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Matthew L. Sharp MATTHEW L. SHARP, LTD. 419 Flint Street Reno, NV 89501 Phone: (775) 324-1500 Fax: (775) 284-0675 Email: [email protected] Interim Co-Liaison Counsel for Plaintiffs [Additional Counsel Listed Below]
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
CHRISTOPHER CARR, ROXANNE CLAYTON and BRIAN BENNETT, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. INTERNATIONAL GAME TECHNOLOGY, et al., Defendants.
Case No.: 3:09-cv-00584-RCJ-WGC PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR AWARD OF ATTORNEYS’ FEES, REIMBURSEMENT OF EXPENSES AND CASE CONTRIBUTION AWARDS DATE: June 3, 2013 TIME: 10:00 a.m. JUDGE: Hon. Robert C. Jones
RANDOLPH K. JORDAN and KIMBERLY J. JORDAN, on Behalf of Themselves and a Class of Persons Similarly Situated, Plaintiffs, v. INTERNATIONAL GAME TECHNOLOGY, et al., Defendants.
Case No.: 3:09-cv-00585-RCJ-WGC
Case 3:09-cv-00584-RCJ-WGC Document 171 Filed 05/06/13 Page 1 of 31
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TABLE OF CONTENTS
PAGE NO.
Table of Authorities ............................................................................................................................. ii I. PRELIMINARY STATEMENT ............................................................................................. 1 II. THE REQUESTED ATTORNEYS’ FEES ARE FAIR AND REASONABLE AND
SHOULD BE APPROVED ..................................................................................................... 5 A. A Reasonable Percentage of the Fund Recovered Is an Appropriate Approach to
Awarding Attorneys’ Fees in Common Fund Cases.................................................... 5 B. Consideration of the Relevant Factors Used by Courts in the Ninth Circuit Justifies a Fee Award of 30% in this Case ................................................................... 7
1. The Settlement Achieved ................................................................................. 7 2. Risks of Litigation and Contingent Nature of the Fee ................................... 10 3. The Skill Required and Quality of the Work Performed ............................... 11 4. The Novelty and Difficulty of the Questions Presented ................................ 11 5. The Contingent Nature of the Fee and the Financial Burden Carried by
Plaintiffs’ Counsel ......................................................................................... 13 6. The Customary Fee ........................................................................................ 15 7. Reaction of the Class to the Settlement and Attorneys’ Fees and Expenses
Sought ............................................................................................................ 16 8. The Lodestar Crosscheck Confirms the Reasonableness of the Requested
Fee .................................................................................................................. 17 III. PLAINTIFFS’ COUNSEL’S EXPENSES ARE REASONABLE AND WERE
NECESSARILY INCURRED TO ACHIEVE THE BENEFIT OBTAINED FOR THE SETTLEMENT CLASS ........................................................................................................ 18
IV. THE REQUESTED CASE CONTRIBUTION AWARDS TO PLAINTIFFS ..................... 19 V. CONCLUSION ...................................................................................................................... 21
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TABLE OF AUTHORITIES
PAGE NO.
CASES
Aamco Automatic Transmissions, Inc. v. Tayloe, 82 F.R.D. 405 (E.D. Pa. 1979) .......................................................................................................... 16 Abrams v. Lightolier, Inc., 50 F.3d 1204 (3d Cir. 1995).............................................................................................................. 18 Adams v. Standard Knitting Mills, Inc., [1978 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 96,377 (E.D. Tenn. January 6, 1978) ............. 16 Antonopulos v. N. Am. Thoroughbreds, Inc., No. 87-0979G (CM), 1991 U.S. Dist. LEXIS 12579, 1991 WL 427893 (S.D. Cal. May 6, 1991).... 3 Baron v. Commercial & Indus. Bank, [1979-1980 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,132 (S.D.N.Y. Oct. 3, 1979) ............ 16 Beech Cinema, Inc. v. Twentieth Century Fox Film Corp., 480 F. Supp. 1195 (S.D.N.Y. 1979).................................................................................................. 16 Blum v. Stenson, 465 U.S. 886 (1984) .......................................................................................................................... 15 Bratcher v. Bray-Doyle Indep. Sch. Dist. No. 42, 8 F.3d 722 (10th Cir. 1993) .............................................................................................................. 18 Brieger v. Tellabs, Inc., No. 06-CV-1882, 2009 WL 1565203 (N.D. Ill. June 1, 2009) ......................................................... 14 Clark v. Cameron-Brown Co., [1981 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 98,014 (M.D.N.C. Apr. 6, 1981) .................... 16 Cullen v. Whitman Med. Corp., 197 F.R.D 136 (E.D. Pa. 2002) ........................................................................................................... 9 DeFelice v. U.S. Airways, Inc., 436 F. Supp. 2d 756 (E.D. Va. 2006) ............................................................................................... 14 Fischel v. Equitable Life Assur. Soc ‘y of the U.S., 307 F.3d 997 (9th Cir.2002) ............................................................................................................... 5 Genden v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 741 F. Supp. 84 (S.D.N.Y. 1990) ..................................................................................................... 19 Gerstein v. Micron Tech. Inc., No. 89-1262, 1993 U.S. Dist. LEXIS 21215 (D. Id. Sept. 10, 1993) ................................................. 6 Gottlieb v. Wiles, 150 F.R.D. 174 (D. Colo. 1993) ....................................................................................................... 19
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TABLE OF AUTHORITIES
PAGE NO.
CASES
Greene v. Emersons, Ltd., [1987 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 93,263 (S.D.N.Y. May 20, 1987) ................... 16 Harris v. Marhoefer, 24 F.3d 16 (9th Cir.1994) ................................................................................................................. 18 Hensley v. Eckerhart, 461 U.S. 424 (1983) ............................................................................................................................ 9 Howes v. Atkins, 668 F. Supp. 1021 (E.D. Ky. 1987) .................................................................................................. 16 IBEW Local 697 Pension Fund v. Int’l Game Tech., Inc., Case No. 3:09-cv-00419-MMD-WGC, 2012 U.S. Dist. LEXIS 151498 (D. Nev. Oct. 19, 2012) .. 10 In re Activision Sec. Litig., 723 F. Supp. 1373 (N.D. Cal. 1989) ................................................................................................... 6 In re Ampicillin Antitrust Litig., 526 F. Supp. 494 (D.D.C. 1981) ....................................................................................................... 16 In re Apollo Group, Inc. Sec. Litig., No. 04-2147-PHX-JAT, 2008 WL 3072731 (D. Ariz. Aug 4, 2008) ............................................... 14 In re Cont’l Ill. Sec. Litig., 962 F.2d 566 (7th Cir. 1992) ........................................................................................................ 4, 19 In re Corel Corp. Sec. Litig., 293 F. Supp. 2d 484 (E.D. Pa. 2003) .................................................................................................. 9 In re Crazy Eddie Sec. Litig., 824 F. Supp. 320 (E.D. NY 1993) .................................................................................................... 10 In re Dynamic Random Access Memory (DRAM) Antitrust Litig., No. M-02-1486-PJH, 2007 WL 2416513 (N.D. Cal. Aug. 16, 2007) .............................................. 13 In re Equity Funding Corp. Sec. Litig., 438 F. Supp. 1303 (C.D. Cal. 1977) ................................................................................................. 11 In re F&M Distrib., Inc. Sec. Litig., No. 95-CV-71778-DT, 1999 U.S. Dist. LEXIS 11090 (E.D. Mich. June 29, 1999) ........................ 13 In re Franklin Nat’l Bank Secs. Litig., [1980 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,571 (E.D.N.Y. June 24, 1980) ................... 16 In re Gen. Instruments Sec. Litig., 209 F. Supp. 2d 423 (E.D. Pa. 2001) .................................................................................................. 9
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TABLE OF AUTHORITIES
PAGE NO.
