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McGreevy v. Life Alert Emergency Response, Inc.

United States District Court, S.D. New York

April 27, 2017

MARGARET McGREEVY, individually and on behalf of all others similarly situated, et al., Plaintiffs,
v.
LIFE ALERT EMERGENCY RESPONSE, INC., Defendant.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, District Judge

         On October 11, 2016, Plaintiffs moved for final approval of a class action settlement of up to $3, 281, 250 and separately moved for approval of attorneys' fees and costs to be paid out of the settlement fund to Class Counsel. By Order dated December 2, 2016, the Court approved the Agreement as fair and adequate under Federal Rule of Civil Procedure 23(e), but reserved judgment on Plaintiffs' motion for fees and costs. Plaintiffs seek attorneys' fees amounting to 33.3% of the total possible settlement, or $1, 093, 750, along with reimbursement of $34, 141.96 in costs. For the following reasons, the motion is granted in part and denied in part.

         I. BACKGROUND

         This case deals with claims that Defendant failed to pay proper wages to more than 2, 000 individuals in violation of the Fair Labor Standards Act (“FLSA”), New York law and Florida law. The case was mediated in conjunction with Barragan v. Life Alert Emergency Response, Inc., No. BC556127, a partially overlapping action filed in California state court. With the assistance of a mediator, the parties in both the instant case and Barragan negotiated a final, global settlement.

         The settlement in this case is reflected in a settlement agreement (the “Agreement”) and commits Defendant to pay up to $3, 281, 250 (the “gross settlement amount”). This amount covers all payments to settle the action -- payments to class members, attorneys' fees, costs, the cost of settlement administration, service awards and all payroll and withholding taxes. All fees and costs are deducted from the gross settlement amount before funds are paid to the class members resulting in the “net settlement amount.” Any fees, costs or service awards that are reduced by the Court become part of the net settlement amount. The total fees and costs paid to Class Counsel, the settlement administrator and the named plaintiffs are capped at 37.5% of the gross settlement amount.

         The settlement is allocated among three settlement classes. The FLSA class consists of the 372 sales persons who opted into the FLSA collective, out of the 1, 400 potential opt-in FLSA plaintiffs who worked in Defendant's offices nationwide.[1] The New York and Florida classes are Rule 23 opt-out classes, consisting of 781 and 957 independent contractors who worked in those respective states. The gross settlement amount is allocated 23% to the FLSA class, 34% to the New York class and 43% to the Florida class based on the approximate number of work weeks that each settlement class worked and the approximate damages that class members would have recovered if Plaintiffs were successful at trial. Within each class, the net settlement amounts are allocated pro rata based on the total number of work weeks for each settlement class member, regardless of the number of class members who actually share in the settlement proceeds.

         The FLSA class members are entitled to recover without the filing of a claim form. For the New York and Florida classes, the Agreement is a claims-made settlement, meaning that only members of those two classes who submit a proper and timely claim form are entitled to their share of the New York and Florida settlement amounts. Defendant is required to pay at least 50% of the net settlement amount to members of these classes. Class members submitted claim forms representing 53% of the New York class work weeks and 59% percent of the Florida class work weeks. Defendant is not required to disburse unclaimed funds allocated to the New York and Florida classes -- i.e., 47% of the New York class funds and 41% of Florida class funds.

         If Class Counsel's fees and other costs were awarded in the amounts requested, the FLSA class would receive $485, 842.35 in settlement funds, the New York class would receive $380, 646.92 and the Florida class would receive $535, 905.24, for an average of approximately $1, 499 per FLSA class member, $2, 136 per New York class member and $1, 711 per Florida class member. Any checks not cashed by class members within 180 days will be distributed to cy pres beneficiaries, MFY Legal Services and Bet Tzedek.

