Fraley et al v. Facebook, Inc., No. 5:2011cv01726 - Document 360 (N.D. Cal. 2013)
Court Description: ORDER GRANTING IN PART MOTION FOR ATTORNEY FEES, COSTS, AND INCENTIVE AWARDS. by Judge Richard Seeborg (cl, COURT STAFF) (Filed on 8/26/2013) (Entered: 08/26/2013)
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Fraley et al v. Facebook, Inc. Doc. 360 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 SAN FRANCISCO DIVISION 9 11 For the Northern District of California United States District Court 10 12 13 14 No. C 11-1726 RS ANGEL FRALEY, et al. Plaintiffs, ORDER GRANTING IN PART MOTION FOR ATTORNEY FEES, COSTS, AND INCENTIVE AWARDS v. FACEBOOK, INC., Defendant. 15 16 ____________________________________/ 17 18 19 I. INTRODUCTION This class action challenged the propriety of Facebook’s “Sponsored Stories” program, in 20 which the names and “profile pictures” of Facebook members are sometimes presented in 21 connection with promoting products and services those members have indicated they “like,” through 22 the Facebook “like” feature. The parties’ settlement has received final approval and requires (1) 23 establishment of a $20 million dollar settlement fund, and (2) Facebook to make changes to the 24 Statement of Rights and Responsibilities (“SRRs”) it contends governs use of its site, and to 25 implement additional mechanisms giving users greater information about, and control over, how 26 their names and likenesses are employed in connection with Sponsored Stories (the “injunctive 27 relief”). The settlement fund is to be distributed in cash payments of $15 each to Facebook 28 members who submitted valid claims. It will also be used to pay settlement administrative Dockets.Justia.com 1 expenses, attorney fees and costs, and incentive awards, with the remaining balance going to 2 specified cy pres recipients. Plaintiffs move for an attorney fee award of $7.5 million, plus costs, 3 and incentive awards to the named plaintiffs of $12,500 each, for a total of $37,500. The motion will 4 be granted, albeit in lower amounts than those requested. 5 II. DISCUSSION1 6 7 A. Attorney Fees 8 Plaintiffs seek to recover $7,500,000 in fees and $236,591.08 in costs2 out of the settlement which a fee award of 25% of a settlement fund is generally considered the benchmark. See Six (6) 11 For the Northern District of California fund. They contend the fee request is well justified under the “percentage-of-recovery” approach, in 10 United States District Court 9 Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). Although 12 plaintiffs are requesting fees amounting to 37.5% of the settlement fund, they argue that the 13 recovery should be seen as including the economic value of the injunctive relief, which they 14 estimate to be between $57.4 million and $226 million. Plaintiffs then claim that their requested 15 $7.5 million in fees represents either 9.6%, 4.5%, or an even smaller percent of the common fund, 16 depending on which expert valuation of the injunctive relief is employed. As a cross-check on the purported reasonableness of their request, plaintiffs calculate their 17 18 unadjusted lodestar (i.e., the hours counsel expended multiplied by their claimed hourly rates) as 19 $5,391,030. The $7.5 million in requested fees amounts to a 1.391 multiplier, which plaintiffs argue 20 is “more than reasonable” compared to multipliers in other fee awards approved in the Ninth Circuit. 21 Plaintiffs’ counsel have submitted a summary of the hours they claim to have worked on this case— 22 8,346.6 hours in total—broken down into ten “task categories.” The claimed billing rates range from 23 $350 per hour for a second year associate to $950 per hour for lead counsel. In support of these 24 rates, plaintiffs have provided curriculum vitae for each of the six attorneys for whom they are 25 26 1 The factual and procedural background of this litigation has been set forth in prior orders and will not be repeated here. 27 2 28 This cost figure was updated on reply to a lower amount than first requested. 2 1 seeking fees and an expert declaration opining as to the reasonableness of the rates in this 2 geographical market. 3 4 5 1. Basis of calculation In opposing the fee request, Facebook insists that applicable California law requires that the 6 fee award be calculated through the lodestar approach, and not as a percentage of the recovery. As 7 Facebook correctly observes, the availability and amount of the fee award are considered 8 substantive issues of state law for Erie purposes. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 9 (9th Cir. 2002); Mangold v. Cal. Pub. Util. Comm’n, 67 F.3d 1470, 1478 (9th Cir. 1995). While Facebook points to some California precedent questioning whether a percentage-based award 11 For the Northern District of California United States District Court 10 remains available in California, more recent Ninth Circuit guidance teaches that in common fund 12 cases, under state and federal law, courts possess the “discretion to apply either a lodestar method or 13 the percentage-of-the-fund method in calculating a fee award.” Fischel v. Equitable Life. Assur. 