eastern division artur a. nistra, group, inc. employee … · 2020-05-19 · case no. 1:16-cv-04773...

IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ARTUR A. NISTRA, on behalf of The Bradford Hammacher Group, Inc. Employee Stock Ownership Plan, and on behalf of a class of all other persons similarly situated,

Plaintiff,

v.

RELIANCE TRUST COMPANY,

Defendant.

Case No. 1:16-cv-04773 Hon. Gary Feinerman Magistrate Judge Sidney I. Schenkier

PLAINTIFF’S MOTION FOR ATTORNEYS’ FEES, COSTS, AND CASE CONTRIBUION AWARD

Plaintiff Artur A. Nistra, Individually and as Class Representative, moves the Court for

an order granting an award of attorneys’ fees, costs, and a case contribution award.

Good cause exists for granting this motion as set forth in the accompanying

Memorandum in Support and Declarations of Gregory Porter and Mark Kindall filed with

Plaintiff’s Unopposed Motion for Final Approval of Settlement.

Dated: May 18, 2020 Respectfully Submitted, /s/ Patrick O. Muench Patrick O. Muench (IL #6290298) BAILEY & GLASSER LLP 333 S. Wabash Ave., Ste. 2736 Chicago, IL 60604 (312) 995-7143 [email protected]

Case: 1:16-cv-04773 Document #: 283 Filed: 05/18/20 of 3 PageID #:3710

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Gregory Y. Porter (pro hac vice) Ryan T. Jenny BAILEY & GLASSER LLP 1055 Thomas Jefferson St. NW Ste. 540 Washington, DC 20007 (202) 463-2101 [email protected] [email protected] Robert A. Izard (pro hac vice) Douglas P. Needham (pro hac vice) IZARD, KINDALL & RAABE, LLP 29 South Main Street, Suite 305 West Hartford, CT 06107 (860) 493-6292 (860) 493-6290 Facsimile [email protected] [email protected] Attorneys for Plaintiff


CERTIFICATE OF SERVICE

I hereby certify that, on May 18, 2020, I caused a true and correct copy of the foregoing

to be filed electronically using the Court’s CM/ECF system and to be thereby served upon all

registered participants identified in the Notice of Electronic Filing in this matter on this date.

/s/ Patrick O. Muench Patrick O. Muench


UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ARTUR A. NISTRA, on behalf of The Bradford Hammacher Group, Inc. Employee Stock Ownership Plan, and on behalf of a class of all other persons similarly situated,

Plaintiff, v. RELIANCE TRUST COMPANY,

Defendant.

Case No. 1:16-cv-04773 Hon. Gary Feinerman Magistrate Judge Sidney I. Schenkier

PLAINTIFF’S MEMORANDUM IN SUPPORT OF MOTION FOR ATTORNEYS’

FEES, COSTS, AND CASE CONTRIBUTION AWARD

Case: 1:16-cv-04773 Document #: 283-1 Filed: 05/18/20 Page 1 of 25 PageID #:3713

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TABLE OF CONTENTS Page

I. INTRODUCTION .............................................................................................................. 1

II. BACKGROUND AND SETTLEMENT ............................................................................ 2

A. Background ............................................................................................................. 2

B. The Settlement ........................................................................................................ 2

III. LEGAL STANDARD FOR ATTORNEYS’ FEE AWARDS ........................................... 3

IV. ARGUMENT ...................................................................................................................... 4

A. The Court Should Calculate Fees Here As A Percentage Of The Fund ................. 4

B. The Requested Percentage-Based Fee Is Consistent with the Market Rate Under Seventh Circuit Fee Jurisprudence ............................................................... 5

1. The Requested Fee Is Supported By The Contract Between Plaintiff And Class Counsel ...................................................................................... 7

2. The Requested Percentage Is In Line With Fees Awarded In Other Settlements .................................................................................................. 8

3. Other Factors Support the Requested Fee ................................................. 10

a. Risk of Nonpayment Class Counsel Incurred ............................... 10

b. Quality of Performance and Work Invested ................................. 12

c. Stakes of the Case ......................................................................... 13

4. The Requested Fee Is Reasonable Under A Lodestar Crosscheck ........... 14

V. THE COURT SHOULD ALSO AWARD CLASS COUNSEL’S REASONABLE EXPENSES INCURRED IN PROSECUTING THIS LITIGATION .............................. 15

VI. THE CASE CONTRIBUTION AWARD TO THE CLASS REPRESENTATIVE SHOULD BE APPROVED .............................................................................................. 16

VII. CONCLUSION ................................................................................................................. 17


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TABLE OF AUTHORITIES

Page(s)

Cases

Abbott v. Lockheed Martin Corp., 2015 WL 4398475 (S.D. Ill. July 17, 2015) ..........................................................................4, 8

In re Akorn, Inc. Sec. Litig., 2018 WL 2688877 (N.D. Ill. June 5, 2018) ...............................................................................6

Allen v. JPMorgan Chase Bank, NA, 13–cv–8285, Dkt. 93 (N.D. Ill. Oct. 21, 2015) ..........................................................................9

Americana Art China Co., Inc. v. Foxfire Printing and Packaging, Inc., 743 F.3d 243 (7th Cir. 2014) .....................................................................................................3

Aranda v. Caribbean Cruise Line, Inc., 2017 WL 1369741 (N.D. Ill. Apr. 10, 2017) .............................................................................6

Beesley v. Int’l Paper Co., 2014 WL 375432 (S.D. Ill. Jan. 31, 2014) .....................................................................8, 15, 16

Bell v. Pension Comm. of ATH Holding Co., LLC, 2019 WL 4193376 (S.D. Ind. Sept. 4, 2019) .............................................................................8

