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Reynolds v. Fidelity Investments Institutional Operations Co., Inc.

United States District Court, M.D. North Carolina

January 7, 2020

BAILEY REYNOLDS and HELEN MARTINEZ on behalf of themselves and all others similarly situated, Plaintiffs,


          Catherine C. Eagles, District Judge.

         This class and collective action arose out of the defendants' timekeeping practices in several call centers. Early in the case, the parties agreed to mediation, which led to a settlement agreement. The Court has approved the settlement by separate opinion. Class Counsel seek attorney's fees and expenses and service awards for the named plaintiffs and for certain plaintiffs who opted into the Fair Labor Standards Act settlement. The attorney's fees and expenses sought here are reasonable, and the compensation to the named and the opt-in plaintiffs is appropriate as well. The Court will grant the motion.

         I. Background

         A detailed procedural history and a description of the settlement agreement are set forth in a separate opinion granting final approval to the settlement, issued concomitantly with this Order. In sum, the plaintiffs contend that Fidelity failed to adequately compensate them for time worked in Fidelity's call centers, including time required to be “call ready, ” and incorrectly calculated appropriate overtime rates in violation of the Fair Labor Standards Act (FLSA) and North Carolina and New Mexico state wage and hour laws. Doc. 62. The named plaintiffs have asserted claims on behalf of two Rule 23 classes of individuals working in Fidelity's workplace business call centers in North Carolina (the NCWHA Class) and New Mexico (the NMWHA Class), as well as an FLSA collective action for similarly situated individuals. Id. at ¶¶ 7, 11, 13. After filing the complaint in May 2018, Doc. 1, the plaintiffs responded to the defendants' partial motion to dismiss, filed two amended complaints, and moved for class certification. The parties then agreed to pursue mediation and reached a settlement in December. Doc. 47. In April 2019, the Court granted preliminary approval of the settlement, provisionally certified the settlement classes and collective action, appointed class counsel, approved the settlement administrator, and approved plaintiffs' notice of the settlement with some modifications. Doc. 65.

         In the settlement agreement, the defendants have agreed to pay up to $3, 000, 000 to the eligible class members, as well as the employer share of payroll taxes associated with any back wages. Doc. 64-1 at § II(A)(6) (“Gross Settlement Amount”). Claimants will receive their proportionate share of settlement proceeds relative to their estimated hours of unpaid work, id. at §§ III(C)(1), (2); plaintiffs who opted in before the agreement will receive the greater of either a $2, 000 service award or their proportionate share of the settlement; and the named plaintiffs will receive their proportionate share in addition to their service awards. Id. at §§ III(C)(3), (4). The proportionate share for class members who do not submit a claim form reverts to the defendants, id. at § III(B), but funds leftover from unnegotiated settlement checks will be distributed to designated cy pres recipients. Id. at § IV(D)(2).

         Consistent with these provisions, the plaintiffs request court approval of service awards of $20, 000 for named plaintiff Bailey Reynolds, $15, 000 for named plaintiff Helen Martinez, and $2, 000 for each of the members who opted into the FLSA collective action before settlement. Doc. 56. Class Counsel stated at the fairness hearing that there were fifteen to twenty of these opt-in plaintiffs. Class Counsel also request $1, 000, 000 in attorney's fees and $33, 931.42 in litigation expenses. Doc. 54 at 2; Doc. 79 at ¶ 11. These motions have been on the docket since February 2019, and the Court ordered the settlement administrator, RG/2, to notify class members of the settlement and that Class Counsel had sought compensation from the settlement fund for these plaintiffs, attorney's fees, and costs. Doc. 65 at ¶ 25; Doc. 64-2.

         The Court extended the notice period twice, once for a second reminder postcard to be sent and later so notice could be sent to inadvertently overlooked class members. Doc. 65 at ¶¶ 20, 23; Docs. 71, 73, 74. Original notice recipients were also mailed a postcard advising them of the new final approval hearing date, which was continued in light of the newly notified class members. Docs. 73, 74. The claims administrator at RG/2 confirmed that notice was mailed to all class members and published on a settlement website, with a relatively small number returned undeliverable. Doc. 78-1 at ¶¶ 6-7, 13-14, 17. Of the 5, 761 identified class members, five requested to be excluded from the suit and none filed objections. Id. at ¶¶ 12, 18, 19. The defendants have not opposed the motions for attorney's fees or expenses or for service awards.

         II. Attorney's Fees

         a. Legal Standard

         Rule 23 and the FLSA both allow for the award of reasonable attorney's fees and expenses. Hall v. Higher One Machs., Inc., No. 5-15-CV-670-F, 2016 WL 5416582, at *7 (E.D. N.C. Sept. 26, 2016). Rule 23(h) provides in relevant part that “[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement.” Fed.R.Civ.P. 23(h). The FLSA contains a fee-shifting provision: the court “shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b).

         The Fourth Circuit generally uses the lodestar method for determining a reasonable fee in an FLSA settlement, defined as a reasonable hourly rate multiplied by hours reasonably expended. See Lyle v. Food Lion, Inc., 954 F.2d 984, 988 (4th Cir. 1992); Duprey v. Scotts Co. LLC, 30 F.Supp.3d 404, 411-12 (D. Md. 2014). However, where the parties reach a settlement on behalf of both an FLSA collective and Rule 23 classes and agree to a common fund for the benefit of all, courts may assess the reasonableness of fees by using the percentage method, in which attorneys recover a percentage of the fund bestowed on the class, [1] supplemented with a lodestar cross- check. See, e.g., Hall, 2016 WL 5416582, at *7 (stating the proper standard for a hybrid FLSA and Rule 23 action); Mullinax v. Parker Sewer & Fire Subdistrict, No. 6:12-cv-01405-TMC, 2014 WL 12774925, at *7-8 (D.S.C. Mar. 11, 2014) (same). This lodestar cross-check compares the requested contingent fee award against a fee calculated based on hours spent at prevailing market rates to ensure that the fee is “within some reasonable multiplier of the lodestar.” Boyd v. Coventry Health Care, Inc., 299 F.R.D. 451, 462, 467 (D. Md. 2014); see also Jones v. Dominion Res. Servs., Inc., 601 F.Supp.2d 756, 759-60 (S.D. W.Va. 2009) (collecting cases).

         The Fourth Circuit considers twelve factors to evaluate the overall reasonableness of an award of attorney's fees: “(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.” Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978); Mullinax, 2014 WL 12774925, at *11 (applying the Barber factors to award attorney's fees in a hybrid FLSA and Rule 23 action).

         b. Analysis

         Class Counsel's request for a fee of $1, 000, 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 1461.8 attorney hours and 296.6 hours of non-attorney time on this matter, a significant investment of labor and resources. Doc. 78-3 at ¶ 6; Doc. 79 at ¶ 8. Counsel conducted extensive factual and legal research to determine the merits and scope of the claims, damages, and certain procedural matters. See Doc. 58 at ¶¶ 15-17. This included interviewing about thirty-five people and researching novel questions of law, such as how to address a bonus that is calculated in one way, then adjusted to reflect an even percentage of an employee's salary. Id. at ¶¶ 15, 16; see Kirkpatrick v. Cardinal Innovations Healthcare Sols., 352 F.Supp.3d 499, 505 (M.D. N.C. 2018) ...

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