Watkins v. Hireright, Inc., No. 3:2013cv01432 - Document 153 (S.D. Cal. 2016)
Court Description: ORDER granting 136 Motion for Attorneys' Fees, Costs and Service Award. The Court GRANTS Plaintiffs Motion for Attorneys Fees, Costs and Service Award. (ECF No. 136.) The Court awards Class Counsel $655,000 in attorneys fees and $60,000 in Costs. The Court also awards named Plaintiff Spencer Hoyt $10,000 as a service or incentive award. Signed by Judge Cynthia Bashant on 9/30/2016. (acc)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 BLANCA WATKINS, SPENCER HOYT, individually, on behalf of other similarly situated individuals, and on behalf of the general public, 11 12 13 Case No. 13-cv-1432-BAS-BLM Plaintiffs, 14 v. 15 ORDER GRANTING MOTION FOR ATTORNEYS’ FEES, COSTS AND SERVICE AWARD [ECF No. 136] HIRERIGHT, INC., 16 Defendant. 17 18 19 Plaintiff’s counsel files an unopposed Motion for Attorneys’ Fees, Costs and 20 Service Award requesting $655,000 in attorneys’ fees; $60,000 reimbursement for 21 costs; and $10,000 as a service award for the named Plaintiff Spencer Hoyt. (ECF 22 No. 136.) The Court held a hearing on the issue on September 19, 2016. (ECF No. 23 149.) 24 After reviewing the time sheets and considering the arguments of counsel both 25 oral and written, the Court GRANTS the Motion for Attorneys’ Fees, Costs and 26 Service Award. 27 // 28 // –1– 13cv1432 1 I. BACKGROUND 2 On May 24, 2013, Blanca Watkins filed a civil class action in San Diego 3 Superior Court, which Hireright removed to federal court. (ECF No. 1.) On March 4 19, 2014, Plaintiff filed an amended complaint adding Spencer Hoyt as a named 5 Plaintiff. (ECF No. 60.) After extensive discovery, including several litigated 6 discovery disputes, Plaintiffs filed a Motion to Certify the Class. (ECF No. 85.) On 7 September 11, 2014, Blanca Watkins settled her individual claims with Hireright, and, 8 therefore, she was dismissed from the case. (ECF No. 101.) 9 On November 10, 2014, the parties attended mediation with a neutral mediator 10 and reached a preliminary settlement agreement. On January 30, 2015, the parties 11 filed a Joint Motion for Preliminary Approval of Proposed Settlement. (ECF No. 119.) 12 On February 11, 2015, Hireright filed a Notice of Bankruptcy, and the case was 13 stayed. (ECF No. 122.) After additional negotiation with the assistance of bankruptcy 14 counsel, on October 9, 2015, the parties requested that the Motion for Preliminary 15 Approval be reinstated. (ECF No. 125.) The Motion was granted. (ECF No. 130.) 16 Now pending before the Court is the Motion for Final Approval of the Class Action 17 Settlement (ECF No. 141) and this Motion for Attorneys’ Fees Costs and Service 18 Award. (ECF No. 136.) 19 20 II. STATEMENT OF FACTS 21 A. Underlying Case 22 Hireright is a large consumer reporting agency. Its customers, employers, use 23 it both for background checks of potential employees, as well as for human resources 24 support and assistance. Plaintiffs allege Hireright violated the Fair Credit Reporting 25 Act (“FCRA”) when it failed to include certain emails when consumers requested 26 copies of their files. Specifically, Hireright sends its customers (employers) system- 27 generated emails informing the customers whether the consumer’s background report 28 may or may not meet the customer’s hiring criteria. Plaintiffs contend that those –2– 13cv1432 1 emails should have been included in Hireright’s responses to consumer disclosure 2 requests. 3 4 B. Attorneys’ Fees and Costs 5 During the three years this case has been pending, Class Counsel investigated 6 and drafted both the Complaint and the Amended Complaint, drafted and served 7 multiple sets of written discovery, reviewed objections, and engaged in meet and 8 confers regarding this written discovery. Additionally, Class counsel prepared and 9 conducted depositions of defense witnesses, prepared and defended depositions of the 10 two named Plaintiffs, and conducted meet and confers regarding deposition disputes. 11 Class Counsel responded to 119 special interrogatories, 50 clarifying questions, and 12 156 written discovery requests propounded by Defendant and researched and drafted 13 responses to Defendant’s motion to compel. The docket is replete with instances when 14 counsel returned to the Magistrate Judge for resolution of various discovery disputes. 15 Class Counsel then researched and drafted the motion for class certification. Once an 16 agreement to attend mediation was reached, counsel drafted mediation briefs, 17 attended a full-day mediation, and then drafted multiple drafts of the settlement 18 documents. Counsel claims it engaged in more than twelve hours of arm’s length 19 negotiations to reach the final agreement. 