Case Information
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND DARREN KONDASH, individually and on :
behalf of others similarly situated, :
:
Plaintiff, :
: v. : Case No. 18-cv-00288-WES-LDA
:
CITIZENS BANK, NATIONAL :
ASSOCIATION, :
:
Defendant. : REPORT AND RECOMMENDATION REGARDING CLASS COUNSEL’S MOTION
FOR APPROVAL OF ATTORNEYS’ FEES AND EXPENSES
PATRICIA A. SULLIVAN, United States Magistrate Judge.
“Computerized calls are the scourge of modern civilization.”
Mims v. Arrow Fin. Servs., LLC,
Class Counsel initiated this action in June 2018 alleging that Defendant, Citizens Bank, National Association, made multiple prerecorded nonconsensual robocalls to the cell phones of Class Representative/Plaintiff, Darren Kondash, and over 283,000 class members in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Following a period of contested discovery, the parties participated in a mediation presided over by the Hon. Morton Denlow (ret.) of JAMS. The mediation resulted in a settlement agreement requiring the creation of a non-reversionary Settlement Fund of $1,837,500. According to the settlement, the net Settlement Fund (after payment of the costs of notice and administration and any award the Court may make for attorney’s fees and expenses to Class Counsel and an incentive award to the Class Representative) is to be allocated among class members who submit timely proofs of claim.
The Court preliminarily approved the settlement on June 2, 2020, and, except for reserving regarding attorney’s fees and expenses, finally approved it by an Order that issued on November 12, 2020. ECF No. 49. Regarding Class Counsel’s motion for attorney’s fees and expenses (ECF No. 45), which was supported by the Declaration of Attorney Alexander Burke (ECF No. 45-1) (“Burke Dec. I”), the Court directed Class Counsel to supplement his motion, including to provide additional information regarding costs. Text Order of Nov. 12, 2020. Class Counsel complied and filed a supplemental brief (ECF No. 50) and a second Declaration of Attorney Alexander Burke (ECF No. 50-1) (“Burke Dec. II”). The motion has been referred to me for report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). In reliance on the two Burke Declarations, and in light of the additional information provided in Class Counsel’s supplementation, I find that the motion is now ripe for decision and recommend that it be granted for the reasons that follow.
I. BACKGROUND AND PROPOSED FINDINGS
At the final approval hearing held on November 9, 2020, Class Counsel advised the Court that the notice to the class had been effective in reaching more than 95% of the class members and that 7% of them (an excellent return rate) had responded to the notice. Based on these returns and on the assumption that the fees, expenses and incentive award sought by Class Counsel’s motion are approved, Class Counsel predicted that each class member will receive approximately $44. This recovery is consistent with the information provided to the class in the notice approved by the Court (ECF No. 43-1 at 41), which had estimated that the payout would be between $25 and $60 per class member. [3] Class Counsel has characterized this result as a “fantastic settlement,” ECF No. 50 at 8, while counsel for Defendant advised the Court that the settlement represents a fair value to Defendant and, in Defendant’s view, fair value to the class. There were no objections to the settlement; one class member asked to be, and was, excluded. ECF No. 45-1 ¶ 15; ECF No. 49 at 3. Apart from the requested fees and expenses, the Court approved the settlement through the issuance of the Final Approval Order and Judgment on November 12, 2020. ECF No. 49.
During the final approval hearing, the Court addressed the instant motion for fees and expenses. The Court noted that the basis for the requested fee was the percentage of fund method, which is normally subject to a lodestar cross-check, and questioned Class Counsel about the amount of the lodestar. Class Counsel advised that the lodestar had not been provided in the motion; when pressed by the Court, he responded with an estimate ($110,000). If accurate, this estimate would mean that the total fee ($612,500) requested is almost six times the value of the time expended by counsel. [4] The Court expressed concern that such a multiplier seemed high and ordered Class Counsel to file a supplemental brief, including to address the risks posed by the case that might justify a fee so disproportionate to the effort invested by Class Counsel in the case. By text order a few days later, the Court “directed [Class Counsel] to provide additional information regarding costs.” Text Order of Nov. 12, 2020.