Boeing Co. v. Van Gemert, 444 U.S. 472 (1980) ...................................................................................................................3

Camp Drug Store, Inc. v. Cochran Wholesale Pharm., Inc., 897 F.3d 825 (7th Cir. 2018) .....................................................................................................3

In re Capital One Tel. Consumer Prot. Act Litig., 80 F. Supp. 3d 781 (N.D. Ill. 2015) .......................................................................................4, 6

Castillo v. Noodles & Co., 2016 WL 7451626 (N.D. Ill. Dec. 23, 2016) .............................................................................6

Charvat v. AEP Energy, Inc., No. 14-3121, Dkt. No. 44 (N.D. Ill. Nov. 20, 2015) ..................................................................9

Charvat v. Valente, 2019 WL 5576932 (N.D. Ill. Oct. 28, 2019) ..............................................................................9

Cook v. Niedert, 142 F.3d 1004 (7th Cir. 1998) ...........................................................................................16, 17


iii

Desai v. ADT Sec. Servs., Inc., No. 11-01925 (N.D. Ill. June 21, 2013) ...................................................................................17

Florin v. Nationsbank of Georgia, N.A., 34 F.3d 560 (7th Cir. 1994) .....................................................................................................11

Gaskill v. Gordon, 160 F.3d 361 (7th Cir. 1998) ...................................................................................................10

George v. Kraft Foods Glob., Inc., 2012 WL 13089487 (N.D. Ill. June 26, 2012) .......................................................................4, 8

Heekin v. Anthem, Inc., 2012 WL 5878032 (S.D. Ind. Nov. 20, 2012) ...............................................................7, 14, 17

Kirchoff v. Flynn, 786 F.2d 320 (7th Cir. 1986) .....................................................................................................7

Kolinek v. Walgreen Co., 311 F.R.D. 483 (N.D. Ill. 2015) .......................................................................................5, 8, 10

Leung v. XPO Logistics, Inc., 326 F.R.D. 185 (N.D. Ill. 2018) .............................................................................................5, 6

Mangone v. First USA Bank, 206 F.R.D. 222 (S.D. Ill. 2001) .................................................................................................7

In re Marsh ERISA Litig., 265 F.R.D. 128 (S.D.N.Y. 2010) .......................................................................................10, 15

Martin v. Caterpillar Inc., 2010 WL 11614985 (C.D. Ill. Sept. 10, 2010) ................................................................4, 7, 14

Martin v. JTH Tax, Inc., No. 13-6923 (N.D. Ill. Sept. 16, 2015) ......................................................................................9

Matlock v. Pitney-Bowes, Inc., 811 F. Supp. 2d 1186 (M.D.N.C. 2011) ..................................................................................15

McCue v. MB Fin., Inc., 2015 WL 4522564 (N.D. Ill. July 23, 2015) ..............................................................................9

Mezyk v. U.S. Bank Pension Plan, 2012 WL 13028659 (S.D. Ill. Nov. 5, 2012) .............................................................................4

Pearson v. NBTY, Inc., 772 F.3d 778 (7th Cir. 2014) .........................................................................................1, 5, 6, 9


iv

Prena v. BMO Fin. Corp., 2015 WL 2344949 (N.D. Ill. May 15, 2015) .............................................................................9

Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014) .................................................................................................5, 9

Retsky Family Ltd. P’ship v. Price Waterhouse, LLP, 2001 WL 1568856 (N.D. Ill. Dec. 10, 2001) .............................................................................7

Silverman v. Motorola Sols., Inc., 739 F.3d 956 (7th Cir. 2013) ...............................................................................................3, 11

Spano v. Boeing Co., 2016 WL 3791123 (S.D. Ill. Mar. 31, 2016) ...................................................................4, 8, 14

Spicer v. Chi. Bd. Options Exch., Inc., 844 F. Supp. 1226 (N.D. Ill. 1993) ..........................................................................................15

Sutton v. Bernard, 504 F.3d 688 (7th Cir. 2007) ...................................................................................3, 10, 11, 12

In re Synthroid Marketing Litig., 264 F.3d 712 (7th Cir. 2001) .........................................................................................3, 15, 16

In re Synthroid Mktg. Litig., 325 F.3d 974 (7th Cir. 2003) .............................................................................................1, 5, 6

Taubenfeld v. AON Corp., 415 F.3d 597 (7th Cir. 2005) .............................................................................................3, 7, 8

Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005).......................................................................................................14

Wilkins v. HSBC Bank Nevada, N.A., 2015 WL 890566 (N.D. Ill. Feb. 27, 2015) ...............................................................................6

Will v. Gen. Dynamics Corp., 2010 WL 4818174 (S.D. Ill. Nov. 22, 2010) .........................................................................4, 8

Williams v. Rohm & Haas Pension Plan, 658 F.3d 629 (7th Cir. 2011) .....................................................................................................4

Wright v. Nationstar Mortgage LLC, 2016 WL 4505169 (N.D. Ill. Aug. 29, 2016) ............................................................................9

Young v. Rolling in the Dough, Inc., 2020 WL 969616 (N.D. Ill. Feb. 27, 2020) ...............................................................................9


v

Young v. Verizon’s Bell Atlantic Cash Balance Plan, 783 F. Supp. 2d 1031 (N.D. Ill. 2011) .....................................................................................14

Statutes

29 U.S.C. § 201, et seq.....................................................................................................................9

29 U.S.C. § 1000, et seq......................................................................................................... passim

29 U.S.C. § 1132(g)(1) ..................................................................................................................15


I. INTRODUCTION

Artur Nistra, the Plaintiff in this ERISA class action, has obtained an outstanding

settlement on behalf of the participants in The Bradford Hammacher Group, Inc. Employee

Stock Ownership Plan (the “Plan”). The Settlement will result in the creation of a $13,363,636

Settlement Fund (the “Fund”). The Fund will be distributed to the 1,245 Settlement Class

Members, after deduction for Court approved attorneys’ fees and expenses, administrative costs,

and a case contribution award. On average, the benefit to each Class Member will be

approximately $8,036 after Court approved deductions requested by Plaintiff.1 These benefits

were generated through the diligent efforts of Plaintiff and Class Counsel.

