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In re Southwest Airlines Voucher Litigation

United States District Court, N.D. Illinois, Eastern Division

June 20, 2014

In re: SOUTHWEST AIRLINES VOUCHER LITIGATION

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge.

The Court previously approved a class-wide settlement in this action. See In re Southwest Airlines Voucher Litig., No. 11 C 8176, 2013 WL 4510197 (N.D. Ill. Aug. 26, 2013). After plaintiffs moved for attorney's fees, costs, and incentive awards, the Court granted the motion in part, reducing plaintiffs' requested fee amount and awarding plaintiffs' counsel fees in the amount of $1, 332, 206.25 and $18, 522.32 in expenses. See In re Southwest Airlines Voucher Litig., No. 11 C 8176, 2013 WL 5497275 (N.D. Ill. Oct. 3, 2013). The Court thereafter entered final judgment. Plaintiffs' attorneys then filed a motion under Federal Rule of Civil Procedure 59(e) to alter or amend the final judgment. The Court held a hearing on the motion in June 2014. This decision concerns that motion. Familiarity with the Court's settlement approval and fee petition decisions is assumed. For the following reasons, the Court grants plaintiffs' motion and increases the fee award, but not to the extent plaintiffs seek.

Background

The plaintiffs in this case brought a class action lawsuit against Southwest Airlines over its decision to stop honoring drink vouchers it had provided to travelers who purchased premium-priced "Business Select tickets." The settlement permitted each class member to submit a proof of claim form and supporting documentation in order to receive one replacement drink voucher for each unredeemed drink voucher. After consenting to the settlement, Southwest agreed after mediated negotiations not to oppose a fee request by plaintiffs of up to $3, 000, 000. Plaintiffs' counsel submitted a motion for fees in that amount. Counsel worked backward from that amount to propose two methods for calculating their fees to equal $3, 000, 000. First, counsel contended that the Court could award the $3, 000, 000 based on a percentage of the settlement-in this case, 10.3 percent of what counsel considered the minimum value of the settlement ($29 million). Secondly, under the lodestar method, counsel proposed hourly rates for the five individuals who worked on the case: $585 for Joseph Siprut, $325 for James McClintick, $325 for Aleksandra M.S. Vold, $225 for Gregg Barbakoff, and $150 for Kristina Pearson. Counsel said they worked 2899.2 hours on the case, a figure including 222 prospective hours "through the end of this litigation." Counsel then proposed a multiplier of 2.63, which brought the total to nearly $3, 000, 000. Pls.' Mot. For Attys.' Fees at 12-13.

Both before and after counsel submitted their motion for fees, several class members filed objections both to the settlement and to the agreed-upon fee maximum. Some objectors also argued that the Class Action Fairness Act (CAFA), 28 U.S.C. ยง 1712, governed the settlement, that the fee request was disproportionate to the class recovery, and that the Court should not award fees until it learned how many drink vouchers were redeemed as a result of the settlement. See, e.g., Gregory Markow's Obj. to Class Settlement, docket no. 105; Obj. to Class Action Settlement by Jonathan E. Fortman & Notice of Intention to Appear, docket no. 107; Notice of Obj. to the Settlement (Daniel Sibley), docket no. 116.

The Court agreed with the objectors that CAFA applied to the attorney's fee award and precluded an award based on the value of unredeemed replacement coupons. But the Court also concluded that CAFA permits use of the lodestar method to determine class counsel's fees. In applying the lodestar method, the Court noted that "[t]he fee petitioner carries the burden of persuasion" on whether class counsel's submitted hourly rates are reasonable. See In re Southwest, 2013 WL 5497275, at *8 (citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010)).

Given that burden, the Court observed that although the claimed number of hours did not appear to be excessive, plaintiffs' counsel offered "rather scanty" evidence in support of the hourly rates they sought. Id. at *9. Counsel had submitted an affidavit stating their various rates but "offer[ed] nothing to indicate... that the attorneys have charged and obtained these rates for similar litigation, or indeed for any litigation." Id. Counsel had also presented a table of large law firms' billing rates, but "offer[ed] no support... for the proposition that these rates involve similar work done in similar cases. In fact, the contrary is likely true." Id.

Possessing little other evidence from plaintiffs' counsel tending to establish the propriety of the requested rates, the Court reviewed published fee awards from other cases, in particular those awarded to another Chicago firm with an established practice in consumer class action litigation. Judges had previously approved lower hourly rates than those requested in this case, for attorneys with, in some situations, significantly greater experience than plaintiffs' attorneys have. The Court also noted that lead attorney Siprut had not described his level of experience, prompting the Court to do Internet research to ascertain the number of years he had practiced as an attorney.[1] The Court also drew on other cases over which it had presided and had adjudicated fee petitions and concluded that "the rates proposed by plaintiffs in the present case significantly exceed the market rate-at least absent further support, which plaintiffs have not offered." Id. at *10.

Using this data, the Court determined that the appropriate hourly rate for Siprut was $425, and it found rates of $275, $225, and $200 appropriate for the other, less-experienced plaintiffs' attorneys in the case. The Court also approved a $125 rate for counsel's paralegal. Given the number of hours the attorneys submitted, the Court calculated counsel's lodestar amount to be $888, 137.50. The Court also rejected counsel's proposed multiplier of 2.63, awarding a multiplier of 1.5 for reasons described in detail in the Court's written ruling. Applying the multiplier to the lodestar, the Court awarded $1, 332, 206.25 in attorney's fees to plaintiffs' counsel.

In their motion asking the Court to reconsider the fee award, plaintiffs' counsel contend that the Court failed to give sufficient deference to the parties' settled-upon figure and that the Court should not have considered certain evidence without providing plaintiffs' counsel a chance to respond to it. After filing the motion to reconsider, plaintiffs' counsel filed additional evidence, including an expert report as well as detail on certain cases in which plaintiffs' attorneys had previously been paid the hourly rates they seek here. In addition, counsel argue that the Court should add 500 more hours of work to the lodestar amount to compensate counsel for future work, given that an appeal of the settlement was filed in September 2013.

Discussion

Plaintiffs' attorneys have moved the Court to alter its judgment under Rule 59(e). To prevail on such a motion, "a party must clearly establish (1) that the court committed a manifest error of law or fact, or (2) that newly discovered evidence precluded entry of judgment." Blue v. Hartford Life & Accident Ins. Co., 698 F.3d 587, 598 (7th Cir. 2012) (internal quotation marks omitted). The Seventh Circuit has defined "manifest error" as "the wholesale disregard, misapplication, or failure to recognize controlling precedent." Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (internal quotation marks omitted). A Rule 59(e) motion "is not a fresh opportunity to present evidence that could have been presented earlier." Edgewood Manor Apartment Homes, LLC v. RSUI Indem. Co., 733 F.3d 761, 770 (7th Cir. 2013). In other words, Rule 59(e) "certainly does not allow a party to introduce new evidence or advance arguments that could and should have been presented to the district court prior to the judgment." Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir. 1996).

A. Hourly rate

In their motion, plaintiffs argue that the Court in its prior decision did not accord sufficient deference to the requested fee amount, to which the parties had agreed after negotiations. Plaintiffs also argue that the Court's " sua sponte reliance on evidence outside the record" was improper "without providing Plaintiffs with notice or an opportunity to respond." Pls.' Mot. to Alter or Amend Final Judgment at 1. This evidence, plaintiffs maintain, ...


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