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approving rates of $200/hour for law clerks and $150/hour for paralegals in FLSA class action
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Case No. 09-cv-10211 (LTS)(HP)
06-07-2011
FREDRIC P. CASTAGNA, CARL LEE GRANT, LAWRENCE PODWILL, and CHRISTOPHER SAUNDERS, on behalf of themselves and other employees similarly situated, Plaintiffs, v. MADISON SQUARE GARDEN, L.P., Defendant.
ORDER
The above-captioned matter came before the Court on Plaintiffs' Motion for Final Approval of the Class Action Settlement, Named Plaintiffs' Service Awards, and Class Counsel's Attorney's Fees and Expenses (the "Motion for Final Approval").
Plaintiffs brought this action to recover unpaid overtime for themselves and all persons MSG employed as Security Officers between December 16, 2003 and June 6, 2010. Plaintiffs alleged that MSG failed to properly pay security guards overtime compensation in compliance with the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA"), and New York State Labor Law §§ 190 et seq. §§ 650 et seq. and 12 NYCRR § 142-2.2 ("NYLL"). Plaintiffs sought, for themselves and similarly situated employees, unpaid overtime, FLSA liquidated damages, and attorney's fees, costs and expenses and prejudgment interest. They amended the complaint on April 20, 2010, following the decision of Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. --- ,130 S. Ct. 1431 (Mar. 31, 2010), to also seek NYLL liquidated damages. The amended complaint alleges that MSG knowingly failed to pay all required overtime for work exceeding forty hours a week.
After MSG appeared, the parties met and conferred about both the legal issues and the factual bases in an attempt to settle the claims without prolonged litigation. Plaintiffs' counsel vigorously investigated the asserted claims and proffered defenses. MSG produced, and Plaintiffs' counsel studied, volumes of computerized payroll entry records listing every occasion each of the 738 security officers worked for MSG from December 16, 2003 through June 6, 2010, and documents demonstrating the length of the MSG shows at which they worked during 2007, 2008, and 2009 and the total number of such occasions they worked.
Plaintiffs' counsel reviewed and analyzed these data, created complex spreadsheets and formulae, and calculated the unpaid overtime owed to the class. Also, counsel obtained from Plaintiffs and other class members pay stubs, personal diaries, work logs, and time sheets, and other documents they maintained, showing the hours they worked, daily and weekly time and pay entries, W-2 forms, dates of hire and discharge, wage stubs, and other wage records. Plaintiffs' counsel analyzed these materials, data and payroll information as well, to cross-check MSG's records. No substantial discrepancies were found. Plaintiffs' counsel also interviewed the Plaintiffs and many class members about facts relevant to this action and proffered defenses.
Plaintiffs' counsel met on multiple occasions with MSG's counsel, conducted and exchanged legal research, factual analyses and letter briefs and engaged in substantial negotiations. These exchanges facilitated productive settlement discussions, but did not conclude with an agreement.
After the parties did not reach agreement, they held a voluntary mediation ("Mediation") before Vivian Berger, the Nash Professor of Law Emerita at Columbia University School of Law, who has spent most of her time since 1998 as a mediator, focusing on employment mediation. Each party submitted a confidential memorandum to the Mediator; Class Counsel's contained their legal and factual arguments supporting their position that Defendant violated the FLSA and NYLL, with spreadsheets containing calculating damages under different factual and legal conclusions.
The all-day mediation on September 28, 2010, attended by all Plaintiffs, an MSG representative, MSG's counsel and Class Counsel, did not end with an agreement. Later the mediator made an economic proposal, which was accepted by both sides on October 5, 2010. Thereafter, counsel drafted and negotiated the Settlement Agreement ultimately resolving other issues.
The Settlement Agreement provides for a Rule 23(b) settlement class ("Settlement Class") consisting of "all individuals who were employed by MSG as security officers at any time between December 16, 2004 and June 6, 2010" (the date of the last data MSG provided). MSG will pay $1,300,000 ("Total Settlement Amount") and the employer portion of required payroll taxes on the share of the distribution to the class deemed wages. The agreement provides that, upon Court approval: • Settlement Class members, without having to file a proof of claim, will receive an award based on the amount of underpaid overtime hours he/she worked during the class period. • Individual incentive payments aggregating $45,000 will be paid from the Total Settlement Amount to the four Class Representatives. • Class Counsel will be paid from the Total Settlement Amount a fee of 30% of the Total Settlement Amount, or $390,000. This is less than the 33% contingency to which Plaintiffs and counsel agreed in their retainer agreements. (If the combined Percentage Allocation Numbers (as defined) of all Settlement Class members who opt out total more than 5% of all Percentage Allocation Numbers, counsel fees would be reduced to the lesser of (i) $390,000 or (ii) $433,000 multiplied by the sum of the Percentage Allocation Numbers of those Settlement Class members who did not opt out, and divided by the sum of all Percentage Allocation Numbers.) • Counsel will be reimbursed from the Total Settlement Amount for costs and expenses up to $20,000. • After subtracting the amounts the Court allows for incentive payments, counsel fees and expenses, the Net Settlement Amount will be divided among the Settlement Class on a pro-rata basis proportionally to how much underpaid overtime each Settlement Class member worked during the Class Period. Each class member will receive an amount equal to the Net Settlement Amount multiplied by the percentage of the total underpaid overtime he/she worked of the total underpaid overtime of all Settlement Class members, which percentages are set forth in Exhibit B to the Agreement. Of these amounts, half is deemed wages, from which MSG will withhold relevant taxes, and the other half is deemed interest.