20 After the settlement agreement was executed and the motion for preliminary 21 approval was drafted and filed, Defendant filed for bankruptcy in Delaware. Class 22 counsel filed a proof of claim in the bankruptcy case on behalf of the class, hired 23 bankruptcy counsel, and eventually negotiated an agreement whereby Hireright, in 24 connection with its plan of reorganization, would resume its original settlement 25 agreement. Class Counsel arranged for this agreement to be incorporated into the 26 bankruptcy court’s confirmation order. 27 28 Class Counsel attaches billing records showing it has expended $97,627 in litigation expenses and has incurred $960,305 in attorneys’ fees. –3– Nonetheless, 13cv1432 1 counsel requests only $60,000 in fees and $655,000 in attorneys’ fees. 2 3 C. Service Award 4 Mr. Hoyt’s involvement became critical when the single other named Plaintiff 5 reached an individual settlement with Hireright and asked to be dismissed from the 6 case. According to Class Counsel, Mr. Hoyt assisted in the investigation of claims, 7 responded to discovery including production of documents, and prepared and 8 attended his deposition. Thus, Class Counsel requests a $10,000 service award on 9 behalf of Mr. Hoyt. 10 11 D. Settlement Agreement 12 The Settlement Agreement provides for a class fund of $460,000, negotiated 13 separate from and exclusive of any attorneys’ fees, costs, or service award. This class 14 fund will be divided up pro rata among all class members. The class administrator 15 indicates the individual per-claim settlement amount, based on 18,381 claims, will be 16 $25.02. (Supplemental Declaration of Kelly Kratz Regarding Notice and Settlement 17 Administration Activities Completed as of September 19, 2016, at ¶ 4.) In addition, the settlement provides for injunctive relief. 18 On all reports 19 pertaining to a consumer who was adjudicated by Hireright, Hireright will include the 20 following on the report (both on the consumer copy and the file disclosure copy, if 21 any): 22 (1) The final adjudication status for the report; 23 (2) If an email notification was sent communicating that adjudication status to 24 the customer, an “Activity Log” or similarly designated section of the 25 report, stating the fact that an email was sent and the date of the email; and (3) The following statement: 26 27 // 28 // –4– 13cv1432 “Email notifications, if configured, were sent by Hireright to the user who requested this report (identified in the ‘Recipient’ column of the report Activity Log). Such notifications may indicate whether the background report satisfies certain criteria established by the user as displayed in the ‘Result’ column of the report Activity Log.” 1 2 3 4 5 (Id. ¶ 2.) 6 7 III. ATTORNEYS’ FEES AND COSTS 8 Courts have an independent obligation to ensure that the attorneys’ and class 9 representative fees awards, like the settlement, are reasonable. In re Bluetooth 10 Headsets Products Liability Litig., 654 F.3d 935, 941 (9th Cir. 2011). In this case, 11 Plaintiff seeks attorneys’ fees under the FRCA’s fee provision, 15 U.S.C. 12 §1681n(a)(3). (ECF No. 136.) This fee provision is a fee-shifting statute. Holman 13 v. Experian Info. Sols., Inc., No. 11-cv-180 CW (DMR), 2014 WL 7186207, at * 3 14 (N.D. Cal. Dec. 12, 2014). “A fee-shifting provision’s purpose is to encourage private 15 litigants to enforce the laws that protect the public.” Id. Therefore, in fixing the fee 16 award, courts in the Ninth Circuit typically examine the “lodestar” in determining the 17 appropriate amount of fees. Id. at *4; see also In re Bluetooth, 654 F.3d at 941 (“The 18 ‘lodestar method’ is appropriate in class actions brought under fee-shifting statutes . . 19 . where the relief sought and obtained—is often primarily injunctive in nature and 20 thus not easily monetized, but where the legislature has authorized the award of fees 21 to ensure compensation for counsel undertaking socially beneficial litigation.”) 22 In the “lodestar method,” the Court multiplies the number of hours the 23 prevailing party reasonably expended by a reasonable hourly rate for the work. In re 24 Bluetooth, 654 F.3d at 941. The hourly rate may be adjusted for the experience of the 25 attorney. 26 However, “the district court . . . should exclude from the initial fee calculation hours 27 that were not ‘reasonable expended.’” Sorenson v. Mink, 239 F.3d 1140, 1146 (9th 28 Cir. 2001) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983)). The Court Id. The resulting amount is “presumptively reasonable.” Id. at 942. –5– 13cv1432 1 may then adjust this presumptively reasonable amount upward or downward by an 2 appropriate positive or negative multiplier reflecting a whole host of reasonableness 3 factors—including the quality of the representation, the complexity and novelty of the 4 issues, the risk of nonpayment, and, foremost in considerations, the benefit achieved 5 for the class. In re Bluetooth, 654 F.3d at 941–42. 