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O'brien et al. v. Panino's

August 16, 2011

O'BRIEN ET AL.
v.
PANINO'S, INC.



Name of Assigned Judge Sitting Judge if Other or Magistrate Judge Geraldine Soat Brown than Assigned Judge

CASE TITLE

DOCKET ENTRY TEXT

Motion hearing held on final approval of class action settlement. Defendant's joint motion for final approval of settlement agreement [61] is granted. Plaintiffs' counsel's motion for attorneys' fees and approval of class representative incentive awards [64] is granted as to the incentive awards of $2,000 to each of the named plaintiffs, but reserved as to the issue of attorneys' fees, for the reasons set out below. Motion hearing on plaintiff's revised motion for attorney fees set for 9/13/11 at 10:00 a.m. Enter Judgment and Order Granting Final Approval of Settlement.

O[ For further details see text below.] Notices mailed by Judicial staff.

00:30

STATEMENT

In settling this class action under the Fair and Accurate Credit Transactions Act ("FACTA"), 15 U.S.C §1681c(g)(1), defendant agreed to pay plaintiffs' counsel $35,000 for attorneys' fees and costs. This court presided at the settlement conference and is aware that defendant was represented by able counsel who negotiated at arms' length to reach a settlement with plaintiffs and their counsel.

If that were all there was to it, there would be no question about the amount of attorneys' fees for plaintiffs' counsel. But under Federal Rule of Civil Procedure 23(h), the court has a responsibility to review, and not just rubber stamp, any fees awarded to class counsel. The Advisory Committee comments to Rule 23(h) make that point.

Active judicial involvement in measuring fee awards is singularly important to the proper operation of the class action process. . . . In a class action, the district court must ensure that the amount and mode of payment of attorney fees are fair and proper whether the fees come from a common fund or are otherwise paid. Even in the absence of objections, the court bears this responsibility. . . . The agreement of a settling party not to oppose a fee application up to a certain amount, for example, is worthy of consideration, but the court remains responsible to determine a reasonable fee.

Fed. R. Civ. P. 23 advisory comm. nn (2003).

In this case, after reviewing plaintiffs' application for attorneys' fees, the court has some reservations about whether $35,000 is a reasonable fee to award in this case.

Defendant's agreement to pay plaintiffs' attorneys' fees here was in settlement of plaintiffs' claim under the fee-shifting provision in FACTA, 15 U.S.C. § 1681n(a)(1)(A)(3). Accordingly, we start with the lodestar. Plaintiffs' counsel states that the lodestar calculation here (reasonable hourly rates multiplied by time expended) would total $69,848.75. (Pls.' Mem. Mot., Ex. 1, Zimmerman Aff. ¶ 5.) [Dkt 65.] Plaintiffs' memorandum, citing Florin v. Nationsbank of Georgia, 34 F.3d 560, 564 (7th Cir. 1994), argues that in a contingent fee case, the Seventh Circuit mandates the award of a "risk multiplier" to enhance the lodestar amount. Thus, plaintiffs argue, by requesting $35,000, their counsel has applied a "negative multiplier," in effect, foregoing some additional bonus to which they would otherwise be entitled.

However, in the Florin case, the claim for statutory fee-shifting was settled by an agreement that plaintiffs' attorneys' fees would be paid from the common fund created by the settlement. Here, no common fund was created. This case is a straight application of the fee-shifting statute, and plaintiffs seek an award to be paid by defendant independent of the class relief. As the Seventh Circuit observed in the Florin case, the Supreme Court has held that in statutory fee-shifting cases, the court may not enhance the fee award above the lodestar amount to reflect risk of loss or contingency. Florin, 34 F.3d at 564 (citing City of Burlington v. Dague, 505 U.S. 557 (1992)). Last year, the Supreme Court again reiterated that in statutory fee-shifting situations, the lodestar calculation may be enhanced only in rare and exceptional circumstances. Perdue v. Kenny A., ____ U.S. ___, 130 S. Ct. 1662 (2010).

Thus, plaintiffs' counsel's request for $35,000 does not reflect the foregoing of a "risk multiplier," because none ...


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