On February 8, 2011, the Court preliminarily approved the proposed settlement, conditionally certified the Settlement Class under Rule 23(e), finding that the class met all of the requirements of Fed.R.Civ.P. 23(a) and (b)(3) and approved the Notice of Class Action Lawsuit, Settlement and Fairness Hearing, as modified, pursuant to Fed.R.Civ.P. 23(c)(2)(B).
Pursuant to that Order, on February 11, 2011, Class Counsel, mailed the Notice. See Meister Decl. ¶ 26. Class members had 45 days to opt-out of the state claim class action and to object to the settlement. No one objected and just one individual opted out of the class.
Based upon an examination of the Settlement Agreement, the April 15, 2011 Declarations of Frederic P. Castagna, Carl Lee Grant, Lawrence Podwill, and Christopher Saunders, the April 20, 2011 Declaration of Robert A. Meister, the April 20, 2011 Declaration of Darnley D. Stewart, Esq., the February 11, 2011 Affidavit of Mailing of Notice of Class Action Lawsuit, Settlement and Fairness Hearing Form of Anna Shwedel filed February 11, 2011, the Notice Of Filing Of Opt- Out And Of No Objections filed April 1, 2011, and for the reasons set forth in the accompanying Memorandum of Law, IT IS HEREBY ORDERED, ADJUDGED AND DECREED: The Court's February 8 , 2011 Order Conditionally Certified the Settlement Class
1. Pursuant to its February 8, 2011 Order, the Court certified the proposed class under Federal Rule of Civil Procedure 23(e), for settlement purposes ("Settlement Class"). The approved Class consists of:
All individuals who were employed by Defendant Madison Square Garden, L.P. ("MSG), as security officers at any time between December 16, 2003 and June 6, 2010 (the "Class" or "Class Members").
2. The Court conditionally certified the class based on the fact that Plaintiffs meet all of the requirements for class certification under Fed.R.Civ.P.23(a) and (b)(3).
3. Plaintiffs satisfy Fed.R.Civ.P. 23(a)(1) because there are more than 700 Class Members and therefore joinder is impracticable. See Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.1995) ("[N]umerosity is presumed at a level of 40 members.")
4. Plaintiffs satisfy Fed.R.Civ.P. 23(a)(2), the commonality requirement, because Plaintiffs and the Class Members share common issues of fact and law, including whether Defendant failed to pay Plaintiffs and the Class Members for all of the overtime they worked. See Prasker v. Asia Five Eight LLC, 2010 WL 476009, at *2 (S.D.N.Y. Jan. 6, 2010); Reyes v. Buddha-Bar NYC, 2009 WL 5841177, at * 2 (S.D.N.Y. May 28, 2009); Mohney v. Shelly's Prime Steak, Stone Crab & Oyster Bar, 2009 WL 5851465, at *3 (S.D.N.Y. Mar. 31, 2009).
5. Plaintiffs satisfy Fed.R.Civ.P. 23(a)(3), the typicality requirement, because Plaintiffs' claims arise from the same factual and legal circumstances that form the bases of the Class Members' claims. See Prasker v. Asia Five Eight LLC, supra, 2010 WL 476009, at *2; Reyes v. Buddha-Bar NYC, supra, 2009 WL 5841177, at *2; Mohney, supra, 2009 WL 5851465, at *3.
6. Plaintiffs satisfy Fed.R.Civ.P. 23(a)(4), the adequacy requirement, because Plaintiffs' interests are not antagonistic or at odds with class members. See Diaz v. Eastern Locating Services, Inc., supra, 2010 WL 2945556, at * 2 (S.D.N.Y. July 22, 2010); Prasker v. Asia Five Eight LLC, supra, 2010 WL 476009, at *2; Toure v. Cent. Parking Sys., supra, 2007 WL 2872455, at *4 (S.D.N.Y. Sept. 28, 2007).
7. Plaintiffs also satisfy Rule 23(b)(3). Common factual allegations-that Defendant failed to pay Class Members for all overtime they worked - and a common legal theory - that Defendant violated the FLSA and NYLL - predominate over any factual or legal variations among class members. See Diaz, supra, 2010 WL 2945556, at *2; Prakser v. Asia Five Eight LLC, supra, 2010 WL 476009, at *2; Reyes v. Buddha-Bar NYC, supra, 2009 WL 5841177, at *3; Mohney, supra, 2009 WL 5851465, at *4. Class adjudication of this case is superior to individual adjudication because it will conserve judicial resources and is more efficient for Class Members, particularly those who lack the resources to bring their claims individually. See Diaz, supra, 2010 WL 2945556, at *2.