14 Society of U.S., 307 F.3d 997, 1006 (9th Cir. 2002) (citing Vizcaino, 290 F.3d at 1047); In re 15 Consumer Privacy Cases, 175 Cal. App. 4th 545, 558 (2009). 16 In this instance, 25% of the common fund recovery (assuming no value ascribed to 17 injunctive relief, as explained below), prior to deductions for costs and administrative procedures, is 18 $5 million. Plaintiffs’ claimed lodestar is just under $5.4 million. Although the lodestar would be 19 subject to downward adjustment to the extent the rates or hours are found to be unreasonable, the 20 eventual award under a lodestar approach at least theoretically could be adjusted upward through 21 use of a multiplier. Thus, whether the award were calculated as a percentage of recovery with the 22 lodestar used as a “cross-check,” or under a lodestar approach with the percentage of recovery as a 23 cross-check, there would be little, if any, difference in the eventual award in this case. 24 Regardless of the approach, “[t]he ultimate goal is to award a reasonable fee.” Hartless v. 25 Clorox, 273 F.R.D. 630, 645 (S.D. Cal. 2011). As an exercise of discretion, in this instance it is 26 appropriate to utilize the percentage of recovery approach, including the 25% benchmark. Although 27 the percentage recovery is apparently sometimes calculated prior to any deduction for costs and 28 settlement administration expenses, in this instance it appears more appropriate and reasonable to 3 1 apply the benchmark percentage to that portion of the settlement that will actually be distributed to 2 the class, either directly or through cy pres. Accordingly, plaintiffs shall recover fees in the amount 3 of 25% of the settlement funds remaining after deducting (1) all costs of settlement administration, 4 (2) the attorney costs allowed below, and (3) the incentive awards allowed below. 5 6 7 2. Size of the common fund Plaintiffs urge the Court to assign a dollar value to the injunctive relief, such that it can be Plaintiffs have pointed to cases in which courts have acknowledged the value of injunctive relief 10 when awarding fees, particularly as one factor supporting a multiplier under a lodestar approach. 11 For the Northern District of California considered part of the total settlement fund, for purposes of applying a percentage-based fee. 9 United States District Court 8 See, e.g., White v. Experian Information Solutions, 2011 U.S. Dist LEXIS 79044 (C.D. Cal. July 15, 12 2011). Additionally, the monetary value of injunctive relief has sometimes been taken into account 13 where it plainly would result in more cash in the pockets of the class members in the future, even if 14 the precise amount of such benefit would be difficult to ascertain. See, e.g., McCoy v. Health Net, 15 569 F.Supp.2d 448 (D.N.J. 2008) (value of injunctive relief considered where settlement required 16 defendant to alter procedures for future processing of health insurance claims, to avoid 17 underpayments.) 18 Here, plaintiffs have offered several different methodologies for assigning a dollar value to 19 the injunctive relief. There is nothing to suggest, however, that any class member will see a single 20 dollar more in his or her pocket as a result of any of the injunctive provisions, directly or indirectly. 21 There is no indication, for example, that by having the opportunity to limit and control appearances 22 in Sponsored Stories, a Facebook member will be able to exploit his or her name or likeness to 23 greater commercial advantage elsewhere. There certainly are no circumstances under which a 24 member will obtain monetary compensation from Facebook as a result of the injunctive provisions. 25 Under these circumstances, while the non-financial benefits to the class of the injunctive 26 relief certainly can be used to support the over-all fairness, reasonableness, and adequacy of the 27 settlement, and while they may generally support a fee award at the benchmark level, it would not 28 be appropriate to award plaintiffs’ counsel a percentage of a dollar figure that is, at best, an abstract 4 1 theoretical construct, not cash benefits actually obtained for the class. Accordingly, adopting any 2 particular dollar calculation offered by plaintiffs is unwarranted, and the “value” of injunctive relief 3 will not be deemed part of the settlement fund against which a benchmark percentage will be 4 applied. 5 6 7 3. Lodestar cross-check As noted, plaintiffs’ claimed lodestar is somewhat greater than 25% of the settlement fund, 8 particularly given that costs, expenses, and incentive awards are being deducted from the fund prior 9 to application of the percentage. Given the size and complexity of this litigation, the hours expended by counsel were generally commensurate with the tasks involved and the results achieved. 