For the reasons set forth below, Class Counsel now requests that the Court award them

attorneys’ fees of $2.64 million, and $638,162.83 in expenses. The requested attorneys’ fee

represents approximately 19.9% of the Fund, after deducting administrative costs and the case

contribution award, in accordance with Pearson v. NBTY, Inc. The requested fee is well below

the fees awarded in similar cases in this jurisdiction, and well below the fee calculated on a

decreasing sliding scale consistent with In re Synthroid Mktg. Litig., 325 F.3d 974 (7th Cir.

2003) (“Synthroid II”). (Had Class Counsel requested fees consistent with Synthroid II, the

requested fees would have been approximately $3.8 million.)

Class Counsel’s fees and expenses are both reasonable and warranted because: (i) the

requested fee represents a reasonable percentage of the Settlement’s total economic value, and

reflects the market rate for such fees; (ii) the Settlement provides substantial, meaningful

monetary benefits to the Class; (iii) Class Counsel undertook this litigation on a completely

contingent basis, advancing all expenses and accepting all risk, including the very real possibility

1 Deductions include administrative expenses, independent fiduciary fees, amounts sought by Plaintiff and Plaintiffs’ counsel for attorneys’ fees, expenses, and a case contribution award.


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that they could receive no compensation or reimbursement whatsoever for years of work; and

(iv) before the negotiations that lead to settlement started, the litigation was not only sufficiently

advanced, but trial had started and Plaintiff had put on most of his case in chief.

Plaintiff also requests a Case Contribution Award of $25,000 for his time and effort in

bringing this Action and helping secure the Settlement benefits for Plan participants.

II. BACKGROUND AND SETTLEMENT

A. Background

Plaintiff incorporates by reference the background information contained in the

Memorandum in Support of Preliminary Approval of Settlement (Dkt. 266) and Memorandum in

Support of Final Approval, filed concurrently with this motion (collectively, the “Approval

Motions”). The Approval Motions demonstrate that the Parties in this litigation vigorously

advocated their respective positions and that the Settlement was the product of extensive arm’s

length negotiations.

B. The Settlement

The Settlement requires Reliance Trust Company (“Reliance” or “Defendant”) to pay

$12,000,000 and the Selling Shareholders to pay $1,363,636, into the Settlement Fund Account,

for the benefit of a Settlement Class, defined as:

All persons other than the September 30, 2013 selling shareholders (including their beneficiaries, heirs, and assigns), who are current or former participants in The Bradford Hammacher Group, Inc. Employee Stock Ownership Plan, whether or not they were vested.

Settlement Agreement, Dkt. 266-2, ¶ 1.42.

The Net Settlement Fund — the funds remaining after payment of Court approved

attorneys’ fees and expenses, Plaintiff’s case contribution award, administrative fees, costs and


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taxes — will be distributed to members of the Class pursuant to the Plan of Allocation. Id. ¶

8.2.2.

The Settlement fully resolves Plaintiff’s claims that Reliance violated ERISA in

connection with the purchase of 600,000 shares of The Bradford Hammacher Group, Inc. stock

by the Plan (the “ESOP Transaction”).

III. LEGAL STANDARD FOR ATTORNEYS’ FEE AWARDS

Under the common fund doctrine, class counsel are entitled to a reasonable attorneys’ fee

from the fund created for the benefit obtained in a class settlement. See Boeing Co. v. Van

Gemert, 444 U.S. 472, 478 (1980). In this circuit, “attorneys’ fees in class actions should

approximate the market rate that prevails between willing buyers and willing sellers of legal

services.” Silverman v. Motorola Sols., Inc., 739 F.3d 956, 957 (7th Cir. 2013).

In evaluating the reasonableness of a requested fee, the Seventh Circuit requires district

courts to consider whether the fee is within the range of fees with would have been agreed to at

the outset of the litigation, considering the risk of nonpayment and the market rate. Camp Drug

Store, Inc. v. Cochran Wholesale Pharm., Inc., 897 F.3d 825, 832 (7th Cir. 2018); In re

Synthroid Marketing Litig., 264 F.3d 712, 718 (7th Cir. 2001) (“Synthroid I”); Sutton v. Bernard,

504 F.3d 688, 692 (7th Cir. 2007) (courts must “undertake an analysis of the terms to which the

private plaintiffs and their attorneys would have contracted at the outset of the litigation when

the risk of loss still existed”). Courts must “do their best to recreate the market by considering

factors such as actual fee contracts that were privately negotiated for similar litigation, [and]

information from other cases.” Taubenfeld v. AON Corp., 415 F.3d 597, 599 (7th Cir. 2005).

Which method to apply — the percentage of fund or lodestar method — is within the court’s

discretion. Americana Art China Co., Inc. v. Foxfire Printing and Packaging, Inc., 743 F.3d 243,

247 (7th Cir. 2014). Ultimately the focus is not on the method selected, but on determining the


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“market rate.” Mezyk v. U.S. Bank Pension Plan, 2012 WL 13028659, at *1 (S.D. Ill. Nov. 5,

2012).

