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Young v. County of Cook

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

September 20, 2017

KIM YOUNG, RONALD JOHNSON, WILLIAM JONES, ALLEN GORMAN, GERRAD LAMOUR, LEE MERCADO, BRADLEY HYTREK, CARL GRAY, and MATTHEW LIPTAK, on behalf of themselves and a class of others similarly situated, Plaintiffs,
v.
COUNTY OF COOK and SHERIFF TOM DART in his capacity as Head of the Cook County Sheriff's Department, Defendants.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY, District Judge

         In 2010, plaintiff Kim Young and eight others, on behalf of a class of similarly situated pretrial detainees, entered into a $55 million settlement with Cook County regarding alleged civil rights violations in the Cook County Jail. The Court approved the settlement in 2011. Under the terms of the settlement, counsel for the plaintiff class sued a number of Cook County's insurers in state court for failing to contribute insurance coverage to assist the County in settling the class action. The County later joined the lawsuit. In 2017, after hard-fought litigation, class counsel negotiated a settlement involving a $52 million payment by the insurers. Of this, $32.5 million has been allocated to the class; the rest will go to the County and the State of Illinois.

         Plaintiffs' counsel have petitioned for an award of attorney's fees plus costs associated with the notice mailing for this recent settlement and for $10, 000 incentive awards to the named plaintiffs. The Court has approved the supplemental settlement and has taken the petition for fees, costs, and incentive awards under advisement. For the reasons stated below, the Court grants plaintiffs' petition.

         Background

         In 2006, named plaintiffs Kim Young and Ronald Johnson sued Cook County, the Sheriff, and certain Sheriff's Department and Cook County employees (collectively, the County) on behalf of themselves and a class[1] of similarly situated pretrial detainees at the Cook County Jail. Young and Johnson alleged that the County engaged in strip-search practices that violated detainees' Fourth and Fourteenth Amendment rights. The background facts of that case (Young I) are described in this Court's prior opinions. See, e.g., Young v. County of Cook, 616 F.Supp.2d 834 (N.D. Ill. 2009).

         The Court approved a class-wide settlement in Young I in March 2011. As previously noted, the class received a total of $55 million from the County pursuant to the Young I settlement. The parties further agreed that Cook County would assign to the class its claims and rights to payment under a number of insurance policies held by the County. The Young I settlement agreement also provided that class counsel Loevy & Loevy would be "eligible to receive as Attorneys' Fees up to one-third of the amount recovered from the Defendants' insurers if Plaintiffs recover any funds in the action on the Assigned Claims." Pls.' Mot. for Prelim. Approval of Class Action Settlement, Ex. 1 ¶ 46.

         Based on their belief that the County's insurers had defrauded the County to avoid paying $20 million in coverage they owed in connection with the Young I settlement, plaintiffs brought suit against the insurers in state court in 2012. The Court will refer to this litigation as the Young insurance case. Plaintiffs alleged violations of the Illinois False Claims Act (IFCA), 740 ILCS 175/3, and common law claims for breach of contract, fraud, and tortious interference, among others. The Illinois Attorney General declined to intervene in the case. Cook County intervened in 2013. After four years of litigation, the Young insurance case went to trial in March 2016. The jury awarded the plaintiffs treble damages of $60 million on their IFCA claim, $20 million in compensatory damages for fraud, $20 million in compensatory damages for fraudulent concealment, and $20 million in punitive damages. After the parties filed cross motions for judgment notwithstanding the verdict (JNOV), the court vacated the award of damages, holding that the award was cumulative and that there was insufficient evidence to support the punitive damages award as well as the verdict on the fraud and fraudulent concealment claims. On the other hand, the court also granted plaintiffs' motion for JNOV regarding two other defendants' liability for violations of the IFCA, breach of contract, and tortious interference. The court ordered a new trial to determine damages.

         In May 2017, before the state court held a new trial, the parties agreed on a settlement. In exchange for the dismissal of all claims, the insurer-defendants agreed to pay a total of $52 million, $26 million of which is allocated to relief allowed under the IFCA. Of that $52 million in settlement funds, the Young I class is entitled to a common fund of $32.5 million. The settlement agreement stipulates that "[a]ll Parties will bear their own costs and attorneys' fees" in connection with the suit. State of Illinois's Amicus Br., Ex. H ¶ 5.