CASES
In re Global Crossing Sec. & ERISA Litig., 225 F.R.D. 436 (S.D.N.Y. 2004) ...................................................................................................... 12 In re Heritage Bond Litig., MDL Case No. 02-ML-1475, 2005 U.S. Dist. LEXIS 13555 (C.D. Cal. June 10, 2005) .. 3, 7, 10, 11 In re Ikon Office Solutions, Inc. Securities Litigation, 194 F.R.D. 166 (E.D. Pa. 2000) ........................................................................................................ 15 In re Immunex Sec. Litig., 864 F. Supp. 142 (W.D. Wash. 1994) ............................................................................................... 17 In re JDS Uniphase Corp. Sec. Litig., Civ. No. C-02-1486CW, 2007 WL 4788556 (N.D. Cal. Nov. 27, 2007) ......................................... 14 In re King Res. Co. Sec. Litig., 420 F. Supp. 610 (D. Colo. 1976) ....................................................................................................... 9 In re Lorazepam & Clorazepate Antitrust Litig. v. Mylan Labs., 205 F.R.D. 369 (D.D.C. 2002) .......................................................................................................... 20 In re Lucent Tech., Inc. Sec. Litig., 327 F. Supp. 2d 426 (D.N.J. 2004) ................................................................................................... 17 In re M.D.C. Holdings Sec. Litig., No. CV89-0090 E (M), 1990 WL 454747 (S.D. Cal. Aug. 30, 1990) .............................................. 15 In re McDonnell Douglas Equip. Leasing Sec. Litig., 842 F. Supp. 733 (S.D.N.Y. 1994) ................................................................................................... 19 In re Media Vision Tech. Sec. Litig., 913 F. Supp. 1362 (N.D. Cal. 1996) ..............................................................................................19 In re Med. X-Ray Film Antitrust Litig., 1998 U.S. Dist. LEXIS 14888 (E.D. NY Aug. 7, 1998) ................................................................... 10 In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454 (9th Cir. 2000) ........................................................................................................ 3, 20 In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036 (N.D. Cal. 2008) ............................................................................................ 18 In re Pub. Service Co. of New Mexico, No. 91-0536M, 1992 U.S. Dist. LEXIS 16326, 1992 WL 278452 (S.D. Cal. July 28, 1992) ..... 3, 15 In re Qwest Savings & Investment Plan ERISA Litig., 2007 WL 295545 (D. Colo. Jan 29, 2007) ........................................................................................ 20
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TABLE OF AUTHORITIES
PAGE NO.
CASES
In re Rite Aid Corp. Sec. Litig., 396 F.3d 294 (3d Cir. 2005).............................................................................................................. 16 In re Rite Aid, 146 F. Supp. 2d 706 (E.D. Pa. 2001) ................................................................................................ 17 In re RJR Nabisco, Inc. Sec. Litig., MDL No. 818, 1992 WL 210138 (S.D.N.Y. Aug. 24, 1992) ........................................................... 15 In re Sprint Crop. ERISA Litig., 443 F. Supp. 2d 1249 (D. Kan. 2006) ............................................................................................... 12 In re Sulzer Hip Prosthesis and Knee Prosthesis Liab. Litig., 268 F. Supp. 2d 907 (N.D. Ohio 2003) ............................................................................................. 13 In re Synthroid Marketing Litig., 264 F.3d 712 (7th Cir. 2001) ............................................................................................................ 15 In re Synthroid Marketing Litig., 325 F.3d 974 (7th Cir. 2003) ............................................................................................................ 15 In re U.S. Bioscience Sec. Litig., 155 F.R.D. 116 (E.D. Pa. 1994) ........................................................................................................ 16 In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291 (9th Cir. 1994) ............................................................................................ 5, 10, 13, 17 In re WorldCom, Inc. Sec. Litig., No. 02 CIV 3288 (DLC), 2004 WL 2591402 (S.D.N.Y. Nov. 12, 2004) ........................................ 17 In re Xcel Energy, Inc., 364 F. Supp. 2d 980 (D. Minn. 2005) ......................................................................................... 17, 20 Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) ............................................................................................................ 11 Keith v. Volpe, 501 F. Supp. 403 (C.D. Cal. 1980) ................................................................................................... 17 Kirchoff v. Flynn, 786 F.2d 320 (7th Cir. 1986) ........................................................................................................ 6, 16 Kurzweil v. Philip Morris Cos., Inc., Nos. 94 Civ. 2373 (MBM), 94 Civ. 2546 (BMB), 1999 WL 1076105 (S.D.N.Y. Nov. 30, 1999) .. 18 Langraff v. Columbia Healthcare Corp., No. 98-CV-0090, 2000 U.S. Dist LEXIS 21831 (M.D. Tenn. May 24, 2000) ................................. 14
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TABLE OF AUTHORITIES
PAGE NO.
CASES
Lindy Bros. Builders, Inc. v. Am. Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir. 1976).............................................................................................................. 10 Mark v. Valley Ins. Co., CV 01-1575-BR, 2004 U.S. Dist. LEXIS 20602 (D. Or. Oct. 6, 2004) ........................................... 17 Miltland Raleigh-Durham v. Myers, 840 F. Supp. 235 (S.D.N.Y. 1993) ................................................................................................... 18 Nelson v. IPALCO Enterprises, Inc., 480 F. Supp. 2d 1061 (S.D. Ind. 2007) ............................................................................................. 14 Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268 (9th Cir. 1989) .............................................................................................................. 5 Phemister v. Harcourt Brace Jovanovich, Inc., No. 77 C 39, 1984 WL 21981 (N.D. Ill. Sept. 14, 1984) .................................................................. 16 Pincay Invs. Co. v. Covad Communications Group, Inc., 90 Fed. Appx. 510 (9th Cir. 2004) .................................................................................................... 16 Plaskow v. Clausing Corp., [1982-1983 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 99,228 (S.D.N.Y. June 1, 1983) ............ 16 Quan v. Computer Scis. Corp., 623 F.3d 870 (9th Cir. 2010) ............................................................................................................ 12 Rabin v. Concord Assets Group, Inc., No. 89 Civ. 6130 (LBS), 1991 WL 275757 (S.D.N.Y. Dec. 19, 1991) ............................................ 17 Shore v. Parklane Hosiery Co., [1980 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,602 (S.D.N.Y. Aug. 1, 1980) ..................... 16 Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) ............................................................................................................ 6 Smith v. Krispy Kreme Doughnut Corp., No. 05-CV-00187, 2007 WL 119157 (M.D.N.C. Jan. 10, 2007) ..................................................... 12 Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) ........................................................................................................ 8, 19 Szymborskiv.Ormat Techs., Inc., Case No.: 3:10-CV-132-RCJ, 2012 U.S. Dist. LEXIS 148545 (D. Nev. Oct. 16, 2012) ............. 6, 10 Thornberry v. Delta Air Lines, Inc., 676 F.2d 1240 (9th Cir. 1982) .......................................................................................................... 19
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TABLE OF AUTHORITIES
PAGE NO.
CASES
Valente v. Pepsico, Inc., [1979 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 96,921 (D. Del. June 4, 1979) ........................ 16 Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294 (N.D. Cal. 1995) ................................................................................................... 17 Vizcaino v. Microsoft Corp., 142 F. Supp. 2d 1299 (W.D. Wash. 2001) .................................................................................. 11, 17 Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) .......................................................................................... 5, 13, 15, 17 Zinman v. Avemco Corp., [1978 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 96,325 (E.D. Pa. Jan. 18, 1978) ...................... 16
OTHER AUTHORITIES
John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of the Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669 (1986) ............................................................................ 6
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I. PRELIMINARY STATEMENT
Plaintiffs Christopher Carr, Brian Bennett, Randolph K. Jordan and Kimberly J. Jordan
(“Plaintiffs”) in the above-entitled action (the “Action”) submit this memorandum in support of
their motion for an award of attorneys’ fees to Plaintiffs’ Counsel1 for services rendered in this
Action, for reimbursement of litigation costs and expenses incurred in successfully prosecuting
this Action, and for Case Contribution Awards.
Plaintiffs’ Counsel are simultaneously submitting a motion and supporting memorandum of
points and authorities for final judicial approval of the Agreement under FED. R. CIV. P. 23(e) (the
“Settlement Memorandum”), and the Joint Declaration of Michael J. Klein and Thomas J.
McKenna in Support of (1) the Proposed Settlement, (2) the Proposed Plan of Allocation, and (3)
the Joint Motion for An Award of Attorneys’ Fees and Reimbursement of Litigation,
Administration Expenses, and Case Contribution dated May 6, 2013 (the “Joint Declaration”).
The Joint Declaration fully describes the history of this Action, the claims asserted, details of the
prosecution of the claims asserted by Plaintiffs’ Counsel, and the negotiations leading to the
Agreement set forth in the Stipulation. The Settlement Memorandum discusses the significant
complexity, magnitude and risks associated with this Action and many of the legal obstacles to
recovery. Rather than repeating those matters here, this memorandum will focus on the legal and
factual standards applicable to attorneys’ fee requests by successful plaintiffs’ attorneys in class
actions and demonstrate the appropriateness of the fee, expense, and compensation award requests.