IV. ARGUMENT

A. The Court Should Calculate Fees Here As A Percentage Of The Fund

To determine a reasonable fee in a class action, courts in this Circuit favor the percentage

of the fund method, rather than lodestar, because contingent, percentage of the recovery fees

mirror the market. See George v. Kraft Foods Glob., Inc., 2012 WL 13089487, at *2 (N.D. Ill.

June 26, 2012) (citing Gaskill v. Gordon, 160 F.3d 361, 362 (7th Cir. 1998)); In re Capital One

Tel. Consumer Prot. Act Litig., 80 F. Supp. 3d 781, 795 (N.D. Ill. 2015) (noting that market rate

in consumer class actions is fee based on a percentage of the recovery); Will v. Gen. Dynamics

Corp., 2010 WL 4818174, at *2 (S.D. Ill. Nov. 22, 2010) (same).

Evaluation of the market rate for ERISA class action fees is no exception. See, e.g.,

Abbott v. Lockheed Martin Corp., 2015 WL 4398475, at *2 (S.D. Ill. July 17, 2015) (“This Court

agrees with prior courts in finding that the market for Class Counsel’s work in ERISA fiduciary

breach cases is a contingent fee market and not an hourly market.”); Will v. Gen. Dynamics, 2010

WL 4818174, at *2 (noting market rate for legal services for ERISA class action is only for

contingency agreements, and the normal rate is one-third); Spano v. Boeing Co., 2016 WL

3791123, at *2-3 (S.D. Ill. Mar. 31, 2016) (noting in ERISA case, “[a] one-third [percentage-

based] fee is consistent with the market rate in settlements concerning this particularly complex

area of law”).

However, some courts in this Circuit have also employed a “rough” lodestar cross-check

against the percentage of fund method. See, e.g., Martin v. Caterpillar Inc., 2010 WL 11614985,

at *4 (C.D. Ill. Sept. 10, 2010). A lodestar cross check is not, however, necessary. See Will,

2010 WL 4818174, at *3; Williams v. Rohm & Haas Pension Plan, 658 F.3d 629, 636 (7th Cir.


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2011) (“consideration of a lodestar cross check is not an issue of required methodology”).

Here, where Class Counsel has secured a common fund for the benefit of a class, fees

should be determined on a percentage-of-the-fund basis. But under either the percentage method

or the lodestar method, as discussed more fully below, the requested fee is reasonable.

B. The Requested Percentage-Based Fee Is Consistent with the Market Rate Under Seventh Circuit Fee Jurisprudence In Synthroid II, 325 F.3d at 975-80, when the Seventh Circuit directed that district courts

should determine the appropriate percentage fee by approximating the market rate, it calculated

the “market based” fee as a percentage of the entire settlement fund. More recently, the Seventh

Circuit held that notice and administration costs should be deducted from the gross fund before

applying the percentage. See Pearson v. NBTY, Inc., 772 F.3d 778, 782 (7th Cir. 2014); Redman

v. RadioShack Corp., 768 F.3d 622, 629 (7th Cir. 2014) (“[t]he ratio that is relevant to assessing

the reasonableness of the attorneys' fee … is the ratio of (1) the fee to (2) the fee plus what the

class members received.”); Leung v. XPO Logistics, Inc., 326 F.R.D. 185, 199 (N.D. Ill. 2018)

(deducting administrative costs, plus incentive payments before calculating percentage fee);

Kolinek v. Walgreen Co., 311 F.R.D. 483, 503 (N.D. Ill. 2015) (finding 36% of the settlement

fund less administrative costs and incentive award reasonable using the percentage-of-recovery

method).

Under the Pearson analysis, fees should not “exceed a third or at most a half of the total

amount of money going to class members and their counsel.” Pearson, 772 F.3d at 782; see also

Leung,326 F.R.D. at 201 (awarding fee of one-third of net amount).

Class counsel’s fee request falls below the Pearson range. The $2.64 million fee is 19.9%


6

of the net amount after deducting administration costs and a case contribution award,2 and 20.9%

of the net fund after deducting administrative costs, litigation costs and incentive award, well

under the one-third of the net amount deemed presumptively reasonable in Pearson. See also

Castillo v. Noodles & Co., 2016 WL 7451626, at *4 (N.D. Ill. Dec. 23, 2016) (“Plaintiffs’

request for one-third of the settlement in attorneys’ fees is consistent with the market in the

Northern District of Illinois.”).

The requested fee is also less than the fee derived by applying the sliding scale used by

some courts in this District for large settlements. Under the sliding-scale approach, courts apply a

benchmark of 30% on the first $10 million recovered; 25% on the next $10 million; and

decreasing percentages on any remaining recovery. See, e.g., Synthroid II, 325 F.3d at 980;

Capital One, 80 F. Supp. 3d at 804–05; Aranda v. Caribbean Cruise Line, Inc., 2017 WL

1369741, at *9 (N.D. Ill. Apr. 10, 2017); Wilkins v. HSBC Bank Nevada, N.A., 2015 WL 890566,

at *10 (N.D. Ill. Feb. 27, 2015); Leung, 326 F.R.D. at 202; In re Akorn, Inc. Sec. Litig., 2018 WL

2688877, at *2 (N.D. Ill. June 5, 2018). Applying this declining marginal scale to the

$13,363,636 recovery, less administrative and incentive payments, here yields a fee of $3.82

million; well above the fee requested by Class Counsel.