I. Final Approval of the Class Action Settlement
8. The Court hereby grants the Motion for Final Approval and finally approves the settlement as set forth in the Settlement Agreement and in this Order under Rule 23 and the FLSA. The Settlement is fair, reasonable, adequate, and not a product of collusion. See Fed.R.Civ.P. 23(c), Frank v. Eastman Kodak Co., 228 F.R.D. 174, 184 (W.D.N.Y. 2005) (quoting Joel A. v. Giuliani, 218 F.3d 132, 138-39 (2d Cir. 2000).
9. Rule 23(e) requires court approval for a class action settlement to ensure that it is procedurally and substantively fair, reasonable, and adequate. Fed.R.Civ.P. 23(e). The FLSA also mandates court approval of any settlement. See Latacela v. Cohen, No. 10 Civ. 4653(RJH), 2010 WL 3911463 at *1 (S.D.N.Y. Oct. 5, 2010).
10. To determine procedural fairness, courts examine the negotiating process leading to the settlement. Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116 (2d Cir. 2005); D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001). To determine substantive fairness, Courts determine whether the settlement's terms are fair, adequate, and reasonable according to the factors set forth in City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974).
11. Courts examine procedural and substantive fairness in light of the "strong judicial policy favoring settlements" of class action suits. Torres v. Gristede's Operating Corp., 08-CV-8531 (PAC), 2010 WL 5507892 at *3 (S.D.N.Y. Dec. 21, 2010) citing Wal-Mart Stores, 396 F.3d at 116. "Absent fraud or collusion, [courts] should be hesitant to substitute [their] judgment for that of the parties who negotiated the settlement." In re EVCI Career Colls. Holding Corp. Sec. Litig., No. 05 Civ. 10240 (CM), 2007 WL 2230177, at *4 (S.D.N.Y. July 27, 2007). "In evaluating the settlement, the Court should keep in mind the unique ability of class and defense counsel to assess the potential risks and rewards of litigation; a presumption of fairness, adequacy and reasonableness may attach to a class settlement reached in arms-length negotiations between experienced, capable counsel after meaningful discovery." McMahon v. Olivier Cheng Catering and Events, LLC, No. 08 Civ. 8713(PGG), 2010 WL 2399328 at *3 (S.D.N.Y. Mar. 3, 2010) (citation omitted). The Court gives weight to the parties' judgment that the settlement is fair and reasonable. See Reyes v. Buddha-Bar NYC, 2009 WL 5841177, at * 3 (S.D.N.Y. May 28, 2009); Mohney v. Shelly's Prime Steak Stone Crab & Oyster Bar, 2009 WL 5851465, at *4 (S.D.N.Y. Mar. 31, 2009).
Procedural Fairness
12. Here, the Class is represented by experienced counsel. Robert A. Meister and David Harrison of Pedowitz & Meister LLP are competent litigators experienced in class and employment actions as well as other complex multi-party litigation. See Meister Decl. ¶¶ 46-51.
13. The settlement was reached only after Plaintiffs' counsel had conducted a thorough investigation and evaluation of the claims, and after legal memoranda were exchanged and extensive negotiations between the parties had taken place. Plaintiffs' counsel undertook a detailed analysis of Defendant's payroll information including developing complex charts and formulae to calculate the amount of overtime worked under different scenarios.
14. To help resolve the case, the parties enlisted the services of experienced mediator, Vivien Berger, the Nash Professor of Law Emerita at Columbia University School of Law, who has spent most of her time since 1998 as a mediator, focusing on employment mediation. Arm's-length negotiations involving counsel and a mediator raise a presumption that the settlement they achieved meets the requirements of due process. See Prasker v. Asia Five Eight LLC, No. 08 Civ. 5811, 2010 WL 476009 at *4 (S.D.N.Y. Jan. 6, 2010); See also Wal-Mart Stores, 396 F.3d at 116.
Substantive Fairness
15. The settlement is substantively fair. All of the factors set forth in City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974), which provides the analytical framework for evaluating the substantive fairness of a class action settlement, weigh in favor of final approval.
16. The "Grinnell factors" are: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Grinnell, 495 F.2d at 463.
17. Litigation through trial would be complex, expensive, and long. Therefore, the first Grinnell factor weighs in favor of final approval.
