United States District Court, D. Vermont
ALICE H. ALLEN, LAURANCE E. ALLEN, d/b/a Al-lens Farm, GARRET SITTS, RALPH SITTS, JONATHAN HAAR, CLAUDIA HAAR, RICHARD SWANTAK, PETER SOUTHWAY, MARILYN SOUTHWAY, REYNARD HUNT, ROBERT FULPER, STEPHEN H. TAYLOR, and DARREL J. AUBERTINE, on behalf of themselves and all others similarly situated, Plaintiffs,
DAIRY FARMERS OF AMERICA, INC. and DAIRY MARKETING SERVICES, LLC, Defendants.
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART MOTIONS FOR ATTORNEYS' FEES AND COSTS, AND INCENTIVE
AWARDS (DOCS. 728 & 729)
Cnristma Reiss, United States District Court Chief Judge.
before the court are Dairy Farmer Subclasses' Motion for
Award of Attorneys' Fees, Reimbursement of Expenses, and
Incentive Awards for Subclass Representatives in Connection
with the DFA/DMS 2015 Settlement (Doc. 728) ("Lead
Counsel" proposal), and Additional Named Representatives
Stephen H. Taylor and Darrel J. Aubertine's Alternative
Motion for Award of Overall Attorneys' Fees, for
Incentive Award and Division of Such Fees Among Class Counsel
(Doc. 729) ("Intervenor Counsel" proposal).
Counsel seeks attorneys' fees in the amount of $16, 666,
666, reimbursement of $3, 804, 337.68 in expenses, and an
incentive award of $130, 000 for distribution to the nine
Subclass Representative farms. Intervenor Counsel seeks an
attorneys' fees award totaling $11, 500, 000, with $500,
000 designated for payment to Intervenor Counsel. Intervenor
Counsel also seeks reimbursement of their expenses in the
amount of $6, 294.18 and incentive awards for Subclass
Representatives Aubertine and Taylor of $20, 000 each. On May
13, 2016, the court held a Fairness Hearing to consider
whether to approve the December 2015 Settlement, at which
time the court took the pending motions under advisement.
attorneys participating in Lead Counsel's motion are
Robert G. Abrams, Esq., Robert J. Brookhiser, Esq., Gregory
J. Commins, Jr., Esq., Terry L. Sullivan, Esq., Danyll W.
Foix, Esq., Emily J. Joselson, Esq., Lisa B. Shelkrot, Esq.,
Kit A. Pierson, Esq., Benjamin D. Brown, Esq., Brent W.
Johnson, Esq., Emmy L. Levens, Esq., David A. Balto, Esq.,
and Andrew D. Manitsky, Esq. The attorneys participating in
Intervenor Counsel's motion are Daniel Smith, Esq., and
Richard T. Cassidy, Esq.
Factual and Procedural Background.
class action arises out of Plaintiffs' allegations that
Defendants Dairy Farmers of America, Inc. ("DFA"),
Dairy Marketing Services, LLC ("DMS"), Dean Foods
Company ("Dean"), and other named and unnamed
co-conspirators conspired to control the supply of raw Grade
A milk in Order 1, which had the effect of suppressing
certain premiums paid to dairy farmers for their milk.
August 3, 2011, the court granted final approval of a
settlement between Plaintiffs and Dean, requiring Dean to
make a one-time payment of $30, 000, 000 (the "Dean
Settlement"). The court awarded attorneys' fees of
$4, 500, 000, reflecting fifteen percent of the Dean
Settlement, and reimbursement of $1, 500, 000 in expenses.
The total award to Plaintiffs' attorneys was therefore
twenty percent of the Dean Settlement. The court declined to
grant any incentive payments to class representatives at that
time, explaining that the notice sent to class members did
not disclose these proposed payments and thus
"[additional compensation for their efforts must await
further developments in this case, and must be accompanied by
full and accurate notice of any deduction from the
class's recovery." (Doc. 341 at 19.)
November 19, 2012, the court certified a class consisting of
all dairy farmers, whether individuals, entities, or members
of cooperatives, who produced and pooled raw Grade A milk in
Order 1 during any time from January 1, 2002 to the present
(the "Dairy Farmers Class"). This class is
comprised of two Subclasses. At the time of class
certification, the court approved Plaintiffs' request
that Claudia and Jonathan Haar and Richard Swantak be named
representatives of the DFA/DMS Subclass, and that Alice H.
and Laurance E. Allen and Garrett and Ralph Sitts be named
representatives of the non-DFA/DMS Subclass.
an adjudication of Defendants' motion for summary
judgment, which the court granted in part and denied in part,
the parties reached a settlement agreement on July 1, 2014
(the "2014 Settlement"). The court subsequently
denied without prejudice the motion for final approval of the
communications regarding the 2014 Settlement, the
relationship between Lead Counsel and certain Subclass
Representatives eroded. Those Subclass Representatives
subsequently moved to remove Lead Counsel. The court denied
the motion, concluding "removal of class counsel at this
late stage in the proceedings and in this complicated case
would constitute an extraordinary remedy reserved for actual
misconduct for which no alternative remedy is either feasible
or prudent." (Doc. 667 at 8.)
the motion to remove Lead Counsel was pending, Stephen H.
