Class Action/Common Fund: $6.33 Million Fee Award In Wage/Hour Class Action Affirmed On Appeal

 

Fee Award Was One-Third of $19 Million Settlement Common Fund, With Percentage Of Recovery Being Acceptable Method Of Recovery In Common Fund Cases.

     In Laffitte v. Robert Half International Inc., Case No. B249253 (2d Dist., Div. 7 Oct. 29, 2014) (unpublished), a $19 million class action settlement was approved in a tricky wage/hour case, with the lower court also awarding one-third of this common fund--$6.33 million—to class action counsel. Class counsel billed on hourly rates between $500-$750, which the lower court found justified based on the attorneys’ wage/hour class action expertise. The lower court’s fee award was based on a 2.13 positive multiplier.

     The defense objections to the fee award were unsuccessful on appeal.

     Procedurally, the defense argued that there was a due process problem because the fee motion was filed until after the class notice deadline for members to file objections, although the class notice did state the amount of fees being requested and set forth a detailed timeline for class member objections. The defense relied on a FRCP 23 Ninth Circuit case, In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993-995 (9^th Cir. 2010). The Second District panel found that Rule 23 was not controlling and that the notice of fees did comply with CRC rule 3.769.

     Using the percentage of recovery as the primary methodology, rather than the lodestar, was no error in a common fund case. The percentage methodology is traditionally used in common fund cases where the benefit per class member is relatively low. (Chavez v. Netflix, Inc., 162 Cal.App.4^th 43, 63, 65 (2008); Consumer Privacy Cases, 175 Cal.App.4^th 545, 557-558 (2009).) The one-third percentage award was within the range of recoveries allowed in other California cases. Beyond that, the lower court prudently and correctly “cross-checked” the award using the lodestar method. (BLOG NOTE—In many non-common fund cases, the lodestar method is the one to be used, cross-checked by the percentage of recovery calculation.)

     It was also no abuse of discretion for the lower court to award the 2.13 multiplier given multiplier can range from 2 to 4 or even higher. (In re Lugo, 164 Cal.App.4^th 1522, 1546 (2008).) The lower court correctly assessed the lodestar and multiplier factors, including the contingency risk of the case, not having to issue detailed reasoning for picking the selected multiplier.

The hourly rates were supported by a National Law Journal survey and a supporting declaration of CEB treatise writer Richard M. Pearl.

     The “clear sailing” provision in the class action settlement agreement was fine, because these types of provisions are proper as long as non-collusive in nature. (Consumer Privacy Cases, 175 Cal.App.4^th at 553.) No “warning signs” of collusion were present, because the fees came out of the common fund (not separately paid by the defense) and any unawarded fees from the fee request—although this did not happen-- would not revert back to the defendants but would remain in the common fund.

     BLOG UNDERVIEW—Co-contributor Mike has worked with two of the class action attorneys, Joe Antonelli and Janelle Carney, both of whom were very professional and demonstrated wage/hour class action expertise. Judge Segal, a Los Angeles County Superior Court judge sitting by assignment, authored this opinion, with co-contributors Marc and Mike having tried a case before him in early 2008.