United States District Court, E.D. Pennsylvania
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
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).
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.
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.
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.
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.
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
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.
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).
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.
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
(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 ...