The Seventh Circuit has identified additional factors that can assist courts in estimating

the market rate, including: (i) the actual fee contracts that were privately negotiated for similar

litigation; (ii) information from other cases; (iii) data from class-counsel auctions (iv) the risk

counsel undertook in accepting the case; (v) the quality of the attorneys’ performances; (vi) the

2 Out of the $13,363,636 Settlement Fund, an estimated $35,000 will be paid for notice and administration, $25,000 for a case contribution award, if approved, and $20,000 for the Independent Fiduciary, leaving a net amount of $13,283,636. The requested fee of $2.64 million is 19.87% of $13,283,636. If the $638, 162.83 in litigation costs are also deducted, the net fund is $12,638,636, and the fee represents 20.9% of this amount.


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amount of work necessary to resolve the litigation; and (vii) the stakes in the case. See

Taubenfeld, 415 F.3d at 599; Heekin v. Anthem, Inc., 2012 WL 5878032, at *2 (S.D. Ind. Nov.

20, 2012). As explained below, each of these factors that are relevant support the requested fee.3

1. The Requested Fee Is Supported By The Contract Between Plaintiff And Class Counsel

The requested fee is in line with representation agreements commonly entered into in this

District, including between Plaintiff and his counsel. See Taubenfeld, 415 F.3d at 599 (noting

that courts also may examine “actual fee contracts that were negotiated for private litigation” in

analyzing market price); Mangone v. First USA Bank, 206 F.R.D. 222, 226 (S.D. Ill. 2001)

(requiring weight be given to the judgment of the parties and their counsel where, as here, the

fees were agreed to through arm’s length negotiations after the parties agreed on the other key

deal terms); Martin, 2010 WL 11614985, at *2 (“[E]ach plaintiff has signed a contingency-fee

contract with Class Counsel calling for a one-third fee plus costs. Considering the paucity of

cases, … successfully challenging … alleged ERISA violations, it would be unrealistic to believe

that any lawyer would undertake such a case on other than a contingency-fee basis.”).

The customary contingency agreement in this Circuit is 33% to 40% of the total recovery.

Kirchoff v. Flynn, 786 F.2d 320, 323 (7th Cir. 1986) (observing that “40% is the customary fee in

tort litigation” and noting, with approval, contract providing for one-third contingent fee if

litigation settled before trial); Retsky Family Ltd. P’ship v. Price Waterhouse, LLP, 2001 WL

1568856, at *4 (N.D. Ill. Dec. 10, 2001) (recognizing that customary contingent fee is “between

33 1/3% and 40%” and awarding counsel one-third of the common fund).

Here, Plaintiff entered into a contingency retainer agreement with Class Counsel for a fee

of up to 33 ⅓ percent of any recovery, plus expenses. See Declaration of Gregory Porter, filed as

3 Factor (iii), data from class-counsel auctions is not applicable.


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Exhibit A in support of this motion and Plaintiff’s Unopposed Motion for Final Approval of

Settlement, (“Porter Decl.”), at ¶ 21. Class Counsel is requesting less than that amount, which

further supports a finding that the requested fee is reasonable. See Taubenfeld, 415 F.3d at 599.

2. The Requested Percentage Is In Line With Fees Awarded In Other Settlements

“As the Seventh Circuit has held, attorney’s fee awards in analogous class action

settlements shed light on the market rate for legal services in similar cases.” Kolinek, 311 F.R.D.

at 493-94 (citation omitted). Here, the percentage requested by Class Counsel is well in line with,

and in fact below awards in other ERISA cases. “A one-third fee [percentage] is consistent with

the market rate in settlements concerning this particularly complex area of law.” Spano, 2016

WL 3791123, at *2 (quoting Abbott, 2015 WL 4398475, at *2). Other ERISA cases approving

fees in this range in this District and Circuit include: Bell v. Pension Comm. of ATH Holding Co.,

LLC, 2019 WL 4193376, at *3 (S.D. Ind. Sept. 4, 2019) (collecting cases and awarding 1/3 of

$23 million common fund, plus expenses); Kraft Foods, 2012 WL 13089487, at *4 (approving

1/3 of $9.5 million monetary recovery plus expenses); Abbott, 2015 WL 4398475, at *2

(awarding 1/3 of $60 million fund, plus expenses); Will, 2010 WL 4818174, at *3 (awarding 1/34

of $15 million recovery, and finding “the market rate for complex plaintiffs’ attorney work in

this [ERISA] case and similar cases is a contingency fee” and agreeing “a one-third fee is

consistent with the market rate”); Beesley v. Int'l Paper Co., 2014 WL 375432, at *2 (S.D. Ill.

Jan. 31, 2014) (“A one-third fee is consistent with the market rate in settlements concerning this

4 In Will, because class counsel did not request claimed fees for any portion of the accrued interest on the funds held in the settlement fund, the requested fee ultimately amounted to less than the total 1/3 common fund recovery. Id. at 1, n.1.


9

particularly complex area of law.”).5 Class counsel’s requested fee is well below the one-third

awarded in these and other cases.

Non-ERISA cases in this District also support the reasonableness of Class Counsel’s fee

request. See, e.g.: Charvat v. Valente, 2019 WL 5576932, at *11 (N.D. Ill. Oct. 28, 2019) ($12.5

million recovery in TCPA case in which the court awarded fee of 33.99% of the net settlement

fund, after deducting administrative costs and $25,000 incentive award); Young v. Rolling in the

Dough, Inc., 2020 WL 969616, at *6 (N.D. Ill. Feb. 27, 2020) (FLSA case in which the court

awarded $1.3 million fee and noted courts in this Circuit typically award 1/3 of the common

fund); Allen v. JPMorgan Chase Bank, NA, 13–cv–8285, Dkt. 93 at ¶ 18 (N.D. Ill. Oct. 21, 2015)

(awarding 33% of the settlement after deducting costs of class administration and service award);

Wright v. Nationstar Mortgage LLC, 2016 WL 4505169, at *13 (N.D. Ill. Aug. 29, 2016) ($12.1

million TCPA case in which the court awarded a fee of 30% of the net settlement fund); Prena v.