6 7 The Court, having reviewed the billing statements submitted by Class Counsel, finds that the lodestar amount is in fact $960,305 in reasonable time expended.1 8 First, the Court finds the billed number of hours to be reasonable by all three 9 law firms given the fact that this case has been pending for three years, involved 10 extensive discovery work, and even after a settlement had been negotiated, required 11 additional hours expended in light of Defendant’s bankruptcy. The hourly rates billed 12 by the attorneys: $425-$525 for partners, $300-$375 for associates, and $175 for 13 paralegals at Nichols Kaster; and $600 for Kevin Fok and $325-$450 for attorneys at 14 A New Way of Life, are reasonable compared to other rates this Court has seen in 15 similar cases in this community. Therefore, the Court finds the lodestar for attorneys’ 16 fees is correctly calculated as $960,305. The Court finds that counsel is skillful and 17 experienced and negotiated an excellent result for the class, obtaining both monetary 18 and injunctive relief, and that counsel obtained this relief despite raising a novel 19 legal issue and assuming significant up-front costs for bankruptcy counsel. However, 20 counsel is not requesting a multiplier for the work, and, in fact, are only requesting 21 $655,000 in attorneys’ fees, below the lodestar. The Court finds this amount is 22 appropriate. 23 With respect to the costs requested, counsel argues that the cost amount should 24 be calculated as $97,627. The Court disagrees. As the Court noted at oral argument, 25 this amount appears to include $3000 in a donation to A New Way of Life, as well as 26 27 28 1 The Court finds just the amount reasonably expended by Nichols Kaster in this case, $818,218.25, is more than the $655,000 requested by counsel. Almost half of the hours billed by Nichols Kaster, or 913.91 hours, were incurred in the heated discovery motions and practice before mediation even began. –6– 13cv1432 1 excessive costs attributed to attorney travel. The Court calculates the appropriate cost 2 amount as $86,626.91.2 However, counsel is only requesting reimbursement of 3 $60,000 in costs, less than the Court’s calculated amount. The Court finds this 4 amount, too, is appropriate. 5 6 IV. INCENTIVE AWARD Finally, Class Counsel requests $10,000 as a service fee for named plaintiff 7 “[I]ncentive awards that are intended to compensate class 8 Spencer Hoyt. 9 representatives for work undertaken on behalf of a class are fairly typical in class 10 actions cases” and “do not, by themselves, create an impermissible conflict between 11 class members and their representative[].” In re Online DVD-Rental Antitrust Litig., 12 779 F.3d 934, 943 (9th Cir. 2015). Nonetheless, the Court has an obligation to assure 13 that the amount requested is fair. In re Bluetooth, 654 F.3d at 941. “The propriety of 14 incentive payments is arguably at its height when the award represents a fraction of 15 the class representative’s likely damages . . . But we should be more dubious of 16 incentive payments when they make the class representative whole, or even more than 17 whole.” In re Dry Pampers Litig., 724 F.3d 713, 722 (6th Cir. 2013). Factors the 18 Court may consider in determining whether an incentive award is appropriate or not 19 include: (1) the risk taken on by the named plaintiff—both financial and otherwise; 20 (2) the notoriety and any personal difficulties faced by the named plaintiff as a result 21 of his work; (3) the amount of time and effort expended by the representative on 22 behalf of the class; (4) the duration of the litigation; and (5) the personal benefit or 23 lack thereof enjoyed by the class representative as a result of the litigation. Holman 24 v. Experian, No. 11-CV-0180 CW (DMR), 2014 WL 7186207, at *5 (citing Van 25 Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal. 1995)). 26 27 28 2 The Court calculates this amount using $500 per attorney flight, $250 per hotel night, meals at $100 per day, and land transportation costs of $150 per day. The Court further deducted the multiple $200 change fees for the airfares and the $3000 donation as noted above. –7– 13cv1432 1 In this case, Spencer Hoyt shouldered the entire burden of being the named 2 Plaintiff when Blanca Watkins withdrew from the litigation. The case has been 3 pending for over three years and during that time period, Mr. Hoyt was called on to 4 answer questions both in a deposition and in extensive written discovery. According 5 to Class Counsel, he also assisted in the investigation of the claims and was required 6 to produce many requested documents. Hence, the Court finds the $10,000 incentive 7 award requested by Class Counsel is reasonable. 8 9 V. CONCLUSION 10 For the reasons stated above, the Court GRANTS Plaintiff’s Motion for 11 Attorneys’ Fees, Costs and Service Award. (ECF No. 136.) The Court awards Class 12 Counsel $655,000 in attorneys’ fees and $60,000 in Costs. The Court also awards 13 named Plaintiff Spencer Hoyt $10,000 as a service or incentive award. 14 IT IS SO ORDERED. 15 16 DATED: September 30, 2016 17 18 19 20 21 22 23 24 25 26 27 28 –8– 13cv1432
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