This Action was prosecuted by Plaintiffs’ Counsel on behalf of all persons who were
Participants in, or beneficiaries of, the International Game Technology (“IGT”) Profit Sharing Plan
(the “Plan”) whose individual Plan accounts included investments in the IGT Stock Fund at any
time between November 1, 2007, and April 23, 2009, excluding Defendants and their immediate
family members, on a fully contingent basis. Through their efforts, Plaintiffs’ Counsel have
obtained a proposed cash settlement fund of $500,000, plus interest accruing since funding on
1 Capitalized terms used but not defined herein are defined in the Stipulation of Settlement (the “Agreement”) dated December 21, 2012. (Dkt No. 157) Plaintiffs are simultaneously moving for final judicial approval of the Agreement.
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February 27, 2013 (the “Settlement Fund”). Additionally IGT has agreed to pay up to half of
Administration Costs up to $25,000.
The Settlement was arrived at only after:
1. Considerable motion practice including:
a. Two motions to dismiss and one motion for summary judgment by
Defendants;
b. A motion by Defendants to certify the denial of the motions to dismiss for
interlocutory appeal; and
c. A motion for class certification by Plaintiffs and a later reconsideration
motion by Plaintiffs based upon the denial of the same;
2. Extensive factual investigation by Plaintiffs including:
a. inspecting, reviewing and analyzing over 50,000 pages of documents
produced during discovery, as well as numerous publicly available
documents, including but not limited to news articles, related complaints,
press releases, analyst reports and regulatory filings;
b. researching the applicable law with respect to the claims asserted and the
potential defenses thereto;
c. serving and/or responding to multiple sets of written discovery, including
requests for production, interrogatories, requests for admissions, and third-
party subpoenas;
d. taking and/or defending six party-related depositions, including the
depositions of Defendants IGT and Matthews;
e. analyzing in detail the Plan’s purchases and holdings of IGT stock, obtained
through discovery, to evaluate the issue of damages; and
f. analyzing the damages assuming complete success on the merits of the
remaining claims and consultation about the same with damage experts.
As discussed below, this motion is premised on a number of factors, including the
substantial monetary result Plaintiffs’ Counsel have achieved for members of the Class; the
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numerous and substantial risks undertaken, on a wholly contingent basis, by Plaintiffs’ Counsel;
Plaintiffs’ Counsel’s vigorous and skillful prosecution of the Action; and the lack of any objections
received to date by members of the Class to the requested fees.
As compensation for their efforts on behalf of the Class, Plaintiffs’ counsel respectfully
request that the Court award attorneys’ fees equal to 30% of the $500,000 Settlement Fund (not
including the additional up to $25,000 in benefits being paid by IGT for the costs of notice and
administration), or $150,000. Plaintiffs’ counsel also seek reimbursement of $33,327.25 in out-of-
pocket expenses which they reasonably and necessarily incurred in litigating Class members’
claims. Since this action arises under ERISA and creates a common fund, the Court may, at its
discretion, use a lodestar or percentage of the fee analysis in awarding Plaintiffs’ Counsel fees.
Florida v. Dunne, 915 F.2d 542, 545 (9th Cir. 1990) (noting that either approach can be used, and
“we require only that fee awards in common fund cases be reasonable under the circumstances”
which either lodestar or the percentage-of-the-fund approach may be). Here, debating which
approach to use is academic, as the fees sought are easily justifiable under either approach.
The fee requested is more than fair and reasonable when considered under the applicable
standards and, as discussed below, is well within the normal range of awards made in contingent
fee matters for class actions in the Ninth Circuit, particularly in view of the number of hours spent
litigating this action and the considerable risks attendant in bringing and pursuing this litigation.
See, e.g., In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454 (9th Cir. 2000) (upholding fee award of
one-third); In re Heritage Bond Litig., MDL Case No. 02-ML-1475, 2005 U.S. Dist. LEXIS
13555, at *60 (C.D. Cal. June 10, 2005) (awarding one-third of the class fund as a fee); In re Pub.
Serv. Co., No. 91-0536M, 1992 U.S. Dist. LEXIS 16326, 1992 WL 278452, at *1, *12 (S.D. Cal.
July 28, 1992) (same); Antonopulos v. N. Am. Thoroughbreds, Inc., No. 87-0979G (CM), 1991
U.S. Dist. LEXIS 12579, 1991 WL 427893, at *1, *4 (S.D. Cal. May 6, 1991) (same).2 2 The fee requested is also reasonable in light of analogous ERISA cases brought across the country under a similar theory. See, e.g., In re Nat’l City Corp. Sec., Derivative & ERISA Litig., No. 109-nc-70002-SO (N.D. Ohio Apr. 26, 2010) (33% of the Settlement Fund); Morrison v. Moneygram Intl., Inc., No. 08-1121 (D. Minn. May 20, 2011) (“Final Order for Judgment”) (one-third); Coppess v. Healthways, Inc., No. 10-109 (M.D. Tenn. Apr. 25, 2011) (“Order and Final Judgment”) (33⅓%); In re Radioshack Corp. ERISA Litig,, No. 08-1875 (N.D. Tex. Feb. 8, 2011)
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Furthermore, under a “lodestar” analysis, the time spent by plaintiffs’ counsel in common
fund cases has been routinely multiplied by a factor of 3 to 4 times that counsel’s time to
compensate them for having undertaken the very real risk of receiving no compensation at all and
for the delay from the time the services were rendered until payment. The fees sought represent a
discount of over 90% off of petitioning counsels’ total lodestar which exceeds $1.75 million and
which reflects nearly 2,600 hours of professional time, or an average of about $57 per hour of
professional time. The normal risk multiplier is, here, instead a discount, and it is therefore also
significantly below the typical range of multipliers awarded by courts in class actions where the
lodestar method has been utilized to determine counsel fee awards.
Importantly, under either the percentage of the benefit or the lodestar/multiplier approach,
the ultimate objective is an award that, in the Court’s view, will fairly and reasonably compensate
Plaintiffs’ Counsel for their successful efforts on behalf of the Class. See, e.g., In re Cont’l Ill.
Sec. Litig., 962 F.2d 566, 568 (7th Cir. 1992) (explaining that the goal of the fee-setting process “is
to determine what the lawyer would receive if he were selling his services in the market.”).
Consequently, as set forth below in further detail, Plaintiffs’ Counsel’s request for an award of
(“Final Order and Judgment”) (33⅓%); In re MBNA Corp. ERISA Litig., No. 05-429 (D. Del. Mar. 27, 2009) (“Final Order and Judgment”) (33%); In re Lear ERISA Litig., No. 06-CV-11735 (E.D. Mich. 2006) (awarding 30% of the Settlement Fund); Gee v. UnumProvident Corp., et al, No. 03-CV-147 (E.D. Tenn. Jan. 25, 2008) (awarding 32% of the Settlement Fund); In re YRC Worldwide Inc. ERISA Litig., No. 09-CV-02593-JAR-JPO, Dkt No. 188 (D. Kan. Mar. 6, 2012) (Order Granting Plaintiffs’ Motion For Award of Attorneys’ Fees, Reimbursement of Expenses, and Case Contribution Awards approving a 30% common fund fee award); In re Westar Energy, Inc. ERISA Litig., No. 5:03-cv-04032-JAR-JPO, Dtk No. 147 (D. Kan. July 27, 2006) (“Order and Final Judgment” approving a 30% common fund fee award); In re Merck & Co., Inc. Sec., Derivative & “ERISA” Litig., No. 2:05-cv-01151-SRC-MAS (D.N.J. Nov. 29, 2011) (Final Order approving 33-1/3% fee award); Morrison v. Moneygram Intl., Inc., No. 08-1121 (D. Minn. May 20, 2011) (“Final Order for Judgment”) (one-third); Coppess v. Healthways, Inc., No. 10-109 (M.D. Tenn. Apr. 25, 2011) (“Order and Final Judgment”) (33⅓%); In re Radioshack Corp. ERISA Litig,, No. 08-1875 (N.D. Tex. Feb. 8, 2011) (“Final Order and Judgment”) (33⅓%); In re MBNA Corp. ERISA Litig., No. 05-429 (D. Del. Mar. 27, 2009) (“Final Order and Judgment”) (33%); In re Aquila ERISA Litig., No. 04-865 (W.D. Mo. Nov. 29, 2007) (“Final Order and Judgment”) (33%); In Re Syncor ERISA Litig., No. 03-2446 (C.D. Cal. Mar. 30, 2009) (“Civil Minutes – General”) (33⅓%); In re Electronic Data System Corp. “ERISA” Litig., No. 03-126 (E.D. Tex. Aug. 6, 2008) (“Order”) (33⅓%); Eslava v. Gulf Telephone Co., Inc., No. 04-297 (D. Al. Nov. 16, 2007) (“Final Order Approving Attorneys’ Fees and Reimbursement of Costs and Expenses”) (35%); Walsh v. Marsh & McLennan Cos., No. 04-8157 (S.D.N.Y. Jan. 29, 2010) (“Decision and Order”) (one-third); Urban v. Comcast Corporation, et al., 08-cv-00773 (E.D. Penn. Jan. 26, 2011) (“Final Order and Judgment”) (33%).
