In Re Puerto Rican Cabotage Antitrust Litigation
815 F. Supp. 2d 448
D.P.R.2011Background
- MDL consolidates direct-purchaser plaintiffs alleging a Sherman Act cabotage price-fixing conspiracy operating from 2002 to 2008, with Defendants controlling a substantial market share.
- Settlement negotiations produced four agreements (Horizon, Crowley, Sea Star, and Chisholm) resolving substantial portions of the claims and creating a Settlement Fund for the class.
- Lead Counsel sought attorneys’ fees based on a percentage of the fund, plus expenses and incentive awards; the Court previously deferred final fee approval pending briefing, noting concerns about the fee methodology.
- The Court ultimately determined the actual value of the settlements to be $65.85 million, after correcting initial overstatements of the fund’s value due to double counting of non-cash components.
- Objectors contested the initial fee amount, asserted the fund was inflated, and urged a smaller award; after briefing and hearings, the Court awarded fees, costs, and awards as detailed in the Amended Opinion.
- Final approval was granted, with Lead Counsel awarded 23% of the total value of the Settlements, Objectors receiving 10% of their recovered amount, incentive awards reduced to $8,000 per Class Representative, and Lead Counsel’s expenses approved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What fee method applies? | Lead Counsel urged percentage-of-fund; lodestar cross-check supported. | Court should limit fees given limited discovery and settlement timing. | Percentage-of-fund applied with lodestar cross-check. |
| What is a reasonable percentage of the fund? | 33 1/3% of the fund or higher justified by complexity and outcome. | 33 1/3% is excessive given early settlement and low risk. | Award set at 23% of total settlements, not 33 1/3%. |
| Should objectors receive fees for their efforts? | Objectors’ scrutiny increased settlement value and benefited the class. | Objectors’ fees should be limited given scope and duration differences from Lead Counsel. | Objectors granted 10% of their recovered amount ($305,000). |
| Are incentive awards appropriate for Class Representatives? | Incentive awards recognize service and risk; six representatives proposed $20,000 each. | Incentive payments should be modest given lack of substantial risk. | Incentive awards denied at $120,000; $8,000 per Class Representative awarded ($48,000 total). |
Key Cases Cited
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. Supreme Court 1983) (most critical factor is degree of success obtained)
- In re AT&T Corp., 455 F.3d 160 (3d Cir. 2006) (percentage-of-fund method favored; court wide latitude)
- In re Thirteen Appeals Arising out of the San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295 (1st Cir. 1995) (percent-of-recovery method generally favored)
- In re Relafen Antitrust Litig., 231 F.R.D. 52 (D. Mass. 2005) (extensive analysis of fee factors in common fund cases)
- In re Tyco Int'l, Ltd., 535 F.Supp.2d 249 (D.N.H. 2007) (Grinnell factors and discovery stage considerations)
- In re Fidelity/Micron Sec. Litig., 167 F.3d 735 (1st Cir. 1999) (lodestar cross-check and fiduciary duties in fee awards)