Dyer v. Wells Fargo Bank, N.A.
303 F.R.D. 326
N.D. Cal.2014Background
- Plaintiffs (Dyer and Stallworth) brought a putative class action against Wells Fargo alleging unpaid commissions for certain refinance loans (HARP, Freddie/Fannie programs) for employees paid 43 bps instead of standard rates from Apr 1, 2011 to Jan 1, 2013.
- The parties negotiated a settlement: Wells Fargo to pay a $14,743,101 common fund (≈32.7% of alleged recovery); Wells Fargo pays employer payroll taxes and notice/administration costs; funds allocated to opt-outs revert to Wells Fargo.
- Court granted preliminary approval and certified the class for settlement purposes; notice plan implemented with minimal undeliverable notices and only 3 opt-outs and no objections.
- Plaintiffs sought (1) final approval of the settlement, (2) attorneys’ fees equal to 25% of the fund, (3) reimbursement of litigation costs, and (4) incentive awards of $15,000 each for the two class reps; Wells Fargo would pay incentive awards separately.
- At final fairness hearing the court found the settlement fair and reasonable, granted final approval, approved attorneys’ fees after lodestar cross-check, denied expense reimbursement for lack of documentation (reserv[ing] funds), and reduced incentive awards to $10,000 each.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Final approval of class settlement (fairness, adequacy, reasonableness) | Settlement provides meaningful recovery (~32.7% of alleged damages), notice was adequate, risks of continued litigation and class certification support compromise | Settlement reasonable given litigation risks and defenses | Settlement granted; court found notice adequate and settlement fair, reasonable, and adequate |
| Attorneys’ fees (25% of common fund) | Request 25% benchmark ($3,685,775.25); counsel argues hours, risk, results justify fee and multiplier | Implicit defense: court should scrutinize fee via lodestar cross-check (initially noting lack of documentation) | Fee award granted after counsel submitted detailed hours/rates; lodestar cross-check produced 2.83 multiplier; court awarded $3,639,465.40 |
| Litigation expenses / costs | Counsel sought reimbursement of costs (included in fee request originally) | Defendant did not contest amount but court requires documentation | Request denied without prejudice for lack of documentation; court reserved $86,341.48 and gave counsel 10 days to itemize to obtain up to additional $46,309.84 |
| Enhancement (incentive) awards to class reps | $15,000 each justified by depositions, 4-day mediation travel, >200 hours (Dyer), missed work/childcare (Stallworth), reputational risk | Not directly disputed but court must ensure proportionality to class recovery and scrutinize adequacy | Reduced award to $10,000 each as reasonable given time/risks and proportionality to average class recovery (~$1,271) |
Key Cases Cited
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (standard for court approval of class settlements; fairness, adequacy, reasonableness factors)
- Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of S.F., 688 F.2d 615 (9th Cir. 1982) (notice must not systematically leave groups without notice)
- Rodriguez v. West Publishing Corp., 563 F.3d 948 (9th Cir. 2009) (consideration of risks of continued litigation favors settlement)
- In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036 (N.D. Cal. 2008) (percent-of-recovery benchmark and settlement fairness analysis)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (discussion of lodestar and percentage-of-recovery methods and need for cross-check)
- Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (factors for adjusting percentage fee awards and multiplier guidance)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (requirement to submit evidence supporting hours for fee awards)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (standards for incentive awards to class representatives)
- Radcliffe v. Experian Info. Solutions, Inc., 715 F.3d 1157 (9th Cir. 2013) (courts must scrutinize incentive awards to ensure they do not undermine adequacy of class representatives)