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attorneys’ fees and reimbursement of expenses is fair and reasonable and should be awarded in
full.
Additionally, as demonstrated below, expenses borne by Plaintiffs’ Counsel have been fair
and reasonable and the Case Contribution Awards sought for the Named Plaintiffs are fair and
reasonable.
Notice was sent to 3,490 Class members3 based upon the Plan’s records. The Notice stated
that Plaintiffs’ Counsel would seek an award of attorneys’ fees not in excess of 33% of the amount
recovered in the Settlement and actual case expenses incurred as well as Case Contribution
Awards not to exceed $2,500 per Named Plaintiff. The deadline for Class members to object to
the Plaintiffs’ Counsel’s Fee Request is May 20, 2013. No objections have been received to date.
II. THE REQUESTED ATTORNEYS’ FEES ARE FAIR AND REASONABLE AND SHOULD BE APPROVED
A. A Reasonable Percentage of the Fund Recovered Is an Appropriate
Approach to Awarding Attorneys’ Fees in Common Fund Cases
For their efforts in creating a common fund for the benefit of the Class, Plaintiffs’ Counsel
seeks a reasonable percentage of the fund recovered for the Class. It is well settled in the Ninth
Circuit that, in a common fund case, the district court has discretion to apply either the percentage
of the fund method or the lodestar method in calculating a fee award. Fischel v. Equitable Life
Assur. Soc ‘y of the U.S., 307 F.3d 997, 1006 (9th Cir.2002); see also, e.g., Paul, Johnson, Alston
& Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989); In re Wash. Pub. Power Supply Sys. Sec.
Litig., 19 F.3d 1291, 1295 (9th Cir. 1994) (“WPPSS”). While the court has discretion to use either
method, the primary basis of the fee award remains the percentage method. Vizcaino v. Microsoft
Corp., 290 F.3d 1043, 1050 (9th Cir. 2002). Since Paul, Johnson and its progeny, courts within
the Ninth Circuit have generally shifted to the percentage method in awarding fees in
representative actions.
As Judge Clive of this District recently recognized:
3 See Affidavit of Michael Rosenbaum Re: Dissemination of Notice (the “Berdon Affidavit”), attached as Exhibit A to the Joint Declaration.
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[U]nder some circumstances the percentage method is preferable because it is simpler to calculate. The Ninth Circuit found that under the percentage method, fee awards ordinarily range from twenty to thirty percent of the fund created. Twenty-five percent should be the “bench mark” percentage, but the district court may adjust upward or downward to account for the circumstances in each case. In In re Activision Securities Litigation, the district court concluded that the “better practice” would be to use the percentage method and that the benchmark should be thirty percent rather than the twenty-five percent recommended in Paul, Johnson. In re Activision Sec. Litig., 723 F.Supp. 1373, 1377-79 (N.D. Cal. 1989). The Activision court found that a review of several reported cases disclosed that “nearly all common fund awards range around 30% even after through application of either the lodestar or twelve-factor method.”
Szymborskiv.Ormat Techs., Inc., Case No.: 3:10-CV-132-RCJ, 2012 U.S. Dist. LEXIS 148545,
10-11 (D. Nev. Oct. 16, 2012); see also Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d
1301, 1311 (9th Cir. 1990) (“The benchmark percentage should be adjusted, or replaced by a
lodestar calculation, when special circumstances indicate that the percentage recovery would be
either too small or too large in light of the hours devoted to the case or other relevant factors.”).
Compensating counsel in common-fund cases on a percentage basis is reasonable. It more closely
aligns the lawyers’ interest in being paid a fair fee with the interest of the class in achieving the
maximum possible recovery in the shortest amount of time,4 it decreases the burden imposed on
courts by eliminating a detailed and time-consuming lodestar analysis and assuring that the
beneficiaries do not experience undue delay in receiving their share of the settlement,5 and it is
4 The court in Kirchoff v. Flynn, 786 F.2d 320, 325-26 (7th Cir. 1986), identified the aligning of lawyers’ and clients’ interest as among the merits of the percentage approach:
The contingent fee uses private incentives rather than careful monitoring to align the interests of lawyer and client. The lawyer gains only to the extent his client gains . . . The unscrupulous lawyer paid by the hour may be willing to settle for a lower recovery coupled with a payment for more hours. Contingent fees eliminate this incentive and also ensure a reasonable proportion between the recovery and the fees assessed to defendants. . . . At the same time as it automatically aligns interests of lawyer and client, rewards exceptional success, and penalizes failure, the contingent fee automatically handles compensation for the uncertainty of litigation.
5 See Gerstein v. Micron Tech. Inc., No. 89-1262, 1993 U.S. Dist. LEXIS 21215, at *14 (D. Id. Sept. 10, 1993) (“This court favors the percentage approach [in common fund cases] because it conserves scarce judicial resources by saving the court from having to make a series of largely judgmental decisions with respect to the actual fees claimed.”); In re Activision Sec. Litig., 723 F. Supp. 1373, 1377-78 (N.D. Cal. 1989).
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consistent with the practice in the private marketplace where contingent-fee attorneys are
customarily compensated by a percentage of the recovery.6
B. Consideration of the Relevant Factors Used by Courts in the Ninth Circuit Justifies a Fee Award of 30% in this Case
The ultimate task for this Court in awarding attorneys’ fees is to ensure that Plaintiffs’
Counsel is fairly compensated for the work they performed and the results they achieved.
Plaintiffs’ Counsel seeks a fee award of 30% of the Settlement Fund, or $150,000, and submit that
such an award is reasonable and appropriate under the circumstances of this case. After the
decision is made to apply the percentage method of fee determination, courts must determine what
percentage to apply. Although not mandated by the Ninth Circuit, courts often consider the
following factors when determining the percentage to be applied: (1) the result obtained for the
class; (2) the effort expended by counsel; (3) counsel’s experience; (4) counsel’s skill; (5) the
complexity of the issues; (6) the risks of non-payment assumed by counsel; (7) the reaction of the
class; and (8) comparison with counsel’s loadstar. See, e.g., In re Heritage Bond Litig., 2005 U.S.
Dist. LEXIS 13555 at *60. As discussed below, application of these factors confirms that the 30%
fee is justified.
1. The Settlement Achieved
Here, Plaintiffs’ Counsel has succeeded in obtaining a $500,000 cash settlement, plus
payment by IGT of up to $25,000 in settlement administration costs. The Settlement Fund
represents a significant portion of the Class’s damages. As explained in Plaintiffs’ Memorandum
of Law in Support of Motion for Preliminary Approval Of Settlement (See Dkt. No. 156 at 10:12-
12:22), assuming that only purchaser damages on the approximately six hundred thousand shares
of IGT acquired during the Settlement Class period are available to the Class, the proffered
recovery (before fees and expenses) equals approximately $0.833333 cents per share. Compared
with “the estimated average recovery per share of common stock [of] approximately $0.037 before 6 Professor Coffee argues that a percentage of the recovery is the only reasonable method of awarding fees in common fund cases because “it relies on incentives rather than costly monitoring” making it the only practical alternative. John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of the Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669, 724-25 (1986).
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deduction of Court-approved fees and expenses” in the related securities fraud case,
(http://gilardi.com/IGT/pdf/Final_IGT_Notice_041812.pdf), this recovery is slightly over 22.5
times that amount for substantially the same time period. Additionally, the Plan may be able to
recover its aliquot share under the securities fraud settlement. Plaintiffs had preliminary
discussions with a damage expert, but did not have an event study or formal damages analysis
done because the case settled on the eve of expert discovery. Joint Decl. at ¶ 12. In so doing, the
Class was spared considerable expenses. But, for the sake of comparison, the class notice in the
securities fraud case (at p.4) sets forth inflation amounts for purposes of distribution, ranging from
$6.24 per share to $0.93 per share, the weighted average of which is $4.31/share.7
http://gilardi.com/IGT/pdf/Final_IGT_Notice_041812.pdf. Assuming that amount is substantially
similar to what the Plaintiffs’ expert would also conclude, and assuming an equal distribution of
purchases, the common fund represents approximately 19.35% of maximum damages, assuming a
complete victory at trial and an affirmance on appeal.
Viewed in that light, the Settlement, as presented to the Court, is undoubtedly fair,
reasonable and adequate.