BMO Fin. Corp., 2015 WL 2344949 (N.D. Ill. May 15, 2015) (awarding 33.5% of fund after

deducting notice costs); McCue v. MB Fin., Inc., 2015 WL 4522564 (N.D. Ill. July 23, 2015)

(FLSA case in which the court awarded 33.33% of the net fund after deduction for notice costs,

plus expenses); Charvat v. AEP Energy, Inc., No. 14-3121, Dkt. 44 (N.D. Ill. Nov. 20, 2015)

(awarding fees of one-third of total settlement fund).

Some courts in the District award fees at a higher percentage after deducting

administrative costs, to account for the risk undertaken. See Martin v. JTH Tax, Inc., No. 13-

6923, Dkt. 85 (N.D. Ill. Sept. 16, 2015) (awarding 37% of fund minus notice and administrative

5 While some of these cases predate Pearson and Redman, and therefore applied the one-third percentage to the entire fund, Class Counsel’s request accords with current precedent and calculates the fee based on the net settlement fund, reduced by administrative costs and case contribution award.


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costs and incentive award); Kolinek, 311 F.R.D. at 501 (awarding 36% of fund minus notice and

administrative costs and incentive award). As discussed below, from the outset Class Counsel

undertook substantial risk that they would ultimately achieve nothing for their efforts on behalf

of the Class. As such, a higher percentage than the 19.87% requested would be justified here,

further demonstrating that the requested fee is reasonable.

3. Other Factors Support the Requested Fee

Beyond the actual terms of the engagement and comparisons to similar fee awards and

agreements, the market price for legal fees “depends in part on the risk of nonpayment a firm

agrees to bear, in part on the quality of its performance, in part on the amount of work necessary

to resolve the litigation, and in part on the stakes of the case.” Sutton, 504 F.3d at 693 (quotation

and internal marks omitted). Given the result achieved for the benefit of the Settlement Class in

this case and considering the risk of nonpayment to Class Counsel and resources expended, the

requested fee is reasonable and appropriate under the totality of circumstances.

a. Risk of Nonpayment Class Counsel Incurred

ERISA class actions, particularly those involving employee stock plans, are a relatively

recent development. In re Marsh ERISA Litig., 265 F.R.D. 128, 147–48 (S.D.N.Y. 2010). Unlike,

for example, securities fraud class actions, which have been litigated since the 1940s and as to

which there is a large body of appellate case law, ERISA class action law is still developing. Id.

The relatively unsettled nature of the law applicable to Plaintiff’s claims necessarily increases

the risks for Class counsel. Id. In addition, Class Counsel bore the usual risk inherent in any

contingent litigation — the risk that they would receive nothing at all despite investing the time

and resources necessary to adequately prosecute this case. Id.; cf. Gaskill, 160 F.3d at 363. Here,

those resources were substantial and included hundreds of thousands in expenses for multiple

experts.


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Although Plaintiff and Class Counsel are confident in their claims, and their ability to

maintain class certification, the outcome of this litigation was always uncertain, and recovery

was by no means guaranteed. The risks and obstacles Plaintiff faced in obtaining a recovery are

described more fully in Plaintiff’s Motion for Final Approval, at Section IV(C), but included:

factual disputes regarding the accuracy of Bradford Hammacher’s projections and whether the

valuation methods used by Reliance were proper; disputes about the Parties’ respective burdens

of proof with regard to Plaintiff’s Section 406(a)(1)(E) claim, an issue which was pending before

the Court and was unresolved; and disputes about the proper measure of damages, which would

have led to a battle of experts with an uncertain outcome. Proceeding all the way through the

conclusion of the trial would have presented the risk of no recovery, along with additional delay.

And, even if Plaintiff had succeeded at trial, the amount of damages was uncertain and Reliance

would likely have appealed any judgment, resulting in further delay of any actual monetary

recovery.

“Contingent fees compensate lawyers for the risk of nonpayment. The greater the risk of

walking away empty-handed, the higher the award must be to attract competent and energetic

counsel.” Silverman, 739 F.3d at 958 (citation omitted). Thus, the risk of non-payment is a key

consideration in assessing the reasonableness of a requested fee and must be incorporated into

any ultimate fee award. See Florin v. Nationsbank of Georgia, N.A., 34 F.3d 560, 565 (7th Cir.

1994) (“The lawyers for the class receive no fee if the suit fails, so their entitlement to fees is

inescapably contingent.”) (quotations and citations omitted); Sutton, 504 F.3d at 694 (finding

abuse of discretion where court refused to account for the risk of loss and therefore “the

possibility exists that Counsel … was undercompensated”).

The considerable risk undertaken by Class Counsel in prosecuting this Action on a purely


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contingent fee basis further supports the requested fee award.

b. Quality of Performance and Work Invested

Class Counsel are national leaders in ERISA litigation. See Porter Decl. at ¶¶ 8-13;

Declaration of Mark P. Kindall, filed as Exhibit B in support of this motion and Plaintiff’s

Unopposed Motion for Final Approval of Settlement, (“Kindall Decl.”), ¶5 and Ex. A to Kindall

Decl. Mr. Porter has served as lead counsel in numerous ERISA class actions, including ESOP

cases such as this one. Porter Decl. at ¶¶ 8-10. His firm has recovered millions of dollars for

ERISA plan participants. Id. at ¶¶ 9-10. The quality of Class Counsel’s performance and the

amount of time invested over nearly four years, from initial investigation through the beginning

of trial, through settlement, to achieve a $13,363,636 Settlement Fund for the benefit of the

Settlement Class supports the requested fee award. Sutton, 504 F.3d at 693.