Class Counsel’s supplemental brief appropriately addresses what is the actual lodestar for this case. Specifically, the second Burke Declaration clarifies that the estimated lodestar ($110,000) provided in response to the Court’s inquiry is simply wrong. The correct lodestar is $226,785. Burke Dec. II ¶¶ 19-20. As detailed by the second Burke Declaration, this lodestar is based on the work of three attorneys: Attorney Burke who worked for 298.6 hours at the rate of $600 per hour; Attorney Burke’s associate, Attorney Daniel Marovitch who worked for 107 hours at the rate of $375 per hour; and local counsel, Attorney Christopher Lefebvre, who worked for 18.75 hours at the rate of $400 per hour. Id. And while the first Burke Declaration contains detailed information regarding Attorney Burke’s deep experience in cases like this one, as well as his national reputation in TCPA cases, the second Burke Declaration adds information regarding the TCPA experience of Attorney Marovitch and the consumer law experience of Attorney Lefebvre. Id. ¶¶ 2-11, 19-20.
Although Class Counsel has not provided a declaration with the opinion of an independent attorney regarding the reasonableness of these hourly rates, the second Burke Declaration references many specific cases and other resources, which collectively establish that these rates are well within the realm of reasonable for attorneys of their experience in a case of this type. Burke Dec. II ¶¶ 19-20. Further, while Class Counsel has not provided actual billing records to permit the Court independently to assess the reasonableness of the hours, the amount of time expended generally synchs comfortably with the work necessarily performed by Class Counsel – including the pre-filing investigation, the filing of the case, discovery, a complex mediation and the negotiation, documentation and implementation of the settlement – to bring the case to a successful conclusion. Accordingly, I find the lodestar ($226,785) to be a reasonable reflection of the work actually performed by Class Counsel.
In support of the request for a one-third contingent fee, the first Burke Declaration avers that the Class Representative entered into an agreement with Class Counsel that the fee would be contingent on a successful result, as well as that, should the class be certified, the fee would be whatever amount is determined by the Court. Burke Dec. I ¶ 18. The second Burke Declaration confirms that Class Counsel worked on this case on an entirely contingent-fee basis. Burke Dec. II ¶ 14. Class Counsel emphasizes that all risk of loss for this case was borne by his small law firm. Id. ¶ 12. Further, based on his own extensive experience in litigating TCPA cases on behalf of clients, as well as in interacting with other attorneys doing the same work, Attorney Burke avers (and, in reliance on his averment, I find) that, he “is confident that the market rate for plaintiff contingency representation for this kind of case is between one-third and 40%.” Id. ¶ 13.
Regarding the risks posed by this engagement undertaken on a contingent basis, the Court
should begin the inquiry focused on the reality that the injury caused by the intrusion of repeated
unwelcome robocalls is largely psychic, based on which Congress established a statutory
recovery of $500 per violation with trebling for willful violations, but did not provide for
attorney’s fees. 47 U.S.C. § 227(b)(3). As a practical matter, therefore, a single plaintiff is
unlikely to have the potential for a damage recovery large enough to cover the attorney’s fee and
costs required for litigating a complex TCPA case to conclusion; this means that the private right
of action that Congress created could be moribund but for the availability of relief on a class-
wide basis. The other TCPA reality is that a robocaller can raise as a defense the argument that
some putative class members consented to being called. 47 U.S.C. § 227(a)(4)(A). Due to the
availability of this defense, courts have struggled with whether a TCPA class can be certified in
light of the potentially impossible task of removing from the class uninjured persons who
consented to the calls. E.g., Tomeo v. CitiGroup, Inc., No. 13 C 4046,
The risk undertaken by Class Counsel was further exacerbated recently as courts have
grappled with whether TCPA’s words used to limn its technical elements – particularly the
capacity to generate random or sequential numbers, which is necessary to the statutory definition
– mesh with evolving technology, causing one jurist to cry that its “wording . . . is enough to
make a grammarian throw down her pen.” Gadelhak v. AT&T Servs., Inc.,
Mindful of these risks, Class Counsel accepted this case on a purely contingent basis, exposing himself, his small firm and his local counsel to the hazards of investing substantial time and treasure over a protracted period (to the exclusion of other work) with no return. And by ending this case with a certified class and a Settlement Fund large enough for meaningful compensation for the class, Class Counsel successfully sidestepped all of these potential landmines and achieved an outcome that confers a substantial benefit on the class.