Additionally, Plaintiffs’ Counsel obtained IGT’s agreement to pay up to $25,000 for the
costs of Settlement notice and administration that would otherwise reduce the amount available for
ultimate distribution to claiming Class members. This achievement was the result of Plaintiffs’
Counsel’s arduous litigation and settlement negotiations. Consideration of such amounts—which
is proper because it raises the distributable amount of the common fund (see Staton v. Boeing Co.,
327 F.3d 938, 974-75 (9th Cir. 2003) (not an abuse of discretion to include such funds in valuing a
settlement)). IGT’s agreement to pay half of the Administrative Costs up to $25,000 offsets
necessary Settlement Fund expenses, allowing for more of the Settlement Fund to be distributable
7 The securities case notice includes 168 days where the alleged inflation was $6.24/share (November 1, 2007 through and including April 16, 2008); 91 days where the alleged inflation was $3.93 per share (April 17, 2008 through and including July 16, 2008); 62 days where the alleged inflation was $2.04 per share (July 17, 2008 through and including September 16, 2008); and, 44 days where the alleged inflation was $0.93 per share (September 17, 2009 through and including October 30, 2008). Weighting the artificial inflation by counting the number of days for which each alleged inflation amount was in place results in an average of $4.31/share.
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to the Settlement Class than otherwise would have been distributable absent its inclusion in the
Agreement.
Courts have consistently recognized that the settlement achieved is a major and perhaps the
most important factor to be considered in determining an appropriate fee award. Hensley v.
Eckerhart, 461 U.S. 424, 436 (1983) (“most critical factor is the degree of success obtained”); In
re King Res. Co. Sec. Litig., 420 F. Supp. 610, 630 (D. Colo. 1976) (“the amount of the recovery,
and end result achieved are of primary importance, for these are the true benefit to the client”). As
described in detail in the Joint Declaration, Plaintiffs faced numerous obstacles in this litigation.
The expense and length of continued proceedings necessary to prosecute the Action against
Defendants through expert discovery, trial and appeals would be substantial. Plaintiffs, aided by
their Counsel, carefully considered the likelihood of success against Defendants, the likely total
damages that could be recovered against Defendants following the Court’s Order on the motion to
dismiss which eliminated some of their claims, the risks to quantifying such damages, as well as
the uncertain outcome and risk of any litigation, especially in complex actions such as this, and the
difficulties and delays inherent in such litigation.
Furthermore, the recovery here is a significant percentage of the estimated maximum
Class-wide damages, assuming complete success on the merits on liability and damages through
the trial and appellate proceedings—which assumption this Court noted it believed was dubious
during the hearing at which the Agreement was preliminarily approved. This recovery therefore
easily merits an attorney fee award of thirty percent of the fund. The settlement achieved is also
greater, when measured as a percentage of theoretical damages, than the results obtained in other
cases where class counsel was awarded one-third of a common fund in both securities fraud8 and
ERISA actions.9 8 See In re Corel Corp. Sec. Litig., 293 F. Supp. 2d 484, 497-498 (E.D. Pa. 2003) (permitting one-third fee award from $ 48 million settlement fund which represented approximately 15% of class’ total net damages); Cullen v. Whitman Med. Corp., 197 F.R.D 136, 148 (E.D. Pa. 2002) (awarding one-third in fees from settlement of class consisting of defrauded vocational students that was 17% of the tuition that class members paid); In re Gen. Instruments Sec. Litig., 209 F. Supp. 2d 423, 431, 434 (E.D. Pa. 2001) (awarding one-third fee from $ 48 million settlement fund that was approximately 11% of the plaintiffs’ estimated damages); In re Med. X-Ray Film Antitrust Litig., CV-93-5904, 1998 U.S. Dist. LEXIS 14888, 1998 WL661515, at *7-*8 (E.D. NY Aug. 7,
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2. Risks of Litigation and Contingent Nature of the Fee
Numerous cases have recognized that risk is an important factor in determining a fair fee
award. See, e.g., WPPSS, 19 F.3d at 1299-1301; Lindy Bros. Builders, Inc. v. Am. Radiator &
Standard Sanitary Corp., 540 F.2d 102, 117 (3d Cir. 1976). Uncertainty that an ultimate recovery
would be obtained is highly relevant in determining risk. WPPSS, 19 F.3d at 1300; Lindy, 540
F.2d at 117.
As Judge Clive observed, “Plaintiffs’ counsel shouldered the risk of non-payment by taking
the class action suit on a contingency fee basis. ‘It is an established practice in the private legal
market to reward attorneys for taking the risk of non-payment by paying them a premium over
their normal hourly rates for winning contingency cases.’ In re Washington Pub. Power Supply
Sys. Sec. Litig., 19 F.3d 1291, 1299 (9th Cir. 1994) (citation omitted).” Szymborskiv, 2012 U.S.
Dist. LEXIS 148545, at *11-12; accord IBEW Local 697 Pension Fund v. Int’l Game Tech., Inc.,
Case No. 3:09-cv-00419-MMD-WGC, 2012 U.S. Dist. LEXIS 151498, at *13 (D. Nev. Oct. 19,
2012) (same); see also In re Heritage Bond Litig., 2005 U.S. Dist. LEXIS 13555 at *68 (“The risks
assumed by Class Counsel, particularly the risk of non-payment or reimbursement of expenses, is a
factor in determining counsel’s proper fee award.”).
Plaintiffs’ Counsel undertook this action on a wholly contingent fee basis, risking their
time and their own money with no guarantee of compensation. Joint Decl. at ¶29. Unlike
Defendants’ Counsel (who were presumably paid substantial hourly rates, and reimbursed for their
out-of-pocket expenses on a regular basis), Plaintiffs’ Counsel have not yet been compensated for
any of their time or expenses, and have prosecuted this Action faced with the very real risk that
they might never be compensated at all for their efforts.
1998)(awarding attorney’s fees of 33.3% where counsel recovered 17% of damages); In re Crazy Eddie Sec. Litig., 824 F. Supp. 320, 326 (E.D. NY 1993) (awarding 33.8% where counsel recovered 10% of damages). 9 See supra n.2.
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3. The Skill Required and Quality of the Work Performed
The third factor to consider in determining what fee to award is the skill required and
quality of work performed. In re Heritage Bond Litig., 2005 U.S. Dist. LEXIS 13555 at *63-64.
The successful prosecution of these complex claims required the participation of highly skilled and
specialized attorneys. Id. at *12. (“The experience of counsel is also a factor in determining the
appropriate fee award.”).
The Joint Declaration includes descriptions of the background and experience of Plaintiffs’
Counsel. As those submissions demonstrate, Plaintiffs’ Counsel are experts in the highly
specialized field of ERISA class action litigations. Accordingly, Plaintiffs’ Counsel has brought
their significant experience to bear in achieving this settlement.
The quality and vigor of opposing counsel is also important in evaluating the services
rendered by Plaintiffs’ Counsel. See, e.g., In re Equity Funding Corp. Sec. Litig., 438 F. Supp.
1303, 1337 (C.D. Cal. 1977). Here, Defendants were represented by Wilson Sonsini Goodrich &
Rosati, a prominent, national law firm with substantial experience in defending class actions.
Thus, the fact that Plaintiffs’ Counsel achieved this settlement for the Class in the face of such
formidable legal opposition further evidences the quality of their work.
4. The Novelty and Difficulty of the Questions Presented
Courts have long recognized that the novelty and difficulty of the issues in a case are
significant factors to be considered in making a fee award. See, e.g., Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714 (5th Cir. 1974); Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69-70
(9th Cir. 1975) (adopting factors); Vizcaino v. Microsoft Corp., 142 F. Supp. 2d 1299, 1306 (W.D.
Wash. 2001) (same). As Johnson stated: Cases of first impression generally require more time and effort on the attorney’s part. Although this greater expenditure of time in research and preparation is an investment by counsel in obtaining knowledge which can be used in similar later cases, he should not be penalized for undertaking a case which may “make new law.” Instead, he should be appropriately compensated for accepting the challenge.
488 F.2d at 718.
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This litigation presented novel and difficult legal issues regarding liability, loss causation
and damages under ERISA.
ERISA class actions, in addition to being relatively novel, are also extremely complex and
involve the intricate application of a decidedly complicated statute. Some of the complex legal
issues involved in this matter included: (i) what individuals and entities qualified as fiduciaries of
the Plan and when they so qualified; (ii) what duties did such fiduciaries have to the Plan and
whether such duties incorporated the communications about which Plaintiffs complain; (iii) what
obligations did such fiduciaries have to the participants of the Plan; (iv) to what extent may each
fiduciary be held liable for the losses incurred by the Plan; (v) how to properly measure damages
and (vi) whether and to what extent members of the Class could be charged with knowledge of the
actions which allegedly caused IGT stock to be imprudent during the Class Period.