18. The class's reaction to the settlement was positive. Each Notice included an explanation of the settlement and an estimate of the Class Member's award. The Notices also informed Class Members that they could object to or exclude themselves from the settlement, and explained how to do so. Of the 738 notices mailed out, no Class Member objected to the Settlement and only one Class Member requested exclusion. When relatively few opt-out or object to the settlement, the lack of opposition supports approval. See In re Sony SXRD Rear Proj. Tele. Class Action Litig., No. 06 Civ. 5173(RPP), 2008 WL 1956267 at *6 (S.D.N.Y. May 1, 2008)("The small number of opt-outs and relative to the size of the class in this case supports approval of the Settlement.") The total absence of objections demonstrates Class Members' satisfaction with the Settlement's terms. See Ross v. A.H. Robins Co., Inc., 700 F.Supp 682, 684 (S.D.N.Y. 1988)(noting that "[t]he absence of objectants may itself be taken as evidencing the fairness of the settlement" (citation omitted)). This factor weighs heavily in favor of approving the proposed settlement.
19. The parties have completed enough investigation to agree on a reasonable settlement. Although they did not engage in formal discovery, such is not required for a settlement to be adequate, if the parties obtained sufficient information to understand the claims and negotiate settlement terms. See D'Amato v. Deutsche Bank, 236 F.3d 78, 87 (2d Cir. 2001)(this weighs in favor of approval because "although no formal discovery had taken place, the parties had engaged in an extensive exchange of documents and other information"); In re Global Crossing Sec. & ERISA Litig., 225 F.R.D. 436, 458 (S.D.N.Y. 2004) ("Formal discovery is not a prerequisite; the question is whether the parties had adequate information about their claims."); Willix v. Healthfirst, Inc., No. 07-Civ.-1143(ENV)(RER), 2011 WL 754862 at *4 (E.D.N.Y. Feb. 18, 2011). ("The pertinent question is 'whether counsel had an adequate appreciation of the merits of the case before negotiating.'") In fact, informal discovery designed to develop a settlement's factual predicate is encouraged because it expedites the negotiation process and limits costs which could potentially reduce the value of the settlement. See Jones v. Amalgamated Warbasse Houses, Inc., 97 F.R.D. 355, 360 (S.D.N.Y. 1982) ("Although little formal discovery has occurred, the parties freely exchanged data during settlement talks. In view of the way this speeds the negotiation process, informal 'discovery' is to be encouraged"). The pertinent question is "whether counsel had an adequate appreciation of the merits of the case before negotiating." McMahon, 2010 WL 2399328, at *5 (citation omitted). The stage of these proceedings - where the parties have conducted thorough informal discovery to fully understand the claims and settle without incurring undue costs - weighs in favor of approval.
20. The fourth Grinnell factor, the risks of establishing liability, also weighs in favor of settlement. "In assessing the Settlement, the Court should balance the benefits afforded to members of the Class and the immediacy and certainty of a substantial recovery for them against the continuing risks of litigation." Maley v. Del Global Tech. Corp., 186 F.Supp.2d 358, 364 (S.D.N.Y. 2002). MSG challenges liability on two main theories. First, it contended that meal and break periods do not count as working time under the FLSA and NYLL. If this case were to be tried, Plaintiffs would need to rely on testimony of Class Members and supervisors about the length of meal and break periods and the amount of work during breaks. See In re Sony, 2008 WL 1956267 at *8 (noting that in pursuing litigation "Plaintiffs face the more practical risks of uncertain witness testimony"). Second, MSG urged that FLSA § 207(b) exempted the class from § 207(a) overtime even though MSG had not paid the overtime required by § 207(b). Although a weak argument in light of precedent, "[l]itigation inherently involves risks." Torres v. Gristede's Operating Corp., No. 04-CV-3316 (PAC), 2010 WL 5507892 at *5 (S.D.N.Y. Dec. 21, 2010)(citation omitted). "If settlement has any purpose at all, it is to avoid a trial on the merits because of the uncertainty of the outcome." In re PaineWebber Ltd. P'ships. Litig., 171 F.R.D. 104, 126 (S.D.N.Y. 1997). These risks, which could result in a smaller per-plaintiff recovery, weigh in favor of settlement.
21. The risk of establishing damages further weighs in favor of final approval. Even if Plaintiffs establish liability, they still face the "substantial risks in proving [its] damages at trial." In re Painewebber Ltd. P'ships. Litig., 171 F.R.D. at 128. One purpose of a settlement "is to avoid a trial on the merits because of the uncertainty of the outcome." In re Ira Haupt & Co., 304 F.Supp. 917, 934 (S.D.N.Y. 1969). Here, the fact-intensive nature of Plaintiffs' claims and Defendant's affirmative defenses presents risk. The settlement eliminates this uncertainty. The fifth Grinnell factor weighs in favor of final approval.