As discussed in Plaintiff’s Motion for Final Approval, the work invested by counsel was

extensive. In the course of this litigation Class Counsel has engaged in comprehensive discovery,

having received and reviewed over 31,000 documents produced by Bradford Hammacher,

Reliance, and various non-parties. Porter Decl. at ¶ 15. Class counsel retained and consulted with

three experts, who prepared detailed reports and analyses on valuation, due diligence and the

direct marketing industry. Id. Reliance’s counsel likewise retained and consulted with two

experts, who prepared reports on similar topics. All five experts were deposed. Id.

Motions practice in the case was also extensive, and included a Motion to Dismiss (Dkt.

19), which was denied (Dkt. 27), a first Motion for Class Certification. (Dkt. 47), a Motion to

Suspend Class Certification Briefing Pending Additional Discovery (Dkt. 56), a Motion for

Summary Judgment by Reliance (Dkt. 66), the denial of Plaintiff’s first motion for class

certification (Dkt. 76), a Motion for Leave to Amend Complaint (Dkt. 77), a second Motion for

Class Certification (Dkt. 90) which was granted (Dkt. 142) and then modified (Dkt. 149), a


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motion for leave to file a Second Amended Complaint (Dkt. 99) which was granted (Dkt. 112), a

second motion to dismiss (Dkt. 113), a Motion by Plaintiff to Compel Discovery (Dkt. 120)

which was granted in part, denied in part and denied in part as moot (Dkt. 132). The Parties also

filed motions to exclude the opposing Parties’ experts (Dkt. 180, 182) which were denied (Dkt.

218).

The Parties’ settlement efforts were similarly vigorous and hard-fought. Class counsel

prepared for and attended a two-day mediation with mediator Robert A. Meyer of JAMS, in

March 2019. Porter Decl. at ¶ 17. Despite their best efforts, the Parties were not able to reach a

resolution at that time. Id. Consequently, Plaintiff and Defendant commenced trial on April 23,

2019, and Plaintiff put on most of his affirmative case before the pre-scheduled break in the trial

schedule. Id. With the assistance of Mr. Meyer, settlement discussions continued in the weeks

following the mediation, during the trial and into the weeks between the scheduled trial dates. Id.

The Parties were ultimately able to reach the proposed settlement terms currently before the

Court. Id.

The quality and amount of work invested by Class counsel in this Action for the benefit

of the Class support the requested fee award.

c. Stakes of the Case

The stakes of the case also support the requested fee award. This case involves more than

1,200 Settlement Class Members who were participants in the Plan. The amount each Settlement

Class Member will recover is approximately $8,036 on average. While this amount is substantial,

it is nonetheless highly unlikely that any individual plan member would bring this case on an

individual basis. A class action is realistically the only way that the more than 1,200 Class

Members would receive any relief.


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4. The Requested Fee Is Reasonable Under A Lodestar Crosscheck

As of this date, Class Counsel has spent approximately 3,690 hours combined litigating

this case, resulting in a combined lodestar of $2,205,875 to date. Porter Decl. at ¶ 22; Kindall

Decl. at ¶ 9. The requested fee represents a lodestar multiplier of 1.20, which is well within the

range of lodestar multipliers approved by this court and others. See e.g., Spano, 2016 WL

3791123, at *3 (lodestar multipliers can be reasonable in a range between 2 and 5) (citation

omitted); Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 103, 123 (2d Cir. 2005)

(approving multiplier of 3.5). The hourly rates contained in the Porter Decl. at ¶ 24, and Kindall

Decl. at ¶ 9, are within the range of rates approved by courts in this jurisdiction in similar cases.

See Spano, 2016 WL 3791123, at *3 (ERISA case; under lodestar cross check, court found that

reasonable rates were: for attorneys with at least 25 years of experience, $998 per hour; for

attorneys with 15–24 years of experience, $850 per hour; for attorneys with 5–14 years of

experience, $612 per hour; for attorneys with 2–4 years of experience, $460 per hour; for

paralegals and law clerks, $309 per hour); Young v. Verizon's Bell Atlantic Cash Balance Plan,

783 F. Supp. 2d 1031, 1037 (N.D. Ill. 2011) (nine year old ERISA case approving rates up to

$750/hour). In addition, Class Counsel anticipates incurring additional time to bring the

Settlement to a conclusion.

As noted above, while the lodestar method is “no longer recommended” in the Seventh

Circuit, some courts in this Circuit employ a “rough” check against the percentage of fund

method. See, e.g., Martin, 2010 WL 11614985, at *4; Heekin, 2012 WL 5878032, at *2

(considering “summary reports” of time, not detailed billing records). The rough cross check

here confirms that the fee is reasonable.


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V. THE COURT SHOULD ALSO AWARD CLASS COUNSEL’S REASONABLE EXPENSES INCURRED IN PROSECUTING THIS LITIGATION

ERISA’s fee-shifting provision further entitles Plaintiff to recover “the costs of action.”

29 U.S.C. § 1132(g)(1). Courts therefore award costs separately from attorneys’ fees to

prevailing plaintiffs in lawsuits. See Matlock v. Pitney-Bowes, Inc., 811 F. Supp. 2d 1186, 1192

(M.D.N.C. 2011). Bailey & Glasser has incurred $630,796 in reasonable litigation expenses and

co-counsel Izard, Kindall & Raabe has incurred $7,366.83. Porter Decl. at ¶ 26; Kindall Decl. at

¶ 13. Class counsel is requesting $638,162.83, less than the $645,000 included in the Class

Notice.