As courts have recognized, “ERISA law is highly complex and quickly-evolving area of
the law.” Smith v. Krispy Kreme Doughnut Corp., No. 05-CV-00187, 2007 WL 119157, at *2
(M.D.N.C. Jan. 10, 2007); see also, In re Sprint Crop. ERISA Litig., 443 F. Supp. 2d 1249, 1270
(D. Kan. 2006) (“The applicable law is complex, unsettled, and in a rapid state of development”);
In re Global Crossing Sec. & ERISA Litig., 225 F.R.D. 436, 456 (S.D.N.Y. 2004) (“Fiduciary
status, the scope of fiduciary responsibility, the appropriate fiduciary response to the Plans’
concentration in company stock and [company] business practices would be issues for proof, and
numerous legal issues concerning fiduciary liability in connection with company stock in 401(k)
plans remain unresolved [and] would substantially increase the ERISA cases’ complexity,
duration, and expense – and thus militate in favor of settlement approval.”). For an example of the
legal novelty of Plaintiffs’ claims, the Ninth Circuit adopted a presumption of prudence for claims
like those brought by Plaintiffs while this case was pending (Quan v. Computer Scis. Corp., 623
F.3d 870, 881 (9th Cir. 2010)) and is currently deciding whether such a presumption applies on a
motion to dismiss.10 Similarly, the Supreme Court has invited the Solicitor General’s views on a
10 While Quan was decided on summary judgment, the issue of the presumption’s applicability on a motion to dismiss is pending in Harris v. Amgen, 10-56014 (9th Cir. Argued Feb. 17, 2012).
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Circuit split regarding the presumption’s applicability on a motion to dismiss.11
5. The Contingent Nature of the Fee and the Financial Burden Carried by Plaintiffs’ Counsel
The Ninth Circuit has confirmed that a determination of a fair and reasonable fee must
include consideration of the contingent nature of the fee and the obstacles surmounted in obtaining
the settlement. It is an established practice in the private legal market to reward attorneys for taking the risk of non-payment by paying them a premium over their normal hourly rates for winning contingency cases. See Richard Posner, Economic Analysis of Law § 21.9, at 534-35 (3d ed. 1986). Contingent fees that may far exceed the market value of the services if rendered on a non-contingent basis are accepted in the legal profession as a legitimate way of assuring competent representation for plaintiffs who could not afford to pay on an hourly basis regardless whether they win or lose.
WPPSS, 19 F.3d at 1299; In re F&M Distrib., Inc. Sec. Litig., No. 95-CV-71778-DT, 1999 U.S.
Dist. LEXIS 11090, at *18 (E.D. Mich. June 29, 1999) (court must consider that counsel
“undertook this case on a contingent fee basis, which required them to fund all of the significant
litigation costs while facing the risk of a rejection of their clients’ claims on the merits”); In re
Dynamic Random Access Memory (DRAM) Antitrust Litig., No. M-02-1486-PJH, 2007 WL
2416513, at *1 (N.D. Cal. Aug. 16, 2007) (“Plaintiffs’ counsel risked time and effort and advanced
costs and expenses with no ultimate guarantee of compensation.”); In re Sulzer Hip Prosthesis and
Knee Prosthesis Liab. Litig., 268 F. Supp. 2d 907, 936 (N.D. Ohio 2003) (fee award applicants
“undertook this action on a contingency fee basis and made significant cash outlays to finance it”)
(citation omitted).
Plaintiffs’ Counsel received no compensation during the nearly four-year course of this
Action and have invested more than $1.75 million in time and incurred significant expenses
(totaling more than $33,327.25) in obtaining the Agreement for the benefit of the Class. In addition
to the advancement of costs, lawyers working on the case have forgone the business opportunity to
devote time to other cases. See Vizcaino, 290 F.3d at 1050. Any fee award or expense
11 http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/12-751.htm.
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reimbursement to Plaintiffs’ Counsel has always been at risk, and completely contingent on the
result achieved and on this Court’s discretion in awarding fees and reimbursing expenses.
Indeed, the risk of no recovery in complex cases of this type is very real. The Court noted
in granting preliminary approval of the Agreement that it was skeptical of Plaintiffs’ ability to
prove their claims. In addition, Plaintiffs’ Counsel knows from personal experience that, despite
the most vigorous and competent efforts, their success in contingent litigation such as this is never
guaranteed. The commencement of a class action is no guarantee of success. Bystanders who
focus only on the fees awarded for the successes fail to consider that those same fees help fund the
enormous overhead expenses incurred during the years of litigation when nothing is earned. These
cases are not always settled, nor are plaintiffs’ lawyers always successful. Indeed, there are cases
where plaintiffs’ class counsel has either lost at trial (and was forced to pay all of defendants’
costs) or won at trial only to have a substantial judgment overturned through post-trial motions.
See, e.g., In re JDS Uniphase Corp. Sec. Litig., Civ. No. C-02-1486CW, 2007 WL 4788556 (N.D.
Cal. Nov. 27, 2007), and In re Apollo Group, Inc. Sec. Litig., No. 04-2147-PHX-JAT, 2008 WL
3072731 (D. Ariz. Aug 4, 2008). It is also notable that to the best of Plaintiffs’ Counsel’s
knowledge, only four ERISA company stock fund cases have been tried on the merits, each of
which resulted in defense verdicts.12
Hard, diligent work by skilled counsel is required to develop facts and theories to prosecute
a case or persuade defendants to settle on terms favorable to the Class. It is essential that counsel,
such as Plaintiffs’ Counsel here, have the credibility to let defendants know with certainty that they
will persevere in the face of the risk, even at the expense of their fees.
12 DeFelice v. U.S. Airways, Inc., 436 F. Supp. 2d 756 (E.D. Va. 2006), affirmed, 497 F.3d 410 (4th Cir. 2007) (The Fourth Circuit affirmed the district court’s ruling that defendants did not breach ERISA mandated fiduciary duties by continuing to offer company stock as plan investment option.); Nelson v. IPALCO Enterprises, Inc., 480 F. Supp. 2d 1061 (S.D. Ind. 2007) (The court determined the defendant fiduciaries did not breach their fiduciary duties under ERISA by failing to remove company stock as a plan investment option.); Langraff v. Columbia Healthcare Corp., No. 98-CV-0090, 2000 U.S. Dist LEXIS 21831 (M.D. Tenn. May 24, 2000) (same); Brieger v. Tellabs, Inc., No. 06-CV-1882, 2009 WL 1565203 (N.D. Ill. June 1, 2009) (same).
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6. The Customary Fee
Granting one third in fees based on the percentage method is consistent with the private
marketplace where contingent-fee attorneys typically negotiate percentage fee arrangements with
their clients. Many courts weigh the customary fee in the marketplace for contingent cases as a
significant measure in approving fees. See e.g., In re Synthroid Marketing Litig., 264 F.3d 712,
718 (7th Cir. 2001) (“[W]hen deciding on appropriate fee levels in common-fund cases, courts
must do their best to award counsel the market price for legal services, in light of the risk of
nonpayment and the normal rate of compensation in the market at the time.”); In re RJR Nabisco,
Inc. Sec. Litig., MDL No. 818, 1992 WL 210138, at *7 (S.D.N.Y. Aug. 24, 1992) (“What should
govern such [fee] awards is not the essentially whimsical view of a judge, or even a panel of
judges, as to how much is enough in a particular case, but what the market pays in similar cases”);
In re Synthroid Marketing Litig., 325 F.3d 974, 975 (7th Cir. 2003) (“A court must give counsel
the market rate for legal services…”). Plaintiffs’ Counsel seeks less than that amount as attorneys’
fees.
Although the Ninth Circuit has not adopted the customary fee as a factor to consider in
setting fees in class actions, the Circuit expressly recognized it is at least “probative” of what fee is
reasonable. Vizcaino, 290 F.3d at 1049. If there were a non-class action litigation, the customary
contingent fee would likely range between 30 and 40 percent of the recovery. See, e.g., In re Pub.
Service Co. of New Mexico, No. 91-0536M, 1992 WL 278452, at *7 (S.D. Cal. July 28, 1992);
(“[i]f this were a non-representative litigation, the customary fee arrangement would be contingent,
on a percentage basis, and in the range of 30% to 40% of the recovery”); In re M.D.C. Holdings
Sec. Litig., No. CV89-0090 E (M), 1990 WL 454747, at *7 (S.D. Cal. Aug. 30, 1990) (“[i]n private
contingent litigation, fee contracts have traditionally ranged between 30% and 40% of the total
recovery”); In re Ikon Office Solutions, Inc. Securities Litigation, 194 F.R.D. 166, 194 (E.D. Pa.