22. The risk of maintaining class status throughout trial also weighs in favor of final approval. A contested class certification motion would likely require extensive discovery and briefing. If the Court granted a contested class certification motion, Defendants could seek to file an appeal and/or move to decertify, which would require additional rounds of briefing and extensive delay. See Glover v. Crestwood Lake Section 1 Holding Corp., No. 89 Civ. 5386 (MLJ), 1991 WL 64172 at *6 (S.D.N.Y. Apr. 10, 1991). See also D.S. v. New York City Dep't of Educ., 255 F.R.D. 59, 78 (E.D.N.Y. 2008)("the risk that the class or subclass may be decertified generally weighs in favor of settlement"). Settlement eliminates the risk, expense, and delay inherent in this process. The sixth Grinnell factor weighs in favor of final approval.
23. While Plaintiffs believe MSG could pay the maximum potential recovery, a "defendant's ability to withstand a greater judgment, standing alone, does not suggest that the settlement is unfair." Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y. 2005) quoting In re Austrian & German Bank Holocaust Litig., 80 F.Supp.2d 164, 178 n.9 (S.D.N.Y. 2000).
24. The amount of the settlement weighs strongly in favor of final approval. The court determines whether the settlement is in the "range of reasonableness," id., "a range which recognizes the uncertainties of law and fact in any particular case and the concomitant risks and costs necessarily inherent in . . . any litigation." Wal-Mart Stores, Inc., 396 F.3d at 96 (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir.1972)). There are risks in proving the best possible recovery. The "settlement assures immediate payment of substantial amounts to class members, even if it means sacrificing 'speculative payment of a hypothetically larger amount years down the road.'" Gilliam v. Addicts Rehab. Ctr. Fund., No. 05-Civ.-3452 (RLE), 2008 WL 782596 at *5 (S.D.N.Y. Mar. 24, 2008).
25. Additionally, the following analyses weight in favor of settlement.
The settlement amount is:
a. 62.5% of the proposed settlement class members' recoverable damages under a "best possible case" analysis assuming, inter alia, (1) the Rule 23 class was
certified; (2) the collective action was and remained certified; (3) the Court would find that the one-hour lunch break during shifts and the 20-30 minute break in each show an early dismissals were all compensable work time, and (4) that the Court would rule that the settlement class is entitled to NY Labor Law liquidated damages and New York State 9% prejudgment interest during the 3-year period that the settlement class is also entitled to FLSA liquidated damages.
b. 70% of the "best possible case" recovery without NYLL liquidated damages or prejudgment interest, which is consistent with this Court's decision in Rios v. Neighborhood Constr. Corp., No. 07 Civ. 8701 (LTS), 2009 WL 3335354 (S.D.N.Y. Oct. 14, 2009) (where Judge Swain held the NYLL claim was subsumed in the FLSA claim and that plaintiffs could not recover NYLL liquidated damages for the two or three year FLSA period); and
c. 119% of the Settlement Class' recoverable damages under a "worst possible case" analysis, assuming the Court were to rule that the lunch and show breaks during shifts were not compensable work time and that NYLL liquidated damages and prejudgment interest are not available during the FLSA period.
26. Thus the Grinnell factors strongly favor Settlement. Although Plaintiffs might recover more at trial, there are significant risks. The Settlement commits a significant amount of money to compensate Class members for their damages. When this monetary relief is weighed against the potential obstacles, substantial costs, and significant delay of further litigation, the benefits to the Class of settlement are overwhelming. This conclusion is confirmed by the absence of objectors and opt-outs.
II. Dissemination of Notice Met Notice and Due Process Requirements
27. Pursuant to the February 8, 2011 Preliminary Approval Order, the Notices were sent by first-class mail to each identified Class Member at his or her last known address. This Court finds that the Notices fairly and adequately advised Class Members of the terms of the settlement, as well as the right of Class Members to opt out of the class, to object to the settlement, and to appear at the fairness hearing conducted on May 6, 2011. Class Members were provided the best notice practicable under the circumstances.
28. The Court further finds that the Notices and distribution of such Notices comported with all constitutional requirements, including those of due process.
III. Named Plaintiffs' Service Awards
29. The Court finds service awards of $10,000 each to Carl Lee Grant, Lawrence Podwill, and Christopher Saunders and $15,000 to Frederic P. Castagna are reasonable and awards them. MSG shall pay these amounts from the Settlement Fund.
30. Such service awards are common in class action cases and are important to compensate plaintiffs for the time and effort expended in assisting the prosecution of the litigation, the risks incurred by becoming and continuing as a litigant, and any other burdens sustained by the plaintiff. See Torres v. Gristede's Operating Corp., 08-CV-8531 (PAC) 2010 WL 5507892 at *7 (S.D.N.Y. Dec. 21, 2010)(awarding an incentive award of $15,000 to each named plaintiff in the settlement of their FLSA overtime claim); Mentor v. Imperial Parking Sys., Inc., No. 05-CIV. 7993 (WHP), 2010 WL 5129068 at *1-2 (S.D.N.Y. Dec. 15, 2010)(upholding a $15,000 incentive award in a class settlement of $690,000 for a plaintiff who reviewed documents, spoke to current and former employees, and traveled to New York during the pendency of the class FLSA claim); See also Willix v. Healthfirst, Inc, No. 07-Civ.-1143 (ENV)(RER), 2011 WL 754862 at *7 (E.D.N.Y. Feb. 18, 2011)(approving incentive awards $30,000, $15,000, and $7,500 in FLSA claim to recover unpaid overtime wages); Khait v. Whirlpool Corp., No. 06-6381(ALC), 2010 WL 2025106, at *9 (E.D.N.Y. Jan. 20, 2010); (awarding $15,000 service awards each to five named plaintiffs and $10,000 awards each to 10 other plaintiffs in FLSA overtime class action).