         Class Counsel is Outten & Golden LLP, a 50 attorney firm experienced in class action litigation. Class Counsel's work on the case included a pre-filing investigation, filing the Complaint, moving for conditional certification of the FLSA collective, opposing Defendant's motion to compel certain opt-in plaintiffs to arbitrate their claims individually, filing an amended complaint to include the Florida class, engaging in approximately eleven months of discovery, preparing for and participating in mediation, negotiating the Agreement and drafting and filing documents in support of both preliminary and final approval of the Agreement. Through October 7, 2016, Class Counsel worked a total of 3, 024.25 billable hours prosecuting and negotiating the settlement of this case. This tally excludes time that will be spent administering the settlement. Based on the hours worked and the hourly rate for each attorney, paralegal and staff member who worked on the case, Class Counsel calculates a lodestar of $1, 060, 602.50. The requested fee award of 33.3% of the fund, or $1, 093, 750, would represent a multiplier of 1.03 of Class Counsel's proposed lodestar.

         II. LEGAL STANDARD

         In Rule 23 class actions, the “attorneys whose efforts created the fund are entitled to a reasonable fee -- set by the court -- to be taken from the fund.” Goldberger v. Integrated Res., Inc., 209 F.3d 43, 47 (2d Cir. 2000). The reasonableness of a fee in this Circuit is evaluated based on consideration of the six Goldberger factors: “(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.” Id. at 50. It is the district court's duty “to act as a fiduciary who must serve as a guardian of the rights of absent class members.” McDaniel v. Cty. of Schenectady, 595 F.3d 411, 419 (2d Cir. 2010) (citation omitted). Fee awards “should be based on scrutiny of the unique circumstances of each case, and a ‘jealous regard to the rights of those who are interested in the fund.'” Id. at 426 (quoting Goldberger, 209 F.3d at 53).

         The Second Circuit has approved the use of two methods to calculate attorneys' fees: the “lodestar” method and the “percentage of the fund” method. See Id. at 417-19. Under the lodestar method, the district court multiplies the reasonable hours billed by a reasonable hourly rate to create a presumptively reasonable fee. See Goldberger, 209 F.3d at 47; McDaniel, 595 F.3d at 423. Under the percentage of the fund method, class counsel is awarded a reasonable percentage of the total value of the settlement fund created for the class. See Goldberger, 209 F.3d at 47. The percentage of the fund method is the trend in this Circuit. See McDaniel, 595 F.3d at 417-19. When the percentage of the fund method is used, the Second Circuit “encourage[s] the practice of requiring documentation of hours as a ‘cross check' on the reasonableness of the requested percentage.” Goldberger, 209 F.3d at 50 (internal quotation marks omitted).

         III DISCUSSION

         A. Attorneys' Fees

         Following the approach set forth in In re Colgate-Palmolive Co. ERISA Litig., 36 F.Supp.3d 344 (S.D.N.Y. 2014), this Opinion applies the percentage of the fund method and considers the Goldberger factors in three steps. First, the Opinion determines a baseline or benchmark for a reasonable fee with reference to other common fund settlements of a similar size and complexity, taking into account the requested fee in relation to the settlement, the magnitude and complexity of the case and the policy consideration of using a sliding scale based on the amount of the settlement to avoid a windfall to class counsel. Second, the Opinion considers the risk to Class Counsel, the quality of representation and other public policy concerns in order to make any necessary adjustments to the baseline fee. Third, the Opinion applies the lodestar method as a cross check, taking into account the time and labor expended by Class Counsel.

         1. Comparison to Court-Approved Fees in Other Common Fund Settlements

         In using the percentage of the fund approach, the critical Goldberger factor is necessarily the size of the requested fee in relation to the settlement. See In re Colgate-Palmolive Co., 36 F.Supp.3d at 348. A sliding scale approach -- awarding a smaller percentage of the settlement as the amount of the settlement fund increases -- is appropriate in order to avoid overcompensating plaintiffs' counsel to the detriment of the class members they represent. See In re Bank of Am. Corp. Sec., Derivative, & Emp. Ret. Income Sec. Act (ERISA) Litig., 772 F.3d 125, 134 (2d Cir. 2014) (“When considering common fund or class action law suits, we have recognized that ‘[district] courts have traditionally awarded fees for common fund cases in the lower range of what is reasonable' given the ‘economies of scale[.]'”) (quoting Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 122 (2d Cir. 2005)); Goldberger, 209 F.3d at 52 (noting that “it is not ten times as difficult to prepare, and try or settle a 10 million dollar case as it is to try a 1 million dollar case”). At the same time, it is important to ensure that the fee awarded decreases in such a way ...


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