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Clark v. Duke University

United States District Court, M.D. North Carolina

June 24, 2019

DAVID CLARK, et al., Plaintiffs,
v.
DUKE UNIVERSITY, et al., Defendants. KATHI LUCAS, et al., Plaintiffs,
v.
DUKE UNIVERSITY, Defendant.

          MEMORANDUM OPINION AND ORDER

          CATHERINE C. EAGLES, DISTRICT JUDGE.

         These two class actions arose out of defendant Duke University's management of a retirement plan for its employees. After discovery and initial summary judgment briefing in the first matter, the parties reached a settlement, which the Court has approved. Class Counsel seek attorney's fees, reimbursement of expenses incurred in prosecuting these cases, and compensation for the class representatives from a common fund created from the ERISA 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. The attorney's fees and expenses sought here are reasonable and the compensation to class representatives are appropriate and consistent with other awards in similar ERISA matters. The Court will therefore grant the motion.

         I .Background

         A detailed procedural history and description of the settlement agreement is set forth in a separate opinion granting final approval to the settlement, issued concomitantly with this Order. In sum, the parties have agreed to settle the plaintiffs' class action ERISA claims in two related matters, Clark v. Duke University, No. 1:16-CV-01044 and Lucas v. Duke University, No. 1:18-CV-00722. Plaintiffs' claims in both matters are based on alleged unreasonable recordkeeping expenses, breaches of duty of prudence, and prohibited transactions arising out of the defendants' management of the Duke University Faculty & Staff Retirement Plan. See Doc. 72;[1] Complaint, Lucas, No. 1:18-CV-00722, Doc. 1 (M.D. N.C. Aug. 20, 2018). The proposed settlement provides for a $10.65 million gross settlement fund as well as other non-monetary relief in exchange for, inter alia, a release of ERISA-related claims on behalf of over 58, 000 class members. Doc. 149-2. The settlement also allows for an award of up to $3.55 million, or one-third of the common fund, in attorney's fees, $825, 000 in attorney's expenses, and case contribution awards of up to $25, 000 for named plaintiffs in Clark and $30, 000 for named plaintiffs in both Clark and Lucas, who are also appointed class representatives for their respective classes. See Id. at pp. 2-3 ¶¶ 2.3, 2.13.

         Consistent with these provisions, Class Counsel requests $3, 550, 000 in attorney's fees, reimbursement of $822, 212 in litigation-advanced expenses, and case contribution awards of $25, 000 each for Clark named plaintiffs David Clark and Thomas C. Mehen, and $30, 000 each for Clark/Lucas named plaintiffs Kathi Lucas, Jorge Lopez, and Keith A. Feather. Doc. 159 at 1. At the fairness hearing, Class Counsel confirmed that these payments in addition to administrative costs will result in a net settlement amount of approximately $5.97 million for distribution to class members.

         The Court ordered the appointed Settlement Administrator, Analytics, to notify class members of the settlement and that Class Counsel would seek compensation from the settlement fund for the class representatives, attorney's fees, and costs. See Doc. 158 at 13-16. The Court also permitted any class member to file objections with the Court no later than thirty calendar days before the fairness hearing scheduled for June 18, 2019. See Id. at 6, 16-17. The project manager at Analytics affirms that notice was mailed or emailed to all 58, 594 class members and published on a settlement website, with only a relatively small number returned undeliverable. Doc. 163-3 at ¶¶ 5-6, 8. This notice included information about the request for attorney's fees and how class members could object. See Id. at 17, 20.

         The motion for attorney's fees has been on the docket since April 19, 2019. Doc. 159. No. class member filed objections to the settlement or proposed attorney's fees, expenses, or class representative awards. The defendants have not opposed the motion.

         II. Attorney's Fees

         A. Legal Standard

         In a class action, a court may award reasonable attorney's fees and nontaxable costs as authorized by law or by the parties' 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 Sims v. BB&T Corp., No. 15CV732, 2019 WL 1993519, at *1 (M.D. N.C. May 6, 2019); 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. May 2019); id. at n.483, n.484 (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) attorney's 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 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). A reasonable rate is usually calculated by looking at the local market, see Burrs v. United Techs. Corp, No. 1:18CV491, 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 $3, 550, 000, 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 7, 841.60 attorney hours and 661.30 hours of non-attorney time in this matter, a significant investment of labor and resources. See Doc. 160-2 at ¶ 3; Doc. 160-3 at ¶ 7. ERISA litigation is a “rapidly evolving and demanding area of the law, ” In re Wachovia Corp ERISA Litig., No. 3:09cv262, 2011 WL 5037183, at *4 (W.D. N.C. Oct. 24, 2011), and excessive fee 403(b) cases are particularly novel as the first trial for this type of matter was just last year. See Doc. 160-1 at ¶ 20 (describing Sacerdote v. New York Univ., 328 F.Supp.3d 273 (S.D.N.Y. 2018)). That trial resulted in a judgment against the plaintiffs. Sacerdote, 328 F.Supp.3d at 273. This, along with several dismissals or summary judgment rulings against plaintiffs in similar matters, [2] tends to show that these cases require a high level of skill on behalf of plaintiffs to achieve any recovery. See ...


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