31. In this case, the four Plaintiffs expended considerable time and effort with Class Counsel and were actively involved in the prosecution of this case. Further, service awards are "particularly appropriate in the employment context . . . [where] the plaintiff is often a former or current employee of the defendant, and thus, undertaken the risk of adverse actions by the employer or co-workers." Frank, 228 F.R.D. at 187. These awards are justified because all four individuals were potentially, and arguably were subjected to adverse actions because of the lawsuit.
IV. Award of Fees to Class Counsel
32. In its February 8, 2011 Order, the Court appointed Pedowitz & Meister LLP as Class Counsel. The Court determined that Counsel met all of the requirements of Federal Rule of Civil Procedure 23(g). See Damassia v. Duane Reade Inc., 250 F.R.D. 152, 165 (S.D.N.Y. 2008) (Rule 23(g) requires the court to consider "the work counsel has done in identifying or investigating potential claims in the action, ... counsel's experience in handling class actions, other complex litigation, and claims of the type asserted in the action, ... counsel's knowledge of the applicable law, and ... the resources counsel will commit to representing the class" (internal quotation marks omitted)).
33. In the Second Circuit, a district court may calculate reasonable attorney's fees in a class action settlement by either the percentage of fund method or the lodestar method. See McDaniel v. County of Schenectady, 595 F.3d 411, 417-18 (2d. Cir. 2010). "[T]he trend in [the Second] Circuit is toward the percentage method." McDaniel, 595 F.3d at 417.
34. Here, Plaintiffs' counsel requests $390,000 which is 30% of the settlement fund. A percentage-of-recovery fee award of 30% is consistent with the Second Circuit's decision in Arbor Hill Concerned Citizens Neighborhood Ass'n. v. County of Albany, where the Court held that a "presumptively reasonable fee" takes into account what a "reasonable, paying client" would pay. 493 F.3d 110, 111-12 (2d Cir.2007). In their retainer agreement, named Plaintiffs agreed that Class Counsel would be entitled to 33% of any recovery, which based on the $1.3 million settlement would lead to a fee of $429,000. During settlement negotiations, however, Class Counsel agreed to accept a fee of 30%. Thus Class Counsel's requested fee of $390,000 is $39,000 less than what named Plaintiffs agreed to pay. Further, an award of thirty (30%) percent of the fund is consistent with what reasonable, paying clients pay in contingency employment cases. See Cent. States Southeast & Southwest Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 249 (2d Cir. 2007) (affirming award of fees and costs equal to 30% of the settlement fund ($42.5 million)); Clark v. Ecolab, Inc., Nos. 07 Civ. 8623(PAC) et. al., 2010 WL 1948198 at *9 (S.D.N.Y. May 11, 2010)(fees of one-third of the settlement fund ($2 million) in FLSA overtime case); Reyes v. Buddha-Bar NYC, No. 08 Civ. 02494(DF), 2009 WL 5841177, at *4 (S.D.N.Y. May 28, 2009) (fee of 33% of $710,000 fund in FLSA and NYLL tip misappropriation case); Mohney v. Shelly's Prime Steak Stone Crab & Oyster Bar, No. 06 Civ. 4270(PAC), 2009 WL 5851465, at *5 (S.D.N.Y. Mar. 31, 2009)(33% of $3,265,000 fund in FLSA and NYLL case); Maley v. Del Global Techs. Corp., 186 F.Supp.2d 358, 371 (S.D.N.Y. 2002) (33 1/3% fee of $11.5 million fund in securities class action); Cohen v. Apache Corp., No. 89 Civ. 0076, 1993 WL 126560 (S.D.N.Y. Apr. 21, 1993) (33 1/3% of $6.75 million fund in securities class action); Khait v. Whirlpool Corp., No. 06-6381(ALC), 2010 WL 2025106 at *8 (E.D.N.Y. Jan. 20, 2010) (33% of settlement or $3,052,500 in FLSA and NYLL case); Stefaniak v. HSBC Bank USA, N.A., No. 05 Civ. 720, 2008 WL 7630102 at *3 (W.D.N.Y. June 28, 2008) (33% of $2.9 million fund in FLSA and NYLL case). The fact that Counsel's fee entitlement was entirely contingent upon success weighs in favor of reasonableness. McMahon, 2010 WL 2399328 at *8.
