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Sims v. BB&T Corp.

United States District Court, M.D. North Carolina

May 6, 2019

ROBERT SIMS, et al., Plaintiffs,
v.
BB&T CORPORATION, et al., Defendants. BREWSTER SMITH, JR., et al., Plaintiffs,
v.
BB&T CORPORATION, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Catherine C. Eagles, District Judge.

         Class Counsel for the plaintiffs seek an award of attorney's fees, reimbursement of reasonable expenses incurred in prosecuting this action, and compensation for the named plaintiffs from a common fund created from the class action settlement. The Court has reviewed Class Counsel's request and supporting evidence, as well as attorney's fees and class representative awards from similar cases. For the reasons stated herein, the Court will grant the motion.

         I. Background

         A detailed procedural history and description of the settlement agreement is set forth in the Court's Memorandum Opinion on final approval of the class action settlement, issued concurrently with this Order. In sum, the parties have agreed to settle the plaintiffs' class action ERISA claims, which are based on alleged breaches of duties of prudence and loyalty and prohibited transactions arising out of the defendants' management of the BB&T employee retirement plan. The proposed settlement provides for a common fund of $24 million as well as other non-monetary relief in exchange for, inter alia, a release of ERISA-related claims on behalf of the approximately 72, 000 class members. The settlement also allows for an award of up to $8, 000, 000 in attorney's fees, $1.1 million in attorney's expenses, and service awards of $20, 000 for each of the representatives.

         Consistent with this provision, Class Counsel asks this Court to approve an award of $8, 000, 000 in attorney's fees, reflecting one-third of the monetary recovery, reimbursement of $768, 176.42 in litigation expenses, and case contribution awards of $20, 000 for each of the class representatives. Doc. 444; Doc. 449. The defendants have not opposed the motion.

         II. Attorney's Fees

         A. Legal Standard

         In a class action, the court may award reasonable attorney's fees and nontaxable costs as authorized by law or by agreement. Fed.R.Civ.P. 23(h). In a common-fund case such as this, “a reasonable fee is based on a percentage of the fund bestowed on the class.” Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984). District courts in the Fourth Circuit prefer the percentage method in common-fund cases, including ERISA cases, see Kruger v. Novant Health, Inc., No. 1:14CV208, 2016 WL 6769066, at *2 (M.D. N.C. Sept. 29, 2016); Smith v. Krispy Kreme Doughnut Corp., No. 1:05CV00187, 2007 WL 119157, at *1 (M.D. N.C. Jan. 10, 2007), and “the vast majority of courts of appeals now permit or direct district courts to use” this method. Manual for Complex Litigation § 14.121 (4th ed. 2018); id. at n.483, n.484, n.485 (collecting cases).

         To determine the reasonableness of the fee award, courts begin by considering the twelve factors identified in Barber v. Kimbrell's, Inc.: “(1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases.” 577 F.2d 216, 226 & n.28 (4th Cir. 1978) (adopting factors from Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 92-93 (1989)).

         Courts should also conduct a lodestar cross-check that compares the requested contingent fee award against a fee calculated based on hours spent at prevailing market rates. See Boyd v. Coventry Health Care, Inc., 299 F.R.D. 451, 462 (D. Md. 2014). “The purpose of a lodestar cross-check is to determine whether a proposed fee award is excessive relative to the hours reportedly worked by counsel, or whether the fee is within some reasonable multiplier of the lodestar.” Id. at 467. Courts often use the lodestar method to cross-check the reasonableness of a percentage fee. Jones v. Dominion Res. Servs., Inc., 601 F.Supp.2d 756, 759-60 (S.D. W.Va. 2009) (collecting cases). To determine the lodestar, courts multiply the reasonable hourly rate for each attorney by the number of hours reasonably expended. Grissom v. The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008). When the lodestar method is used only as a cross-check, however, courts need not “exhaustively scrutinize[]” the hours documented by counsel and “the reasonableness of the claimed lodestar can be tested by the court's familiarity with the case.” Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000). Typically a reasonable rate is calculated by looking at the local market, see Burrs v. United Tech. Corp, No. 1:18-CV491, 2019 WL 1430258, at *1 (M.D. N.C. Mar. 29, 2019), but a national market rate is appropriate for matters involving complex issues requiring specialized expertise, such as ERISA class actions. See Kruger, 2016 WL 6769066, at *4.

         B. Analysis

         Class Counsel's request for a fee of $8 million, reflecting one-third of the monetary recovery provided to class members in the settlement agreement, is reasonable following consideration of the twelve Barber factors. Class Counsel spent over 16, 000 attorney hours and 2, 200 hours of non-attorney time to this matter, a significant investment of labor and resources. See Doc. 445 at 6; Doc. 445-5 at ¶ 3; Doc. 445-3 at ¶¶ 4-6. ERISA litigation is a “rapidly evolving and demanding area of law” in which “[n]ew precedents are frequently issued.” In re Wachovia Corp ERISA Litig., No. 3:09cv262, 2011 WL 5037183, at *4 (W.D. N.C. Oct. 24, 2011). This, and the “significant risk of nonpayment” in ERISA matters generally, see Kruger, 2016 WL 6769066, at *4, tend to indicate that recovery requires navigating novel issues and applying specialized skills. Class Counsel credibly testified that taking on a large class action like this “impacts the firm's ability to handle other class actions or pursue other less risky matters, ” Doc. 445-1 at ¶ 30, and thus comes at some opportunity cost.

         A one-third fee is consistent with the market rate in complex ERISA matters such as this and reflects a customary fee for like work. See Kruger, 2016 WL 6769066, at *2 (collecting cases). Class Counsel has also credibly described their expectation that this matter would be vigorously defended by BB&T, as it was, and would require considerable resources, as it has. Doc. 445-1 at ¶¶ 26-29. Class Counsel recovered monetary relief reflecting 19% of $124 million in total damages sought by the plaintiffs after summary judgment, as well as non-monetary relief and tax benefits that will add approximately $15 million in additional monetary value for class members. See Doc. 445 at 12-14 (estimating a total settlement value of $38.97 million).

         Several courts have recognized the considerable skills and ability of lead counsel, Mr. Schlichter and his firm, in ERISA matters, see, e.g., Beesley v. Int'l Paper Co., No. 06-703, 2014 WL 375432, at *2 (S.D. Ill. Jan. 31, 2014); Will v. Gen. Dynamics Corp., No. 06-698, 2010 WL 4818174, at *2-3 (S.D. Ill. Nov. 22, 2010), and have recognized that this firm's work on behalf of retirement plan beneficiaries has resulted in reductions of recordkeeping fees on retirement plans in the United States overall. Nolte v. Cigna Corp., No. 2:07-cv-2046- HAB-DGB, 2013 WL 12242015, at *2 (C.D. Ill. Oct. 15, 2013). Co-counsel Nichols Kaster has appeared in ERISA matters and has received similar recognition. See Johnson v. Fujitsu Tech. & Bus. Of Am., Inc., No. 16-3698, 2018 WL 2183253, at *6-7 (N.D. Cal. May 11, ...


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