With respect to expenses, the second Burke Declaration breaks down the actual amounts spent on the mediation ($9,565.39), case-related travel ($2,072.55), discovery ($1,360.10) and court fees ($546.80). [6] Burke Dec. II ¶ 21. Like the time spent and hourly rates applied, these also appear to be well within a range that is facially reasonable. The total sought is $13,544.84.
In sum, the motion referred to me seeks $612,500 as an award of attorney’s fees based on one-third of the Settlement Fund and expenses of $13,544.84. These amounts are consistent with or less than what was included in the advisory to the class in the court-approved notice. [7] II. LAW, PROPOSED CONCLUSIONS AND RECOMMENDATIONS
A. Attorney’s Fee Award
In a certified class action, the Court may award reasonable attorney’s fees and costs as
authorized by law or the parties’ agreement. Fed. R. Civ. P. 23(h). Here, fees are not authorized
by law because the TCPA is not a fee shifting statute. Bais Yaakov of Spring Valley v. Act, Inc.,
As held by the First Circuit, in a contingent class case like this one, the “percentage of
fund” approach is appropriate because it is easy to administer; it reduces the possibility of
collateral disputes; it enhances efficiency throughout the litigation; it is less taxing on judicial
resources; and it better approximates the workings of the marketplace. In re Thirteen Appeals
Arising out of the San Juan Dupont Plaza Hotel Fire Litig.,
For guidance in establishing the reasonableness of a percentage-based fee award of one- third of the fund, this Court been guided by the following factors:
(1) the size of the fund and the number of persons benefitted; (2) the skill, experience, and efficiency of the attorneys involved; (3) the complexity and duration of the litigation; (4) the risks of the litigation; (5) the amount of time devoted to the case by counsel; (6) awards in similar cases; and (7) public policy considerations.
In re Loestrin 24 Fe Antitrust Litig.,
Consistent with what seems to be emerging as a well-settled practice, this Court also
looks to the lodestar as a cross-check in examining the reasonableness of a fee request. In re
Loestrin 24 Fe Antitrust Litig.,
Whether a particular multiplier suggests that a fee is not reasonable is a nuanced
determination that depends on an array of considerations. For example, a fee that is more than
double (a multiplier larger than two) the lodestar should be closely scrutinized in so-called
“megafund” cases (where the fund approaches or exceeds $100 million). See In re Loestrin 24
Fe Antitrust Litig.,
With these principles as a backdrop, I conclude that Class Counsel’s request for a fee of $612,500, representing one-third of the Settlement Fund, is eminently reasonable. First, and most significant, the Settlement Fund provides for a substantial award of money for the benefit of a meaningful percentage of a significantly-sized class, with the collateral benefit of deterring the use of the intrusive robocalls from which Congress tried to protect consumers in enacting TCPA. Second, Class Counsel have demonstrated that Attorney Burke, his associate and his local counsel are well-skilled and deeply experienced, particularly in TCPA cases, an arena in which Attorney Burke enjoys a national reputation, as well as that they have effectively and efficiently prosecuted this case to a successful conclusion. Further, in undertaking this case, Class Counsel accepted significant risk of no payment for substantial work, including foregoing other work (a significant matter for a small firm) and expending out-of-pocket expenses with no guarantee of reimbursement. Because this case arose under TCPA, Class Counsel’s risk was significantly enhanced by recent developments in the law, which made class certification (essential to litigate a TCPA case on a cost-effective basis) more challenging and raised the specter of unconstitutionality or unenforceability as the Supreme Court has struggled with TCPA’s interpretation. Mindful of these considerations, and in reliance on the second Burke Declaration (¶ 13), I find that, in a TCPA case, a percentage of fund ranging from one-third to forty percent is consistent with the market rate for such contingency arrangements in TCPA cases, as well as that the Class Representation’s agreement with Class Counsel was based on such a contingent arrangement. Burke Dec. I ¶ 18. These findings and conclusions are not rebutted by objections to the requested fees; to the contrary, no objections were received.