35. Counsel's fees are also reasonable under a lodestar analysis. The attorney's fees amount to a lodestar multiplier of 1.07, which is a relatively low multiplier for settlement of a class action, measured by the range more recently awarded in the district and others. See In re Telik, 576 F.Supp.2d 570, 590 (S.D.N.Y. 2008) ("In contingent litigation, lodestar multiples of over 4 are routinely awarded by courts, including this Court.").
36. This is based on hourly rates of $600 for Robert A. Meister, $325 for David Harrison, $250 for Marisa Warren, $200 for Law Clerks, $150 for paralegals, which the Court finds reasonable in light the fees charged in this District and Class Counsel's experience.
37. Counsel, has spent a total of 1,090 hours up until this motion. Plaintiffs' counsel have submitted their time records for review by the Court (Meister Decl. Exhibit A), and, the Court finds these records to be sufficiently detailed and reasonable in light of the time and effort put into this case.
| Name | Position | Year ofAdmission | Rate | Hours |
|---|---|---|---|---|
| Robert A. Meister | Partner | 1963 | $600 | 207.20 |
| David Harrison | Associate | 2004 | $325 | 534.95 |
| Marisa Warren | Associate | 2010 | $250 | 130.00 |
| Marisa Warren | Law Clerk | -- | $200 | .75 |
| Karen Kranson | Associate | 2009 | $250 | .6 |
| Various | Paralegal | -- | $150 | 216.64 |
38. Counsel's fees are also reasonable under the factors set forth in Goldberger v. Integrated Res. Inc., 209 F.3d 43, 51 (2d Cir. 2000). These factors are applicable to determining reasonableness under both percentage-of-fund and lodestar methods. See McDaniel, 595 F.3d at 423. Courts consider: (1) the time and labor expended by counsel; (2) the magnitude and complexities of the litigation; (3) the risk of litigation; (4) quality of representation; (5) the requested fee in relation to the settlement and (6) public policy considerations. See Goldberger, 209 F.3d at 50. Counsel's requested fee is reasonable under both methods.
39. The first Goldberger factor weighs in favor of award Counsel's requested attorney's fees. Counsel litigated this entire case from its investigatory stage through settlement and this motion. This work comprised interviewing the Plaintiffs and numerous class members; reviewing and analyzing an extensive collection of wage and payroll records, including but not limited to daily time sheets, pay stubs, work logs, and journals as well as the computerized data MSG produced; drafting and then amending the complaint days after the Supreme Court decided Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. ---, 130 S. Ct. 1431 (Mar. 31, 2010); preparing a potential motion to preliminarily certify the class; negotiating extensions of deadlines to amend unnecessary time of the Court and counsel and to preserve the Class's rights; speaking with numerous Class Members; analyzing volumes of records produced by MSG; researching and analyzing extensive legal and factual issues; engaging in detailed conversations and researching and preparing memoranda of law exchanged with MSG Counsel about the substance and value of the case; creating comprehensive damage calculations based on these records; applying different possible conclusions and testing a proffered affirmative defense of exemption. Counsel also prepared a detailed mediation statement assessing the strength of their claims, participated in a full-day mediation and ultimately negotiated an excellent settlement early in the litigation thus saving hundreds of hours of legal time that would have increased their fees. After a tentative agreement was reached, Class Counsel engaged in extensive negotiations to draft a settlement agreement that was agreeable to both sides, including the Class Notice. Following the settlement, Class Counsel drafted motion papers and briefs to the Court advocating for the preliminary approval of the class and settlement and this motion, distributed notices of the action and settlement to the class, investigated to ascertain the correct current address of class members whose notice was returned, and responded to various questions and requests from numerous class members. Meister Decl. ¶ 36.
40. Throughout the litigation, counsel had numerous telephone calls, meetings and email discussions with Plaintiffs regarding the facts underlying the case and the status of negotiations, and responded to frequent calls regarding the case. Named Plaintiffs had and used Robert Meister's personal cellular phone for after-hours access. Through constant contact, counsel kept the Plaintiffs, and other class members with whom they spoke, informed and involved in the action. Id. Additionally, the fact that counsel's fee award "will not only compensate them for time and effort already expended, but for time that they will be required to spend administering the settlement going forward also supports their fee request." Diaz v. Eastern Locating Service Inc., 2010 WL 5507912 at *7 (S.D.N.Y. Nov. 29, 2010).
41. The "magnitude and complexity" of this case supports Counsel's fee request. With 738 members, the Settlement Class is large for a wage and hour class action. See e.g. McMahon v. Olivier Cheng Catering and Events, LLC, 2010 WL 2399328 at *2 (S.D.N.Y. Mar. 3, 2010) (341 Class members); Diaz v. Eastern Locating Service Inc., 2010 WL 2945556 (S.D.N.Y. July 22, 2010) at *1 (185 Class members). Further, seeing as the Class Members worked during different times over a 6 year period and under different supervisors, two different collective bargaining agreements and worked different combination of shifts, shows and both shifts and shows, required counsel to do a broad investigation of the underlying facts.