11 For the Northern District of California United States District Court 10 Facebook complains that excessive hours were billed by lead counsel, for work that could have been 12 delegated to associates with lower billing rates. Delegation, however, does not inevitably lead to 13 overall savings, and counsel here appears to have avoided some of the excesses that can result from 14 overstaffing. Whether plaintiffs have sufficiently demonstrated the reasonableness of all of their 15 hourly rates is a somewhat closer call. 16 Were it necessary to calculate the lodestar with precision, at least some reduction in hourly 17 rates likely would be applied, and specific time entries might require closer examination. For 18 purposes of applying the cross-check, however, plaintiffs have adequately demonstrated that they 19 reasonably incurred approximately 8000 hours in attorney time, which at reasonable hourly rates 20 would result in a lodestar of not less than $4.5 million. Plaintiffs have not shown that application of 21 a multiplier to that lodestar is warranted in order to reach a reasonable fee award. This is 22 particularly so given that plaintiffs have urged application of a percentage-based recovery, and the 23 lodestar calculation is only being employed as a cross-check. Fees are being awarded at the full 24 25% benchmark, applied against the net cash recovery to class members, directly or through cy pres. 25 The lodestar calculation demonstrates that figure is not excessively high. Having urged a 26 percentage-based recovery, plaintiffs cannot now reasonably contend that the lodestar cross-check 27 suggests that recovery is too low unless a multiplier were applied. In sum, as a cross-check, the 28 5 1 lodestar approach confirms that application of the percentage of recovery model, in the manner 2 outlined above, reaches an appropriate result. 3 4 B. Costs 5 Plaintiffs have adequately supported their request for costs, and Facebook does not suggest 6 otherwise, except with respect to a third-party claim made by an entity known as Razorfish, for 7 responding to a subpoena. Plaintiffs agree that the Razorfish claim is excessive, and are challenging 8 it. Accordingly, costs are awarded in the amount requested, $236,591.08. As suggested by 9 plaintiffs on reply, an additional $45,000 shall be allocated for payment of the Razorfish claim, with any excess remaining upon resolution of that claim to be added to the cy pres distribution. 11 For the Northern District of California United States District Court 10 12 C. Incentive Awards 13 As noted, the three named plaintiffs seek incentive awards—or “service” awards—of 14 $12,500 each, in light of the risks they took, and the efforts they made, in pursuing this litigation. 15 As noted in the order approving the settlement, Radcliffe v. Experion Information Solutions, 715 16 F.3d 1157 (9th Cir. 2013) does not preclude such awards here, where eligibility to receive them was 17 not conditioned on class representatives’ support for the settlement. Nevertheless, Radcliffe teaches 18 that making incentive awards, “should not become routine practice” and that they must be 19 “scrutinize[d]” carefully, so that they “do not undermine the adequacy of the class representatives.” 20 715 F. 3d at 1160. The greater the disparity between the awards and the recovery by other class 21 members, the more cause there is for concern. Id. 22 In light of these principles, an award in the amount requested by plaintiffs would be 23 excessive. Nevertheless, they did take risks and contribute time and efforts to this litigation, which 24 resulted in benefits to the class as a whole. Whether or not Facebook’s prior practices caused 25 significant and tangible harm, the additional transparency and control resulting from the settlement 26 is to users’ benefit. Under all the circumstances, an appropriate incentive award to each named 27 plaintiffs will be in the amount of $1500. 28 6 III. CONCLUSION 1 2 Plaintiffs’ application for costs is granted in the amount of $236,591.08. Up to an additional 3 $45,000 is allowed to pay the Razorfish claim, with any excess to be included in the cy pres 4 distributions. The three named plaintiffs are awarded $1500 each. Plaintiffs may recover attorney 5 fees of 25% of the balance of the settlement funds remaining after deduction of (1) settlement 6 administration expenses, (2) the costs awarded herein, (3) the incentive awards made herein. Upon 7 final calculation of those figures, plaintiffs shall file a statement setting forth the exact amount of 8 their fee recovery consistent with this order. 9 IT IS SO ORDERED. 11 For the Northern District of California United States District Court 10 12 13 Dated: 8/26/13 RICHARD SEEBORG UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7
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