Taylor and Darrel J. Aubertine moved to intervene and be
joined as additional Subclass Representatives for the
non-DFA/DMS Subclass. They also sought the addition of their
attorneys, Daniel Smith, Esq., and Richard T. Cassidy, Esq.,
as Subclass Counsel for the non-DFA/DMS Subclass. On August
11, 2015, the court granted the motion to intervene, noting
At this juncture, the opposing Subclass Representatives and
Subclass Counsel are failing to present a united front on
behalf of the Dairy Farmer Subclasses and, in this respect,
are undermining the interests of absent class members. As the
case progresses towards either trial or to a final
settlement, the stalemate and the lack of communication
between Subclass Counsel and all but two of the Subclass
Representatives is and will continue to be unacceptable.
Without a significant change in circumstances, removal of
either Subclass Representatives or Subclass Counsel or both
may be warranted.
(Doc. 682 at 8.) The court initially denied the request to
add additional attorneys because their addition would
increase the attorneys' fees and costs and "would
effectively force Subclass Counsel to work with new attorneys
at the court's direction." Id. at 14. When
the stalemate between opposing Subclass Representatives and
Lead Counsel persisted, the court granted the appointment of
Attorneys Smith and Cassidy as additional counsel
September 24, 2015, Lead Counsel moved to add Marilyn and
Peter Southway, Reynard Hunt, and Robert Fulper as DFA/DMS
Subclass Representatives, and to remove the previously
appointed DFA/DMS Subclass Representatives. On October 23,
2015, the court granted the motion to add Subclass
Representatives, but denied the motion to remove the
previously appointed Subclass Representatives. The court
explained that the existing Subclass Representatives
"adequately represent the DFA/DMS Subclass and remain
committed to vigorously pursuing its interests" and
their removal would eliminate dissenting opinions that may be
important to the adequate representation of the class. (Doc.
707 at 7.)
parties thereafter continued negotiations that resulted in
the December 2015 Settlement. On May 13, 2016, the court held
a Fairness Hearing at which members of the Dairy Farmers
Class overwhelmingly supported the settlement. On June 7,
2016, the court granted final approval of the December 2015
Counsel and Intervenor Counsel (collectively,
"Plaintiffs' counsel") now seek attorneys'
fees and expenses. In support of their pending motions,
Plaintiffs' counsel submit affidavits identifying the
amount of hours that attorneys and other legal professionals
devoted to this case, as well as the hourly rates those
individuals typically charge for their services. In total,
Plaintiffs' counsel expended approximately 64, 000 hours,
reflecting more than $28.7 million in fees, exclusive of
costs, on this case. The records they submit in support of
their request identify general categories of tasks, such as
"Investigations, Factual & Legal Research[, ]"
"Discovery, Document Management and Depositions[,
]" and "Case Management and Administration[.]"
See Doc. 728-2 at 2.
general categories do not reveal how much time was expended
on discrete tasks, such as filing an opposition to a motion
for summary judgment or filing a motion to replace certain
counsel have also incurred unreimbursed costs in the amount
of $3, 810, 631.86. Lead Counsel summarizes their expenses as
Obtaining, reviewing, and hosting documents; preparing,
taking, and defending depositions; hiring stenographers and
videographers for depositions; performing computerized legal
research; making copies and deliveries; preparing pleadings
(motions, memoranda, etc.) filed with the Court; preparing
for hearings; expert witness fees and costs[;] . . .
preparing for trial (reviewing and organizing video
deposition testimony, preparing witness examinations,
selecting exhibits, preparing demonstratives, etc.); and
traveling to depositions, hearings, and meetings with
clients, experts, and potential witnesses.
(Doc. 728 at 27-28.) Intervenor Counsel's expenses arise
solely from travel and lodging related to this case.
Conclusions of Law and Analysis.
