utilized either the "presumptively reasonable fee" method (formerly the "lodestar method") or awarded fees based upon a percentage of the common fund (the "common fund method"). In the common fund method, the court sets as the fee some percentage of the common benefit fund. With the "presumptively reasonable fee" method, the court multiplies what it determines to be a reasonable hourly rate by the number of hours reasonably expended on the case. Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany & Albany Bd. of Elections, 522 F.3d 182, 190 (2d Cir. 2008). Regardless of the approach used, district courts are "guided by the traditional criteria" that reflects a reasonable fee, including: (1) the time and labor expended by counsel; (2) the magnitude and complexities of the litigation; (3) the risk of the litigation; (4) the quality of representation; (5) the requested fee in relation to the settlement; and (6) public policy considerations. Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000).

In a Title VII employment discrimination suit, a court may award "a reasonable attorney's fee" to a "prevailing party." 42 U.S.C. § 2000e-5(k). A "prevailing party" is one who "succeeds on any significant issue in litigation which achieves some of the benefit the party sought in bringing suit." Bridges v. Eastman Kodak Co., 102 F.3d 56, 58 (2d Cir. 1996)(citations and quotations omitted). There is no question here that class counsel represented a "prevailing party" and is entitled to attorneys' fees under Title VII. Nor is there dispute, at least in the Court's mind, that Goldberger factors two through six as set forth above weigh in favor of compensating class counsel fully for their tireless work on behalf of the plaintiffs. The remaining issue then is whether the fee negotiated in the settlement is fair and reasonable based on these factors and the time and labor expended by counsel. The fact that the fee award was negotiated separately and apart from the negotiated class settlement does not require a finding that the negotiated fee is reasonable. "[I]f the court finds good reason to do so, it may reject an agreement as to attorneys' fees just as it may reject an agreement as to the substantive claims. The court's perspective and obligations are different from those of the parties." Jones v. Amalgamated Warbasse Houses, Inc., 721 F.2d 881, 884 (2d Cir. 1983).

Depending on the author of the judicial opinion, the Second Circuit has either modified, clarified, altered or replaced the lodestar method with the "presumptively reasonable fee" method of evaluating attorneys' fee applications. Arbor Hill Concerned Citizens Neighborhood Ass'n, 522 F.3d at 190 ("The meaning of the term 'lodestar' has shifted over time, and its value as a metaphor has deteriorated to the point of unhelpfulness. This opinion abandons its use."). Regardless of nomenclature, it is this method that class counsel asks that the fairness of their requested fee be measured by. Under the "presumptively reasonable fee" approach, the court considers a number of case-specific factors*fn1 in order to establish a reasonable hourly rate that a "reasonable, paying client would be willing to pay," and then multiplies that rate by the number of hours reasonably spent on the case. Arbor Hill Concerned Citizens Neighborhood Ass'n, 522 F.3d at 184, 190. The result is known as the "presumptively reasonable fee" and our Circuit has instructed that in determining this fee we must "bear in mind that a reasonable paying client wishes to spend the minimum necessary to litigate the case effectively." Id. at 190. "By asking what a reasonable, paying client would do, a district court best approximates the workings of today's market for legal services." Id. at 192.

A corollary to the "presumptively reasonable fee" rule is the "forum rule." Under the forum rule, district courts reviewing fee petitions should generally use the prevailing hourly rate in the community where the case was litigated in calculating the presumptively reasonable fee. Indeed, the Second Circuit has instructed that a court must presume "that a reasonable, paying client would in most cases hire counsel from within his district, or at least counsel whose rates are consistent with those charged locally." See Simmons v. New York City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009)(citation omitted). To overcome the presumption is not easy. "[A] litigant must persuasively establish that a reasonable client would have selected out-of-district counsel because doing so would likely (not just possibly) produce a substantially better net result." Id. at 175. In the "unusual" case where the presumption has been overcome, the "district court may use an out-of-district hourly rate-or some rate in between the out-of-district rate sought and the rates charged by local attorneys-in calculating the presumptively reasonable fee if it is clear that a reasonable, paying client would have paid those higher rates." ...


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