2000) (“in private contingency fee cases, particularly in tort matters, plaintiffs’ counsel routinely
negotiate agreements providing for between thirty and forty percent of any recovery”); accord
Blum v. Stenson, 465 U.S. 886, 904 (1984) (“In tort suits, an attorney might receive one-third of
whatever amount the plaintiff recovers. In those cases, therefore, the fee is directly proportional to
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the recovery.”) (concurring opinion); In re U.S. Bioscience Sec. Litig., 155 F.R.D. 116, 119 (E.D.
Pa. 1994) (adopting Special Master’s conclusion that 30% would likely have been negotiated in a
securities action).13 Plaintiffs’ Counsel’s request is at the very low end of that range.
Moreover, Plaintiffs’ Counsel’s efforts were performed, and the results achieved, on a
wholly contingent basis in the face of determined opposition. Under these circumstances, it
follows that Plaintiffs’ Counsel is entitled to the award of a reasonable percentage fee based on the
benefit conferred and the common fund obtained. Indeed, courts have routinely awarded far
greater percentages of the result achieved to successful plaintiffs’ counsel. Under all of the
circumstances present here, a 30% fee is fair and reasonable.14
7. Reaction of the Class to the Settlement and Attorneys’ Fees and Expenses Sought
The Class’s reaction to a proposed settlement and fee requested is a significant factor in
granting fees. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 305 (3d Cir. 2005); Pincay Invs. Co.
v. Covad Communications Group, Inc., 90 Fed. Appx. 510, 511 (9th Cir. 2004) (citing Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)); In re Xcel Energy, Inc., 364 F. Supp. 2d
13 See also Kirchoff, 786 F.2d at 323 (observing that 40% is the customary fee in tort litigation”); Phemister v. Harcourt Brace Jovanovich, Inc., No. 77 C 39, 1984 WL 21981, at *15 (N.D. Ill. Sept. 14, 1984) (“[t]he percentages agreed on [in non-class-action damage lawsuits] vary, with one-third being particularly common”). 14 See, e.g., Beech Cinema, Inc. v. Twentieth Century Fox Film Corp., 480 F. Supp. 1195 (S.D.N.Y. 1979), aff’d, 622 F.2d 1106 (2d Cir. 1980) (53.2% awarded); Zinman v. Avemco Corp., [1978 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 96,325 (E.D. Pa. Jan. 18, 1978) (50% awarded); Lewis v. Musham, [1981 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,946 (S.D.N.Y. Apr. 10, 1981) (49% awarded); Greene v. Emersons, Ltd., [1987 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 93,263 (S.D.N.Y. May 20, 1987) (46.2% awarded); Aamco Automatic Transmissions, Inc. v. Tayloe, 82 F.R.D. 405 (E.D. Pa. 1979) (43.87% awarded); In re Ampicillin Antitrust Litig., 526 F. Supp. 494 (D.D.C. 1981) (40.6% awarded); Howes v. Atkins, 668 F. Supp. 1021 (E.D. Ky. 1987) (40% awarded); Valente v. Pepsico, Inc., [1979 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 96,921 (D. Del. June 4, 1979) (38.8% awarded); Baron v. Commercial & Indus. Bank, [1979-1980 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,132 (S.D.N.Y. Oct. 3, 1979) (36% awarded); Shore v. Parklane Hosiery Co., [1980 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,602 (S.D.N.Y. Aug. 1, 1980) (35% awarded); Clark v. Cameron-Brown Co., [1981 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 98,014 (M.D.N.C. Apr. 6, 1981) (35% awarded); Adams v. Standard Knitting Mills, Inc., [1978 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 96,377 (E.D. Tenn. January 6, 1978) (34.7% awarded); In re Franklin Nat’l Bank Secs. Litig., [1980 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 97,571 (E.D.N.Y. June 24, 1980) (34% awarded); Plaskow v. Clausing Corp., [1982-1983 Transfer Binder], Fed. Sec. L. Rep. (CCH) ¶ 99,228 (S.D.N.Y. June 1, 1983) (34% awarded).
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980, 998 (D. Minn. 2005); Mark v. Valley Ins. Co., CV 01-1575-BR, 2004 U.S. Dist. LEXIS
20602, at *5 (D. Or. Oct. 6, 2004).
Here, Notice was sent to 3,490 Class members. Berdon Affidavit ¶3. The Notice informs
Class members that Plaintiffs’ Counsel would apply for attorneys’ fees not to exceed 33% of the
Settlement Fund and reimbursement of reasonable litigation expenses. The Notice advised Class
members of their right to object to the Settlement, the Plan of Allocation or to Plaintiffs’ Counsel
fee request. The deadline for filing any objections is May 20, 2013. To date, no member of the
Class has objected to Plaintiffs’ Counsel’s application for an award of attorneys’ fees. Plaintiffs’
Counsel will respond to any objections by the May 27, 2013 deadline to do so.
8. The Lodestar Crosscheck Confirms the Reasonableness of the Requested Fee
Although courts in this Circuit typically apply the percentage approach to determine
attorneys’ fees in common-fund cases, the Court may use a lodestar analysis “as a cross-check on
the percentage method.” See WPPSS, 19 F.3d at 1296-98. Vizcaino, 142 F. Supp. 2d at 1302; In
re Immunex Sec. Litig., 864 F. Supp. 142, 144 (W.D. Wash. 1994). Here, such a “cross-check”
confirms that the requested fee amount is reasonable.
In Vizcaino, the Ninth Circuit, in approving a multiplier of 3.65, noted that “courts have
routinely enhanced the lodestar to reflect the risk of non-payment in common fund cases.” 290
F.3d at 1051 (quoting WPPSS, 19 F.3d at 1300). In cases applying the lodestar method to award
fees “‘multipliers of between 3 and 4.5 have been common.’” Rabin v. Concord Assets Group,
Inc., No. 89 Civ. 6130 (LBS), 1991 WL 275757, at *2 (S.D.N.Y. Dec. 19, 1991) (multiplier of 4.4)
(citation omitted); Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294, 298 (N.D. Cal. 1995)
(“Multipliers in the 3-4 range are common in lodestar awards for lengthy and complex class action
litigation.”); see also Keith v. Volpe, 501 F. Supp. 403, 414 (C.D. Cal. 1980) (multiplier of 3.5); In
re Rite Aid, 146 F. Supp. 2d 706 (E.D. Pa. 2001) (multipliers of 4.5-8.5); In re WorldCom, Inc.
Sec. Litig., No. 02 CIV 3288 (DLC), 2004 WL 2591402, at *17 (S.D.N.Y. Nov. 12, 2004)
(multiplier of 2.46); In re Lucent Tech., Inc. Sec. Litig., 327 F. Supp. 2d 426 (D.N.J. 2004)
(multiplier of 2.13); Kurzweil v. Philip Morris Cos., Inc., Nos. 94 Civ. 2373 (MBM), 94 Civ. 2546
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(BMB), 1999 WL 1076105, at *3 (S.D.N.Y. Nov. 30, 1999) (recognizing that multipliers of
between 3 and 4.5 are common in federal securities cases).
Here, the reported lodestar of Plaintiffs’ Counsel is in excess of $1.75 million. See Joint
Decl. at ¶27. And that includes only certain professionals at some of the firms that litigated this
Action. Thus, Plaintiffs’ Counsel’s request for an award of $150,000 does not seek a multiplier;
instead, it is a recovery of less than one-tenth of their lodestar.
III. PLAINTIFFS’ COUNSEL’S EXPENSES ARE REASONABLE AND WERE NECESSARILY INCURRED TO ACHIEVE THE BENEFIT OBTAINED FOR THE SETTLEMENT CLASS
Plaintiffs’ Counsel also requests that the Court grant their application for reimbursement of
$33,327.25 in litigation costs incurred in connection with the prosecution of this litigation. See,
e.g., In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036, 1048 (N.D. Cal. 2008) (“Attorneys may
recover their reasonable expenses that would typically be billed to paying clients in non-
contingency matters.”) (citing Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir.1994)).
The appropriate analysis to apply in deciding whether expenses are compensable in a
common fund case of this type is whether the particular costs are of the type typically billed by
attorneys to paying clients in the marketplace. See Harris, 24 F.3d at 19 (“Harris may recover as
part of the award of attorney’s fees those out-of-pocket expenses that ‘would normally be charged
to a fee paying client.’”) (citations omitted); see also Bratcher v. Bray-Doyle Indep. Sch. Dist. No.