Whether to Grant Lead Counsel's Proposal for
Attorneys' Fees or Intervenor Counsel's Proposal for
Counsel seeks attorneys' fees in the amount of $16, 666,
666, or 33.3% of the monetary recovery under the December
2015 Settlement. Intervenor Counsel proposes an alternative
award of $11, 500, 000, which reflects 23% of the monetary
recovery. For the reasons set forth below, the court
determines that an attorneys' fees award comprising 14%
of the December 2015 Settlement ($7, 000, 000), without
accrued interest, is reasonable.
a certified class action, the court may award reasonable
attorney's fees[.]" Fed.R.Civ.P. 23(h). It is
"well established that the common fund doctrine permits
attorneys whose work created a common fund for the benefit of
a group of plaintiffs to receive reasonable attorneys'
fees from the fund" and that "[c]lass action
lawsuits are the prototypical example of instances where the
common fund doctrine can apply." Victor v. Argent
Classic Convertible Arbitrage FundL.P., 623 F.3d 82, 86
(2d Cir. 2010). Approval of a reasonable fee in common fund
cases is "often challenging . . . especially
because-since the attorneys' fees are drawn from a common
fund rather than being paid separately by the
defendants-there is little incentive for the defendants to
contest the size of the fee. To the contrary, plaintiffs'
and defendants' lawyers share an interest in the approval
of an agreed upon settlement." McDaniel v. Cty. of
Schenectady, 595 F.3d 411, 418 (2d Cir. 2010). For this
reason, the district court has a "duty to act as a
fiduciary who must serve as a guardian of the rights of
absent class members, and [to] reaffirm the requirement of a
searching assessment regarding attorneys' fees that
should properly be performed in each case." Id.
at 419 (citations and internal quotation marks omitted).
the lodestar or percentage of the recovery methods may
properly be used to calculate fees in common fund
cases[.]" Goldberger v. Integrated Res., Inc.,
209 F.3d 43, 45 (2d Cir. 2000). "[T]he trend in [the
Second] Circuit is toward the percentage methodf.]"
McDaniel, 595 F.3d at 417 (internal quotation marks
omitted). Pursuant to the percentage method, the court
"sets some percentage of the recovery as a fee."
Goldberger, 209 F.3d at 47. That "fee award
should be assessed based on scrutiny of the unique
circumstances of each case, and a jealous regard to the
rights of those who are interested in the fund."
Id. at 53 (internal quotation marks omitted).
courts in the Second Circuit most often use the percentage
method, the lodestar may nonetheless serve "as a
'cross check' on the reasonableness of the requested
percentage." Goldberger, 209 F.3d at 50. The
lodestar method "scrutinizes the fee petition to
ascertain the number of hours reasonably billed to the class
and then multiplies that figure by an appropriate hourly
rate." Id. at 47.
calculated pursuant to the lodestar or the percentage method,
the fees awarded in common fund cases may not exceed what is
'reasonable' under the circumstances[.]"
Goldberger, 209 F.3d at 47. "What constitutes a
reasonable fee is properly committed to the sound discretion
of the district court[.]" Id. District courts
must consider: "(1) the time and labor expended by
counsel; (2) the magnitude and complexities of the
litigation; (3) the risk of the litigation; (4) the quality
of representation; (5) the requested fee in relation to the
settlement; and (6) public policy considerations."
Id. at 50 (alterations and internal quotation marks
Time and Labor Expended by Counsel.
counsel estimate they expended approximately 64, 000 hours on
this case, amounting to $28, 790, 531 in fees. The problem with
this estimate is threefold. First, some of the 64, 000 hours
gave rise to the Dean Settlement. At the time of the Dean
Settlement, Lead Counsel represented that it had completed
"over 31, 000 hours of legal work." (Doc. 310-1 at
17.) The court has already awarded attorneys' fees to
compensate the time expended in pursuing the Dean Settlement.
the estimate includes time that Lead Counsel spent addressing
the communication breakdown with Subclass Representatives.
Intervenor Counsel ask the court to consider Lead
Counsel's "responsibility for the breakdown in
communications[, ]" and "propose that the majority
of the time spent on this issue be accounted for, and
removed, as part of the lodestar cross-check." (Doc.
729-1 at 8) (internal quotation marks omitted). The court
agrees that the attorneys' fees award should reflect that
some of the fees expended on this issue could have been
avoided by a more cooperative relationship between Lead
Counsel and Subclass Representatives.
Plaintiffs' counsel aggregate their hours expended into
broad categories of tasks. Consequently, the court cannot
"scrutinize the fee petition to ascertain the number
of hours reasonably billed to the class[.]" See
Goldberger, 209 F.3d at 47; see also Shane Grp.,
Inc. v. Blue Cross Blue Shield of Mich., 2016 WL
3163073, at *8 (6th Cir. June 7, 2016) (holding that the
district court erroneously approved class counsel's
request for $10 million in fees, and observing that
"class counsel provided no backup whatsoever-no time
records, no descriptions of work done-in support of their
hours spent working on this case . . . class counsel
[instead] provided the district court with a ...