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Flores v. Express Services, Inc.

United States District Court, E.D. Pennsylvania

March 30, 2017

JOSE FLORES
v.
EXPRESS SERVICES, INC., et al.

          MEMORANDUM

          Bartle, J.

         Before the court is the motion of plaintiff Jose Flores seeking attorneys' fees and reimbursement of expenses for work performed in connection with the class settlement in this action.

         Plaintiff Jose Flores, on behalf of himself and a class of similarly situated individuals, sued defendants Express Services, Inc. and Express Personnel - Philadelphia for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681, et seq. In his Second Amended Complaint, Flores has alleged that defendants, staffing agencies and users of consumer reports for employment purposes, willfully failed to provide applicants who were the subjects of background reports with notice and a copy of the report before taking adverse action against them, in violation of 15 U.S.C. § 1681b(b)(3).

         On October 28, 2016, the court preliminarily approved the class Settlement Agreement, pending a final approval hearing pursuant to Rule 23(e) of the Federal Rules of Civil Procedure. See Doc. # 39. The court required notice to be given to Class Members and scheduled a final hearing for March 9, 2017.

         On February 28, 2017, Flores filed a motion for final approval of class action settlement. A final approval hearing was held on March 9, 2017. In a separate order following the hearing, the court has approved the class settlement and has found it to be fair, reasonable, and adequate.

         The Settlement Agreement provides that defendants will establish a Settlement Fund of $5, 750, 000 to be used for compensation to Class Members, costs of settlement administration, a $10, 000 service award to the individual Class Representative, Jose Flores, and fees and costs for class counsel.

         Of this Settlement Fund, an Automatic Payment Fund of $1, 842, 400 is allocated for compensation of $50 to each to Class Member who does not file a claim for damages. As of February 17, 2017, class counsel estimated that there are approximately 32, 748 Class Members set to receive automatic payments of $50 each. The Settlement Agreement also contains a Damages Claims Fund of $1, 830, 850, which will provide a payment of up to $2, 500 for each Class Member who submits a claim for damages. The Settlement Administrator had received 2, 333 Damage Claims as of February 17, 2017, which translates to a minimum payment of $785 per Class Member seeking damages.

         A cy pres provision for funds not otherwise expended is included with the following recipients: 50% to the Salvation Army, 25% to the Veterans' Multi-Service Center; and 25% to HAP Veterans' Project.

         Finally, plaintiff seeks from the Settlement Fund $1, 895, 362.33 in attorneys' fees and $19, 387.67 in costs for a total of $1, 914, 750.

         I.

         Rule 23(h) of the Federal Rules of Civil Procedure 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 FCRA authorizes the award of attorneys' fees. See 15 U.S.C. § 1681n(a)(3). Attorneys' fees are calculated using one of two methods: the percentage-of-recovery method (“POR method”) or the lodestar method. Sullivan v. DB Investments, Inc., 667 F.3d 273, 330 (3d Cir. 2011). The POR method applies a “certain percentage to the settlement fund, while [the lodestar method] multiples the number of hours class counsel worked on a case by a reasonable hourly billing rate for such services.” Id. (quoting In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005)) (internal citations and quotations omitted). The POR method is favored where class counsel's efforts have achieved a common fund because it allows the court to award fees in a manner that rewards counsel for success and penalizes counsel for failure or waste. Rite Aid, 396 F.3d at 300. The lodestar method, which multiplies the number of hours reasonably expended on the case by counsel's reasonable hourly rate, is commonly used in statutory fee-shifting cases and “where the expected relief has a small enough monetary value that a percentage-of-recovery method would provide inadequate compensation.” In re Diet Drugs, 582 F.3d 524, 540-41 (3d Cir. 2009). The lodestar method is also used to cross check the reasonableness of the POR method fee award. Sullivan, 667 F.3d at 330; Rite Aid, 396 F.3d at 294; In re AT&T Corp., 455 F.3d 160, 164 (3d Cir. 2006).

         Here, we have a hybrid case. A hybrid case exists when there is both a common fund and a fee-shifting statute. With a hybrid case, the court has discretion to employ either the POR method or the lodestar method. See Brytus v. Spang & Co., 203 F.3d 238, 243 (3d Cir. 2000); In re Cendant Corp. PRIDES Litig., 243 F.3d 722, 737 n. 20 (3d Cir. 2001). The court should cross-check its fee calculation with the unused method to determine that the award is reasonable. See Sullivan, 667 F.3d at 330.

         In calculating the fee using the POR method, our Court of Appeals has instructed that there are ten factors that should be considered. Id.; Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3d Cir. 1990); In re Prudential Ins. Co. Sales Practices, 148 F.3d 283, 332 (3d Cir. 1998). These factors, identified in Gunter and Prudential, are:

(1) the size of the fund created and the number of beneficiaries, (2) the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel, (3) the skill and efficiency of the attorneys involved, (4) the complexity and duration of the litigation, (5) the risk of nonpayment, (6) the amount of time devoted to the case by plaintiffs' counsel, (7) the awards in similar cases, (8) the value of benefits attributable to the efforts of class counsel relative to the efforts of other groups, . . . (9) the percentage fee that would have been negotiated ...

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