It is well established that counsel who create a common fund like this one are entitled to

the reimbursement of litigation costs and expenses. Beesley, 2014 WL 375432, at *3 (citing Fed.

R. Civ. P. 23; Boeing, 444 U.S. at 478; In re Marsh, 265 F.R.D. at 150 (awarding reasonable

expenses from common fund in ERISA class action).

The Seventh Circuit has held that costs and expenses should be awarded based on the

types of “expenses private clients in large class actions (auctions and otherwise) pay.” Synthroid

I, 264 F.3d at 722; see also Spicer v. Chi. Bd. Options Exch., Inc., 844 F. Supp. 1226, 1256 (N.D.

Ill. 1993) (noting that courts regularly award reimbursement of those expenses that are

reasonable and necessarily incurred in the course of litigation); In re Marsh, 265 F.R.D. at 150.

Here, Class Counsel have incurred $638,162.83 in reimbursable expenses. The largest

portion of these expenses, $432,235, was for experts and consultants needed to prove valuation,

industry practices, and due diligence. Porter Decl. at ¶ 26. Other expenses included deposition

transcripts, mediation fees, electronic case hosting, and travel. Id. Class Counsel’s expenses here

were all reasonably incurred in pursuing this litigation. Id. at ¶ 28 Class Counsel have reviewed

the expense records carefully and determined that the expenses were necessary to the successful


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prosecution of this case. Id. These expenses were necessary to prosecute litigation of this size

and complexity on behalf of the Settlement Class, and they are typical of expenses regularly

awarded in large-scale class actions. Accordingly, Class Counsel request that the Court approve

as reasonable expenses in the amount of $638,162.83.

VI. THE CASE CONTRIBUTION AWARD TO THE CLASS REPRESENTATIVE SHOULD BE APPROVED

Class Counsel also request that the Court grant a case contribution award of $25,000 to

the named Plaintiff for his efforts on behalf of the Class. Case contribution awards compensating

named plaintiffs for work done on behalf of the class are routinely awarded. Such awards

encourage individual plaintiffs to undertake the responsibility of representative lawsuits. See

Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998) (ERISA case recognizing that “because a

named plaintiff is an essential ingredient of any class action, an incentive award is appropriate if

it is necessary to induce an individual to participate in the suit”); Synthroid I, 264 F.3d at 722

(“Incentive awards are justified when necessary to induce individuals to become named

representatives.”).

Here the Named Plaintiff, Mr. Nistra, has been an active, hands-on participant in this

litigation, expending significant amounts of his own time to benefit the Class. He joined this

Action and remained in frequent contact with Class Counsel. Porter Decl. at ¶ 29. His decision to

pursue this case as a class action, and not simply seek individual damages, directly benefited the

Class. He provided documents related to his involvement in the ESOP, traveled from Florida to

Chicago and prepared for and sat for a deposition, and traveled again from Florida to Chicago

and prepared for and testified at trial. Id. He should be compensated for his time and efforts on

behalf of the Class, which has benefited greatly from his representation.

The amount requested, $25,000, is comparable to other awards approved by courts in this


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Circuit in ERISA and other types of class action cases. Beesley, 2014 WL 375432, at *4 (in

ERISA case noting “[a]wards of $15,000 to $25,000 for a Named Plaintiff award and total

Named Plaintiff awards of less than one percent of the fund are well within the ranges that are

typically awarded in comparable cases”); Cook, 142 F.3d at 1016 (upholding award of $25,000

to class representative, based on plaintiff’s time expended and results obtained for the class);

Heekin, 2012 WL 5878032, at *1 (approving $25,000 incentive award to lead class plaintiff over

objection); Desai v. ADT Security Servs., Inc., No. 11-1925, Dkt. 243 at ¶ 20 (N.D. Ill. Feb. 27,

2013) (awarding $30,000 incentive award to each plaintiff in TCPA class settlement).

VII. CONCLUSION

WHEREFORE, Class Counsel respectfully request that the Court grant this motion and

award Class Counsel’s attorneys’ fees in the amount of $2.64 million, equal to 19.87% of the net

Settlement Fund after deducting administrative costs and contribution award, and 20.9% when

litigation expenses are also deducted, Class Counsel’s litigation expenses and costs in the amount

of $638,162.83, and the requested case contribution award of $25,000.

Dated: May 18, 2020

Respectfully submitted, /s/ Patrick Muench

Patrick Muench (IL #6290298) BAILEY & GLASSER, LLP 333 S. Wabash Ave., Ste. 2736 Chicago, IL 60604 Telephone: (312) 995-7143 [email protected] Gregory Y. Porter Ryan T. Jenny BAILEY & GLASSER, LLP 1055 Thomas Jefferson St., NW, Suite 540 Washington, DC 20007 [email protected]


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[email protected] Telephone: (202) 463-2101 Robert A. Izard (pro hac vice) Douglas P. Needham (pro hac vice) IZARD, KINDALL & RAABE, LLP 29 South Main Street, Suite 305 West Hartford, CT 06107 Telephone: (860) 493-6292 Facsimile: (860) 493-6290 [email protected] [email protected] Attorneys for Plaintiff


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CERTIFICATE OF SERVICE

I certify that, on May 18, 2020, I caused the foregoing to be electronically filed with the

Clerk of the United States District Court for the Northern District of Illinois using the CM/ECF

system, which will send notification of such filing to all counsel of record.

/s/ Patrick Muench

Patrick Muench


eastern division artur a. nistra, group, inc. employee … · 2020-05-19 · case no. 1:16-cv-04773...

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