         The Court granted plaintiffs' motion for final approval of the Young insurance settlement on September 14, 2017. Class counsel have asked the Court to award attorney's fees in the amount of one-third of the $32.5 million common fund, after the costs of administration are subtracted, plus costs for the notice mailing. Class counsel further ask the Court to approve payment of $10, 000 incentive awards to the nine named plaintiffs in this case. The Illinois Attorney General has filed an amicus brief opposing the request for attorney's fees. The Court also received four objections from class members to the size of the requested fee award.

         Discussion

         A. Attorney's fees and costs

         The Illinois Attorney General (IAG) argues that plaintiffs' counsel are not entitled to an award of attorney's fees equal to one-third of the recovery for the class in the Young insurance case. First, the IAG asserts that Loevy waived their entitlement to attorney's fees under the IFCA's fee-shifting provision by failing to petition the state court for a statutory fee award after reaching a settlement in that case. According to the IAG, this renders Loevy ineligible to receive any amount of attorney's fees out of the Young insurance common fund. The IAG further argues that, if the Court does decide to award attorney's fees, the award should be limited to Loevy's lodestar amount, rather than a percentage of the common fund.

         Federal Rule of Civil Procedure 23 provides that "[i]n a certified class action, the court may award reasonable attorney's fees and . . . costs that are authorized by law or by the parties' agreement." Fed.R.Civ.P. 23(h). When the settlement of a case results in the creation of a common fund for the plaintiff class, class counsel may petition the court for an award of attorney's fees from the fund under the common fund doctrine, as long as no statutory fee-shifting provision controls the award of fees in the case. See Florin v. Nationsbank of Georgia, N.A., 34 F.3d 560, 563-64 (7th Cir. 1994). An appropriate fee award in a common fund case reflects a balance between two competing goals: fairly compensating counsel for the services they provided to the class and protecting class members' interests in the common fund. See Skelton v. Gen. Motors Corp., 860 F.2d 250, 258 (7th Cir. 1988). Ultimately, the goal is to award a fee that most closely approximates "the market price for legal services, " which is the price to which plaintiffs and their attorneys would have agreed had they negotiated ex ante. In re Synthroid Mktg. Litig., 264 F.3d 712, 718-19 (7th Cir. 2001) (Synthroid 1). Factors include the risk of nonpayment, normal compensation rates, the quality of counsel's performance, the stakes of the case, and the amount of work needed to resolve it. Id. at 718, 721.

         Courts may approach the calculation of a reasonable "market price" fee award in different ways. Under the lodestar method, the court multiplies the number of hours reasonably expended on the case by a reasonable hourly rate. E.g., Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010). Alternatively, a court may choose to award a percentage of the common fund. See, e.g., In re Dairy Farmers of Am., Inc., 80 F.Supp.3d 838, 862 (N.D. Ill. 2015) (awarding class counsel attorney's fees of one-third of a $46 million common fund). In common fund cases, the Seventh Circuit leaves the decision whether to use a percentage calculation or the lodestar method to the discretion of the district court. E.g., Americana Art China Co. v. Foxfire Printing & Packaging, Inc., 743 F.3d 243, 247 (7th Cir. 2014) (citing Florin, 34 F.3d at 566). In recent years, instead of awarding class counsel a straight percentage of a large class-action settlement fund, courts in the Seventh Circuit have sometimes calculated fees using a declining marginal percentage scale. See, e.g., In re Synthroid Marketing Litig., 325 F.3d 974, 980 (7th Cir. 2003) (Synthroid 2); Aranda v. Caribbean Cruise Line, Inc., No. 12 C 4069, 2017 WL 1369741, at *6 (N.D. Ill. Apr. 10, 2017); Craftwood Lumber Co. v. Interline Brands, Inc., No. 11 C 4462, 2015 WL 1399367, at *5 (N.D. Ill. Mar. 23, 2015); In re Capital One Tel. Consumer Prot. Act Litig., 80 F.Supp.3d 781, 804 (N.D. Ill. 2015). Under this approach, the court divides the settlement fund into several different tiers of recovery and awards class counsel a decreasing percentage of each tier. Synthroid 2, 325 F.3d at 980. In Synthroid 2, for example, class counsel received 30% of the first $10 million of the settlement fund, 25% of the next $10 million, 22% of the tier of recovery between $20 million to $46 million, and 15% of the recovery in excess of $46 million. Id. ...


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