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Craftwood Lumber Co. v. Interline Brands, Inc.

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

March 23, 2015

CRAFTWOOD LUMBER COMPANY, an Illinois corporation, individually and on behalf of all others similarly situated, Plaintiff,
v.
INTERLINE BRANDS, Inc., et al., Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

Plaintiff Craftwood Lumber Company ("Craftwood" or "Plaintiff") has filed motions seeking attorney's fees and expenses [142] and an incentive fee award for Plaintiff as the class representative [143]. For the reasons explained below, the Court grants in part and denies in part Craftwood's motions.

BACKGROUND

Craftwood filed this case as a putative class action in 2011 against Defendants for alleged violations of the Telephone Consumer Protection Act ("TCPA"), as amended by the Junk Fax Prevention Act of 2005 ("JFPA"), codified at 47 U.S.C. § 227. Craftwood alleges that Defendants sent over 1, 500 advertisements in at least 735, 000 facsimile transmissions in violation of the JFPA and the regulations promulgated thereunder. (R. 36, Am. Compl., at 2.) Plaintiff originally brought this action in state court, and Defendants removed it to the Northern District of Illinois where it was initially assigned to the Hon. John F. Grady.[1] After proceeding with discovery, Craftwood successfully sought sanctions against Defendants precluding them from asserting either a "prior express invitation or permission" ("PEP") or an "established business relationship" ("EBR") defense to Craftwood's junk fax claim. (R. 59.) After participating in several mediations and initially failing to agree to the terms of a written settlement agreement, the parties filed an executed settlement agreement with the Court on November 17, 2014. (R. 128.) On December 8, 2014, the Court entered an order conditionally certifying a class for the purposes of settlement, and granting preliminary approval to the parties' proposed settlement agreement. (R. 136.) Plaintiff has now moved for attorney's fees and expenses and an incentive fee award for Plaintiff as the class representative as part of the settlement. As they agreed in the settlement, Defendants do not object to either motion. ( See R. 128, at 9.) The Court set a deadline of March 9, 2015 for class member objections to Plaintiff's motion for attorney's fees and costs, and Plaintiff's motion for the incentive fee award. (R. 136.) To date, no class members have filed objections.

LEGAL STANDARD

"In a certified class action, the court may award reasonable attorney's fees... that are authorized by law or by the parties' agreement." Fed.R.Civ.P. 23(h). In determining a reasonable fee, "the judge must assess the value of the settlement to the class and the reasonableness of the agreed-upon attorneys' fees for class counsel, bearing in mind that the higher the fees the less compensation will be received by the class members." Redman v. RadioShack Corp., 768 F.3d 622, 629 (7th Cir. 2014). "[A]ttorneys' fees in class actions should approximate the market rate that prevails between willing buyers and willing sellers of legal services." Silverman v. Motorola Solutions, Inc., 739 F.3d 956, 957 (7th Cir. 2013). To determine the reasonableness of the sought-after fee in a common-fund case, "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 Synthroid Mktg. Litig., 264 F.3d 712, 718 (7th Cir. 2001) (" Synthroid I ").

Synthroid I held that the "market rate for legal fees depends in part on the risk of nonpayment a firm agrees to bear, in part on the quality of its performance, in part on the amount of work necessary to resolve the litigation, and in part on the stakes of the case." Synthroid I, 264 F.3d at 721. Because "[c]ontingent fees compensate lawyers for the risk of nonpayment, " the probability of success at the outset of the litigation is important to this inquiry. Silverman, 739 F.3d at 958; see Florin v. Nationsbank of Ga., N.A., 34 F.3d 560, 565 (7th Cir. 1994). The Seventh Circuit has further explained that a district court "must set a fee by approximating the terms that would have been agreed to ex ante, had negotiations occurred.'" Americana Art China Co., Inc. v. Foxfire Printing and Packaging, Inc., 743 F.3d 243, 246-47 (7th Cir. 2014) (quoting Synthroid I, 264 F.3d at 719.) The Seventh Circuit has nevertheless recognized, however, that "[s]uch estimation is inherently conjectural." In re Trans Union Corp. Privacy Litig., 629 F.3d 741, 744 (7th Cir. 2011).

With respect to incentive payments, the Seventh Circuit has explained that such "awards are justified when necessary to induce individuals to become named representatives." Synthroid I, 264 F.3d at 722. Thus, if such individuals "would have stepped forward without the lure of an incentive award, ' there is no need for such additional compensation." Id. at 723. In deciding whether an incentive award is proper, and, if so, in what amount, "relevant factors include the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefitted from those actions, and the amount of time and effort the plaintiff expended in pursuing the litigation." Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998).

Finally, the Federal Rules of Civil Procedure allow the Court, in a certified class action, to "award reasonable... nontaxable costs that are authorized by law or by the parties' agreement." Fed.R.Civ.P. 23(h). The Seventh Circuit has explained that district courts must exercise their discretion to "disallow particular expenses that are unreasonable whether because excessive in amount or because they should not have been incurred at all." Zabkowicz v. W. Bend Co., Div. of Dart Indus., Inc., 789 F.2d 540, 553 (7th Cir. 1986) (quoting Henry v. Webermeier, 738 F.2d 188, 192 (7th Cir. 1984)). "Reducing litigation expenses because they are higher than the private market would permit is fine; reducing them because the district judge thinks costs too high in general is not." Synthroid I, 264 F.3d at 722. "Likewise the amount of itemization and detail required is a question for the market. If counsel submit bills with the level of detail that paying clients find satisfactory, a federal court should not require more." Id.

ANALYSIS

I. Attorney's Fees

Plaintiff seeks the award of $12 million in attorney's fees for its counsel, which represents thirty percent of the common-fund of $40 million that Defendants agreed to pay in the settlement. Plaintiff argues that thirty percent is lower than the amount that would have been negotiated ex ante in a contingency fee agreement, and submits an expert declaration in support of this position. The expert's declaration states that a fee percentage of thirty percent is appropriate, in part because there have been many common-fund class action settlements where courts have awarded between 30 and 33 percent of the fund for attorney's fees. The declaration states further "that the market supports a larger award" than the thirty percent requested. (R. 142-5, Wallace Dec. ¶ 23.) In its brief in support of its motion, Plaintiff's counsel also submits two tables, one summarizing recent large class action settlements in the Northern District of Illinois, and the other listing recent TCPA attorney's fee awards in district courts within the Seventh Circuit. Plaintiff argues that both support its position that a flat attorney's fee of thirty percent is reasonable. As noted above, Defendants agreed in the settlement to not object to Plaintiff's request for attorney's fees, and no class members have filed objections.

While Plaintiff cites a number of cases in which courts have awarded similar percentages of attorney's fees to the percentage Plaintiff's counsel requests here, its motion fails to address that as the dollar value of a class action settlement increases, the percentage of the settlement awarded as attorney's fees generally decreases. In Silverman v. Motorola ...


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