42, 8 F.3d 722, 725-26 (10th Cir. 1993) (expenses reimbursable if they would normally be billed to
client); Abrams v. Lightolier, Inc., 50 F.3d 1204, 1225 (3d Cir. 1995) (expenses recoverable if
customary to bill clients for them); Miltland Raleigh-Durham v. Myers, 840 F. Supp. 235, 239
(S.D.N.Y. 1993) (“Attorneys may be compensated for reasonable out-of-pocket expenses incurred
and customarily charged to their clients, as long as they ‘were incidental and necessary to the
representation’ of those clients.”) (citation omitted). All of the various categories of expenses for
which counsel seek reimbursement herein are the type of expenses routinely charged to hourly
paying clients and, therefore, should be reimbursed out of the common fund.
Expenses include the costs of computerized research. These are the charges for
computerized factual and legal research services such as Lexis-Nexis and Westlaw. It is standard
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practice for attorneys to use Lexis-Nexis and Westlaw to assist them in researching legal and
factual issues. See In re Media Vision Tech. Sec. Litig., 913 F. Supp. 1362, 1371 (N.D. Cal. 1996).
Indeed, courts recognize that these tools create efficiencies in litigation and, ultimately, save
clients and the class money on hours of attorney time that could have been spent less productively
on research. See, e.g., In re Cont’l Ill. Sec. Litig., 962 F.2d 566, 570 (7th Cir. 1992). In approving
expenses for computerized research, the court in Gottlieb v. Wiles underscored the timesaving
attributes of computerized research as a reason reimbursement should be encouraged. 150 F.R.D.
174, 186 (D. Colo. 1993), rev’d and remanded on other grounds sub nom., Gottlieb v. Barry, 43
F.3d 474 (10th Cir. 1994).
In addition, several instances of out-of-town travel was required in connection with this
case. The expenses in this category are reasonable in amount, and are properly charged against the
fund created. See Thornberry v. Delta Air Lines, Inc., 676 F.2d 1240, 1244 (9th Cir. 1982),
vacated and remanded on other grounds, 461 U.S. 952 (1983); In re McDonnell Douglas Equip.
Leasing Sec. Litig., 842 F. Supp. 733, 746 (S.D.N.Y. 1994); Genden v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 741 F. Supp. 84, 86 (S.D.N.Y. 1990).
Lastly, the Notice provided to the members of the Class informed them that Plaintiffs’
Counsel would seek reimbursement of their expenses incurred in the prosecution of the Action.
The deadline for Class members wishing to object to the Settlement and/or Plaintiffs’ Counsel’s
fee application is May 20, 2013. To date, no member of the Class has objected to Plaintiffs’
Counsel’s request.
IV. THE REQUESTED CASE CONTRIBUTION AWARDS TO PLAINTIFFS
Courts have found that incentive awards to class representatives are justified if necessary to
induce individuals to become named representatives, or to compensate them for personal risk
incurred or additional effort and expertise provided for the benefit of the class. See, e.g., Staton v.
Boeing Co., 327 F.3d 938, 975-78 (9th Cir. 2003) (case contribution awards to named class
representatives are appropriate as incentives for individual plaintiffs to take on the risks of
representing a class and as reimbursement for the time and effort spent participating in the case;
relevant factors in determining the reasonableness of a case contribution award include the benefits
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received by the class, the time and effort expended by the class representatives, and reasonable
fears of workplace retaliation); In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 457, 463 (9th Cir.
2000) (finding that it was within the district court’s discretion to make $5,000 incentive awards to
class representatives). In recognition of their effort on behalf of the Class, Plaintiffs request that
this Court award Case Contribution Awards in the amount of $2,500 to each of the four
Plaintiffs—Christopher Carr, Brian Bennett, Randolph K. Jordan and Kimberly J. Jordan.
Each of Plaintiffs devoted substantial time and energy to this Action, participating in
numerous conferences with counsel and providing discovery to Defendants in the form of multiple
interrogatory answers, documents responses and document production, submitting declarations to
the Court in connection with Plaintiffs’ opposition to Defendants’ summary judgment motion and
Plaintiffs’ motion for reconsideration of denial of class certification, and preparing and sitting for a
deposition. Additionally, each Plaintiff has been intimately involved in the Settlement process.
See also Joint Decl. ¶¶ 37-41. Many courts have recognized that the efforts of a class
representative should not go unrecognized. See e.g., In re Lorazepam & Clorazepate Antitrust
Litig. v. Mylan Labs., 205 F.R.D. 369, 400 (D.D.C. 2002) (“[i]ncentive awards are not uncommon
in class action litigation and particularly where . . . a common fund has been created for the benefit
of the entire class . . . . In fact, [c]ourts routinely approve incentive awards to compensate named
plaintiffs for the services they provided and the risks they incurred during the course of the class
action litigation”) (internal quotations and citation omitted). Courts have recognized that the
enforcement of the ERISA laws by private litigants is in the interest of the public and should be
encouraged. Accordingly compensation to class representatives has been approved in analogous
ERISA settlements, and the amount requested here for each Plaintiff ($2,500) is in line with—and
indeed on the low end—of that awarded in analogous company stock breach of fiduciary duty class
action settlements.15 15 See, e.g., In re Schering-Plough Corp. ERISA Litig., No. 03-CV-1204 (D. N.J. Dec. 14, 2010) (“Order Awarding Lead Counsel’s Attorneys’ Fees and Reimbursement of Expenses and Named Plaintiff’s Case Contribution Award”) (Hayden, J.) ($10,000 case contribution award); In re Xcel Energy Inc. Sec. Derivative & ERISA Litig., 364 F. Supp. 2d 980, 1000 (D.Minn. 2005) (total of $100,000 distributed to eight plaintiffs); In re Qwest Savings & Investment Plan ERISA Litig., 2007 WL 295545, at *2 (D. Colo. Jan 29, 2007) (Order Awarding Attorney Fees and Reimbursed of
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Since the benefits now available to the Settlement Class would not have been obtained
without the active participation of the named Plaintiffs, it is entirely fair that Plaintiffs receive a
modest compensatory award for their service on behalf of the Settlement Class members.
V. CONCLUSION
From the beginning of this litigation, Plaintiffs and their counsel have faced determined
adversaries represented by experienced counsel. With no assurance of success, Plaintiffs and their
counsel pursued the Action, eventually negotiating a $500,000 cash settlement plus a contribution
by IGT to the settlement administration costs of up to $25,000. The Settlement represents a
considerable amount of the Class’s recoverable damages. The Settlement is a testament to
Plaintiffs’ Counsel’s efforts in the face of significant risk. Accordingly, Plaintiffs’ Counsel
respectfully submits that the Court should approve the fee and expense application and enter the
order submitted herewith awarding Plaintiffs’ Counsel 30% of the Settlement Fund, or $150,000 in
fees and reimbursement of $33,327.25 in litigation expenses and should award each Named
Plaintiff $2,500 as Case Contribution Awards.
Dated: May 6, 2013 Respectfully submitted,
By: /s/Michael J. Klein Michael J. Klein STULL, STULL & BRODY 6 East 45th Street New York, NY 10017 Phone: (212) 687-7230 Fax: (212) 490-2022 Email: [email protected] Patrice L. Bishop STULL, STULL & BRODY 9430 W. Olympic Boulevard, Suite 400 Beverly Hills, CA 90212 Phone: (310) 209-2468 Fax: (310) 209-2087 Email: [email protected]
Litigation Expenses approving a $10,000 case contribution award to each of the eight named plaintiffs); In re YRC Worldwide ERISA Litig., No. 09-CV-2593 (D. Kan. Mar. 6, 2012) (approving case contributions of $5,000 to each of the three named plaintiffs); In re Sprint Corp. ERISA Litig., 443 F. Supp. 2d at 1271 (approving named plaintiff case contribution awards of $5,000 to each of four named plaintiffs)
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Thomas J. McKenna GAINEY McKENNA & EGLESTON 440 Park Avenue South, 5th Floor New York, NY 10016 Phone: (212) 983-1300 Fax: (212) 983-0383 Email: [email protected]
Interim Co-Lead Counsel
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CERTIFICATE OF SERVICE
I hereby certify that on May 6, 2013, I electronically transmitted the attached document to
the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic
Filing to all registered CM/ECF registrants for this case.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Executed at New York, New York on May 6, 2013.
/s/ Michael J. Klein Michael J. Klein
Case 3:09-cv-00584-RCJ-WGC Document 171 Filed 05/06/13 Page 31 of 31