Turning to the lodestar cross-check, as noted infra , I conclude that the lodestar is a useful tool for this case in that I find that the hours and rates presented in the second Burke Declaration (totaling $226,785) are a reasonable, indeed understated, reflection of the value of the work actually performed by Class Counsel on this case. I further find that this lodestar confirms the reasonableness of a one-third-of-fund fee award in that the requested fee ($612,500) is less than three times the lodestar. That is, mindful of the risk Class Counsel accepted at the outset of the matter, I find that a multiplier of 2.7% in the circumstances presented here is reasonable and does not amount to a windfall at the expense of the class.
Based on the foregoing, I find the percentage method of calculating the fee award should be the basis for payment of Class Counsel. Mindful of the holistic factors listed in Loestrin and the mimic-the-market approach used in Cabletron, I further find that one-third of the Settlement Fund is fair, reasonable and appropriate compensation for the work done by Class Counsel to create the Settlement Fund. For all of these reasons, I recommend that the Court approve an attorney’s fee for Class Counsel of $612,500, to be paid from the Settlement Fund.
B. Costs and Expenses
When, as here, the expenses requested are modest and synch with the matters that arose
over the course of the case, the Court’s review should be for irregularities and, if none are
apparent, should review the expenses as presented. See generally In re Loestrin 24 Fe Antitrust
Litig.,
III. CONCLUSION
Based on the foregoing, I recommend that the Court grant the Class Counsel’s Unopposed Motion for Attorneys’ Fees and Expenses (ECF No. 45) and approve the following payments out of the Settlement Fund:
(1) Reimbursement for costs and expenses of $13,544.84; and (2) Attorney’s fees for Class Counsel of $612,500, which amounts to one- third of the Settlement Fund.
Any objection to this report and recommendation must be specific and must be served and filed
with the Clerk of the Court within fourteen (14) days of its receipt. See Fed. R. Civ. P. 72(b)(2);
DRI LR Cv 72(d). Failure to file specific objections in a timely manner constitutes waiver of the
right to review by the district judge and the right to appeal the Court’s decision. See United
States v. Lugo Guerrero,
/s/ Patricia A. Sullivan PATRICIA A. SULLIVAN
United States Magistrate Judge
December 23, 2020
Notes
[1] JAMS bills itself as the “world’s largest private alternative resolution . . . provider.” See “About Us” https://www.jamsadr.com/about/ (last visited Dec. 22, 2020).
[2] As originally filed, the motion for attorney’s fees and expenses also sought an incentive award of $15,000 for the Class Representative; this aspect of the motion was approved by the Court in the Final Approval Order and Judgment. ECF No. 49 ¶¶ 16-17 (approving incentive award but reserving on fees and expenses). It will not be discussed further.
[3] See Class Notice at http://www.citizensbanktcpasettlement.com/frequently-asked-questions.aspx#a9 (last visited December 22, 2020).
[4] This arithmetic comparator of the percentage-based fee to the value of the work actually performed is referred to as the multiplier. The multiplier looks at the reasonableness of the relationship between the lodestar (the total attorney’s hours multiplied by the applicable billing rate) and the requested fee. As of the final approval hearing, Class Counsel estimated that the lodestar was $110,000. Based on a requested fee of $612,500, this lodestar yields a multiplier of 5.6, which was high enough to raise the Court’s hackles.
[5] It must be noted that this lodestar understates the total work that will be done by Class Counsel to bring this case to closure, in that it does not include the work on the supplemental brief or any other time that will be spent on this case after the filing of the supplemental brief. ECF No. 50 at 17.
[6] The original motion included an estimate for travel to the final hearing. Because of the COVID pandemic, the hearing was remote. Therefore, the amount requested by the supplemental brief is reduced to reflect this savings. ECF No. 50 at 22-23; Burke Dec. II ¶ 21.
[7] See Class Notice at http://www.citizensbanktcpasettlement.com/frequently-asked-questions.aspx#a19 (last visited Dec. 22, 2020).
[8] Class Counsel did not support the motion with authenticated copies of bills and invoices. If the amounts were not so modest, I would have delayed this decision until such materials were submitted. However, while that may be the better practice, in this case, I did not deem it necessary.