In this case, the greatest benefit to the class members provided by the settlement agreement is First Nationwide's promise to take corrective action requiring fewer funds in customer escrow accounts. This result, however, is difficult to monetize. The future financial value of First Nationwide's promise to the class relies heavily on a number of currently unknown and nebulous variables, including interest rates, future property tax rates in different locales, and the time remaining on class members' mortgages. Class counsel has admitted that such an appraisal is difficult, if not impossible, to make with any certainty. The Court therefore will not undertake such a seemingly fruitless exercise. Instead, as it is plain that the precise evaluation required to determine a fee award based on the percentage of recovery method is unavailable here, the Court shall exercise its discretion and employ the lodestar method for calculating the appropriate amount of counsel fees.
Determining the lodestar is merely a starting point from which to analyze counsel's fee request. The Court must first multiply the number of hours spent by class counsel in this litigation by a number representing a reasonable hourly rate. Lindy Bros., Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973). After this amount, the lodestar, is determined, the Court may make adjustments as necessary. See In re Fine Paper Antitrust Litig., 751 F.2d 562, 583 (3d Cir. 1984).
Counsel has submitted fairly detailed time sheets identifying the type of work done by its various attorneys, as well as the amount of time spent on each task. None of the time entries appear inflated nor do the entries appear extraneous or intended merely for the purpose of inflating the fees. Accordingly, the Court concludes that all hours claimed by class counsel shall be used for the lodestar calculation.
Counsel has also submitted a schedule of the attorneys who worked on the case and their respective billing rates. While the rates appear on the "high side" based on the Court's experience, they are not out of line with the market rate in the community for counsel of similar experience and skill.
Accepting as reasonable both the number of hours spent and the rates, the Court concludes that the amount submitted by counsel for the plaintiffs, $ 59,586.25, is the lodestar amount.
The lodestar may be increased by way of a quality multiplier if a court finds that the settlement was "achieved with unusual efficiency, and with little expenditure of attorney time and expense." In re Fine Paper Antitrust Litig., 751 F.2d at 589. However, "the overall quality of performance ordinarily should not be used to adjust the lodestar, [so as to remove] any danger of double counting." Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 566, 106 S. Ct. 3088, 3099, 92 L. Ed. 2d 439 (1986). In the present case, the Court will not enhance the lodestar with a quality multiplier. To the extent that counsel's skill and experience helped shepherd the case efficiently, this factor has already been taken into account in approving counsel's high hourly rate. See Rainey v. Philadelphia Hous. Auth., 832 F. Supp. 127, 130 (E.D. Pa. 1993) ("Normally the higher the allowed hourly rate commanded based upon skill and experience, the shorter the time it should require an attorney to perform a particular task."). Applying a quality multiplier in this case would result, therefore, in double counting. In any event, the Court does not agree that the litigation of this case reflected "unusual" efficiency on the part of counsel.
The Court may also augment the lodestar by using a contingency multiplier. A contingency multiplier was previously used to reflect "the contingent nature of [the lawsuit's] success" and the "delay in the receipt of payment for services rendered." Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102, 117 (3d Cir. 1976). In City of Burlington v. Dague, 505 U.S. 557, 112 S. Ct. 2638, 120 L. Ed. 2d 449 (1992), the Supreme Court ruled that a contingency multiplier based on the risk of the plaintiff's success could not be used to increase the lodestar under two federal fee-shifting statutes. This prohibition has subsequently been extended to common fund cases, making the likelihood that the plaintiffs would not succeed irrelevant for purposes of enhancing the lodestar. See In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d at 822 (stating that the relevance of Dague to a de facto common fund "was patent"); In re Nineteen Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig., 982 F.2d 603, 619 (1st Cir. 1992) (Lay, J., concurring) (applying Dague to a common fund case). But see Florin v. Nationsbank of Georgia, 34 F.3d 560, 564-65 (7th Cir. 1994) (refusing to extend Dague to common fund cases); In re Washington Power Supply Sys. Litig., 19 F.3d 1291, 1299-1301 (9th Cir. 1994) (same).
The Supreme Court's decision in Dague did not, however, rule out a multiplier based upon a delay in counsel's receipt of its fees. The parties initially petitioned the Court for preliminary approval of the attorneys' fees on December 28, 1993, after which the necessary steps for approval were taken. Given the time spent in the finalization process, a multiplier of 0.1 will be used to increase the fee award. Thus, the amount to be awarded to plaintiffs' counsel shall be $ 5,888.37 in costs and expenses and $ 65,544.88 in fees, for a sum total of $ 71,433.25.