42. Due to the contingent nature of the case, Counsel risked substantial time and effort with no ultimate guarantee of compensation. Counsel took this case pursuant to a retainer agreement with the named Plaintiffs that provided for a fee only if Plaintiffs obtained a recovery. Therefore the risks of this litigation weigh in favor of granting Counsel's fee award.
43. Counsel used their experience to obtain an excellent result for the class. Additionally, Counsel's quality is confirmed by its enormously positive response of the class where no class member objected to the settlement and only one class member opted out. This factor weighs in favor of granting the requested fee.
44. The fee "is consistent with the norms of the class litigation in this circuit." See Gilliam, 2008 WL 782596 at *5. In this Circuit, the "percentage-of-recovery" method is the "trend." McDaniel, 595 F.3d at 417; 1. Class Counsel's request for 30% of the Fund is reasonable and "consistent with the norms of class litigation in this circuit." See Cent. States Southeast & Southwest Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 249 (2d Cir. 2007) (affirming award of fees and costs equal to 30% of the settlement fund ($42.5 million)). Thus this factor weighs in favor of Court approval.
45. Public policy considerations weigh in favor of awarding Counsel's requested fee as "[p]rivate attorneys should be encouraged to take risks required to represent those who would not otherwise be protected from socially undesirable activities. . ." Maley, 186 F.Supp. 2d at 374.
46. Accordingly, the Court hereby grants Plaintiffs' Motion for Attorney's Fees, finds counsel fees of $390,000 are reasonable and awards them to Pedowitz & Meister LLP. MSG shall pay them from the Total Settlement Amount as specified in the Settlement Agreement.
V. Award of Costs to Class Counsel
47. The Court also awards Class Counsel reimbursement of their litigation expenses in the amount of $2,159.50, which the Court finds to be reasonable. "Attorneys may be compensated for reasonable out-of-pocket expenses incurred and customarily charged to their clients." Toure v. Cent. Parking Sys., No. 05 Civ. 5237(WHP), 2010 WL 1572589, at *3 (S.D.N.Y. Mar. 26, 2007)(citation omitted). Here counsel has provided detailed records documenting all costs. See Meister Decl. ¶ 57. They include court filing fees, telephone charges, postage, transportation, photocopies, electronic research and the investigator's fee for locating Class Members whose addresses were not current. They are all reasonable, incidental and necessary to the representation of the Class, and were are far less than the $20,000 maximum set in the Settlement Agreement, which difference will increase Class Members' recovery. Further, Class Counsel saved the Class substantial costs by insisting that MSG pay all the mediator's fees if an agreement was reached and the expense of payment with the tax withholding and by self-administering the class notice rather than using an outside service firm. See McMahon, 2010 WL 2399328 at *8. MSG shall pay the $2,159.50 to Pedowitz & Meister LLP from the Total Settlement Amount, as specified in the Settlement Agreement.
CONCLUSION
48. Defendant shall pay the Total Settlement Amount in accordance with the terms of the Settlement Agreement.
49. The Defendant shall also pay to Class Counsel attorney's fees of $390,000 and costs of $2,159.50 from the Total Settlement Amount in accordance with the terms of the Settlement Agreement.
50. The Defendant shall also pay $10,000 to Carl Lee Grant, Lawrence Podwill, and Christopher Saunders and $15,000 to Frederic Castagna as service awards from the Total Settlement Amount in accordance with the terms of the Settlement Agreement.
51. Defendant shall pay the balance of the Total Settlement Amount to Class Members as specified in the Settlement Agreement, based on Exhibit B thereto, which amounts shall be agreed to by Class Counsel, and shall distribute the Settlement Checks as described in the Settlement Agreement.
52. The Defendant shall satisfy its employer obligations to pay all applicable employer tax contributions associated with the wage payments in the Settlement Checks.
53. Defendant shall further perform the additional duties outlined in the Settlement Agreement. Plaintiffs' counsel shall provide defendant with all updated mailing addresses for Class Members and all W-4 forms that were sent in from Class Members.
54. In accordance with terms and definitions contained in the Settlement Agreement, all Released Claims are hereby dismissed with prejudice as to all Class Members through December 13, 2010. Settlement Class Members will retain any other claims, except the Class Representatives, who seek service awards, release all employment claims through December 13, 2010. All Class Members who have not timely opted out of the Settlement Class are permanently enjoined from pursuing and/or seeking to reopen claims that have been released by the Settlement Agreement.
55. The Court retains jurisdiction over this action as may be necessary to administer the settlement. The parties shall abide by all terms of the Settlement Agreement and this Order.
56. The Clerk of the Court is directed to enter a final judgment consistent with this Order and close the file. This order resolves docket entry no. 104. New York, New York
June 7, 2011.
/s/_________
United States District Judge