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Craftwood Lumber Co. v. Interline Brands, Inc.

United States District Court, Northern District of Illinois, Eastern Division

May 6, 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 Court Judge:

Plaintiff Craftwood Lumber Company (“Craftwood” or “Plaintiff”) has filed a motion requesting that the Court reconsider and amend [157] its March 23, 2015 memorandum opinion and order granting Craftwood’s counsel $9.5 million in attorney’s fees. For the following reasons, the Court denies Plaintiff’s motion.

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.)

On February 13, 2015, Craftwood moved for the award of $12 million in attorney’s fees for its counsel, which corresponded to 30 percent of the common settlement fund of $40 million. (R. 142.) As they agreed in the settlement, Defendants did not object. (See R. 128, at 9.) The Court set a deadline of March 9, 2015 for objections to Plaintiff’s motion, and no class members filed objections. (R. 136.) On March 23, 2015, the Court issued an opinion (the “March 2015 Opinion”) awarding Craftwood’s counsel a sliding scale contingency fee as follows: 30 percent of the first $10 million of the settlement, 25 percent of the second $10 million, and 20 percent of the remaining amounts from $20 to $40 million. (R. 152.) This corresponded to $9.5 million of the $40 million common settlement, or 23.75 percent. (Id.) Craftwood now moves the Court under Federal Rule of Civil Procedure 59(e) for reconsideration of its opinion and to amend the award, requesting the remaining $2.5 million of the $12 million in attorney’s fees that it originally sought. (R. 157.)

LEGAL STANDARD

Rule 59(e) permits parties to file, within twenty-eight days of the entry of judgment, a motion to alter or amend the judgment. See Fed. R. Civ. P. 59(e). Motions under Rule 59(e) serve the limited function of allowing the Court to correct manifest errors of law or fact or consider newly discovered material evidence. See Seng–Tiong Ho v. Taflove, 648 F.3d 489, 505 (7th Cir. 2011); United States v. Resnick, 594 F.3d 562, 568 (7th Cir. 2010). “It is well established that a motion to reconsider is only appropriate where a court has misunderstood a party, where the court has made a decision outside the adversarial issues presented to the court by the parties, where the court has made an error of apprehension (not of reasoning), where a significant change in the law has occurred, or where significant new facts have been discovered.” Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011), overruled on other grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (7th Cir. 2013). Rule 59(e) “does not provide a vehicle for a party to undo its own procedural failures” or “introduce new evidence or advance arguments that could and should have been presented to the district court prior to the judgment.” Resnick, 594 F.3d at 568 (quoting Bordelon v. Chicago School Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000)); see also Cnty. of McHenry v. Ins. Co. of the West, 438 F.3d 813, 819 (7th Cir. 2006). Whether to grant a Rule 59(e) motion “is entrusted to the sound judgment of the district court.” Matter of Prince, 85 F.3d 314, 324 (7th Cir. 1996); see also Anderson v. Catholic Bishop of Chicago, 759 F.3d 645, 652 (7th Cir. 2014) (reviewing district court’s denial of Rule 59(e) motion for abuse of discretion).

ANALYSIS

As an initial matter, Craftwood requests an opportunity to respond to the concerns raised by the Court in its March 2015 Opinion that Craftwood did not address in its original motion for attorney’s fees. Because Defendants agreed in the settlement not to oppose Craftwood’s requested attorney’s fee award and no class members filed objections, the Court independently scrutinized Craftwood’s request for fees under relevant Seventh Circuit law. See Redman v. RadioShack Corp., 768 F.3d 622, 629 (7th Cir. 2014) (“[t]he judge asked to approve the settlement of a class action is not to assume the passive role that is appropriate when there is genuine adverseness between the parties…[c]ritically 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.”) To allow Craftwood an opportunity to respond to the Court’s reduction of its requested attorney’s fees in the March 2015 Order, the Court grants Craftwood’s motion for reconsideration to the extent it requests that the Court consider the merits of its supplemental arguments that it did not raise in its original motion. See Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 652 (7th Cir. 2011) (“…a district court must afford plaintiffs an opportunity to respond when the court raises concerns about the fee petition that are based upon its independent scrutiny of the record or when the court establishes reasons sua sponte for reducing the fee award.”)

Thus, the Court examines Craftwood’s additional substantive arguments, which consist of three main grounds for amending the Court’s March 2015 Opinion. First, Craftwood argues that the Court should award it a flat rate attorney’s fee, rather than a sliding-scale fee. Second, it contends that the Court should award it a higher overall fee percentage of 30 percent, rather than the 23.75 percent that the Court awarded. Finally, even if the Court does award a sliding-scale fee, Craftwood argues that the Court should increase the fee percentages to better reflect the risks of Plaintiff’s case. For the reasons explained below, the Court denies Craftwood’s motion to amend the judgment to increase its attorney’s fee award.

I. Fixed Rate Attorney’s Fee

Craftwood first argues that the Court should award it a fixed rate attorney’s fee rather than a sliding-scale fee. As the Court stated in its March 2015 Opinion, however, the Seventh Circuit in Silverman v. Motorola Solutions, Inc. recently discussed in depth its approval of awarding sliding-scale attorney’s fee percentages in multi-million dollar class settlements:

[N]egotiated fee agreements regularly provide for a recovery that increases at a decreasing rate… Many costs of litigation do not depend on the outcome; it is almost as expensive to conduct discovery in a $100 million case as in a $200 million case. Much of the expense must be devoted to determining liability, which does not depend on the amount of damages…There may be some marginal costs of bumping the recovery from $100 million to $200 million, but as a percentage of the incremental recovery these costs are bound to be low. It is accordingly hard to justify awarding counsel as much of the second hundred million as of the first. The justification for diminishing marginal rates applies to $50 million and $500 million cases too, not just to $200 million cases …
Awarding counsel a decreasing percentage of the higher tiers of recovery enables them to recover the principal costs of litigation from the first bands of the award, while allowing the clients to reap more of the benefit at the margin (yet still ...

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