4. Approval of Class Representative Fees
Having determined the award of attorneys' fees, the Court now turns to the class representative fees sought by plaintiffs Michael and Erna Lake. Like the attorneys' fees in this case, if the Lakes do not receive a class representative fee, the fee will not be distributed to the class.
The Lakes seek a fee of $ 2,000 as compensation for the risk of retaliation by First Nationwide, for the time they spent assisting counsel, and for the fact that they would have been liable for costs incurred if this matter had not resulted in an award to the plaintiff class. Furthermore, they claim that they risked an invasion of privacy "by revealing their financial history to the public and risked acquiring public attention and public notoriety." Memorandum in Support of Plaintiffs' Motion for Approval of Application for Fees for Class Counsel and the Class Representatives at 12.
The Court disagrees that the Lakes were exposed to a realistic threat of retaliation, given their contractual relationship to the Bank under their mortgage. Yet, some allowance for the time that the Lakes spent prosecuting this matter and reimbursement for the actual costs they incurred would be reasonable.
Despite the Court's prior admonition that these fee requests would be subject to considerable scrutiny,
the Lakes have not provided an adequate indication of either the actual time they invested or the costs they incurred as a result of their involvement in this case. The Court's independent review of class counsel's time records discloses some reference, on three separate occasions, to counsel's conferences with what appear to be the Lakes. Yet, the amount of time during those three conferences which was spent with the Lakes remains unclear. Furthermore, class counsel stated at the November 29, 1994, hearing that both plaintiffs came to Philadelphia from the suburbs to discuss certain escrow records and that the plaintiffs spent time answering phone calls from class members and being prepared for depositions.
Based on this record, the Court finds no justification in awarding a $ 2,000 fee to these plaintiffs. Instead, based on the time records and the comments by counsel, and making a slight adjustment for costs, the Court shall approve a class representative fee totalling $ 500 ($ 250 each) to both plaintiffs to compensate them for their actual time and expenses. No other fee shall be paid to the class representatives
The Court grants final certification to the proposed class and approves the settlement agreement between the parties. The Court further finds that attorneys' fees and costs in the amount of $ 71,433.25 are reasonable in light of the circumstances. A class representative fee in the amount of $ 500 is awarded to Michael and Erna Lake to account for the time and costs they spent during their involvement with this litigation.
Appropriate findings and an order shall be entered.
FINDINGS AND ORDER
This matter came on for a hearing before the undersigned on Tuesday, November 29, 1994 on the motion of plaintiffs for final approval of the class action settlement entered into between the parties to the action. Defendant First Nationwide Bank ("First Nationwide") appeared in support of said motion.
The plaintiff class was represented by Charles S. Zimmerman and Barry G. Reed of the law firm Zimmerman Reed, 5200 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota; and Cary L. Flitter of the law firm of Lundy, Flitter & Beldecos, 450 N. Narberth Avenue, Narberth, Pennsylvania. First Nationwide was represented by Alan N. Salpeter and Jeffrey M. Strauss of the law firm of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois; and Arthur E. Newbold of the law firm of Dechert, Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania. The issues with respect to the fairness of the proposed settlement and the attorneys' fees and costs sought by plaintiffs' counsel were briefed and argued. Based upon such briefs and arguments, and upon the other files and records in this matter, the Court FINDS and ORDERS as follows:
1. This action was commenced against First Nationwide in the United States District Court, Eastern District of Pennsylvania, on January 4, 1993.
2. The claims asserted by plaintiffs consist of one cause of action under § 10 of the Real Estate Settlement and Procedures Act ("RESPA"), and four causes of action asserting remedies under several statutes and common law.
3. This action may for all purposes be maintained as a class action pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3), with the class consisting of all persons who have or had escrowed mortgage loans that are now, or were, serviced or subserviced by the defendant or its predecessors at any time from January 4, 1983 up to and including the date of the settlement agreement. This class includes subclasses of:
(a) "Open loan class members": subject to the last sentence of paragraph 25 of the settlement agreement, all persons who have escrowed mortgage loans that are being serviced or subserviced by defendant as of the date of the settlement agreement ("open loans"); and
(b) "Closed loan class members": all persons who had escrowed mortgage loans that were serviced or subserviced by defendant or its predecessors between January 4, 1983 and the date of the settlement agreement (the "closed loan period"), which loans were paid off, transferred or otherwise removed from defendant's books and records, or whose escrow accounts were waived by defendant or its predecessors during the closed loan class period ("closed loans"). The term "closed loan class members" shall include persons treated as closed loan class members pursuant to the last sentence of paragraph 25 in the settlement agreement.