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Bina Radosti, et al v. Envision Emi

January 19, 2011

BINA RADOSTI, ET AL., PLAINTIFFS,
v.
ENVISION EMI, LLC, DEFENDANT.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

The above-captioned case is a class action that arose out of a series of youth conferences sponsored by Defendant Envision EMI, LLC ("Envision") in and around Washington, D.C. surrounding the inauguration of President Barack Obama in January 2009. The named plaintiffs in this action are Bina Radosti, Joshua Rottman, Sally Rife, Heather Kern, Zachary Johnson Burton, and Latiana Carter (collectively, the "named Plaintiffs"), who brought this action on behalf of themselves and a class of all those similarly situated alleging breach of contract, negligent misrepresentation, and violations of state consumer protection laws by Envision. After a successful mediation, the parties reached a settlement, which the Court preliminarily approved on December 17, 2009. Notice was subsequently given to all putative class members, and the Court held a fairness hearing to determine whether the settlement was fair, reasonable and adequate. On June 8, 2010, the Court issued a Final Order Approving Class Action Settlement and Dismissing Class Action with Prejudice.

The class settlement agreement provides, inter alia, that each class member can receive two vouchers that may be used at future Envision programs; if the total value of vouchers claimed is less than $8 million, the difference between the value of the vouchers claimed and $8 million shall be distributed into a class settlement scholarship fund ("cy pres fund") for future program attendees. The Court approved the terms of the class action settlement agreement, except for the administration of the cy pres fund, which the Court held in abeyance pending the expiration of the claims period. On October 29, 2010, the parties filed a [42] Joint Status Report indicating that 3437 claims had been received amounting to $4,296,250 worth of vouchers. Although the deadline for the submission of claims was October 6, 2010, the parties indicated that they would continue to accept claims received as late as November 15, 2010. On December 3, 2010, Plaintiffs filed a [44] Second Supplemental Memorandum in Support of Plaintiffs' Motion for Attorneys' Fees, Expenses, and Class Representative Service Awards indicating that the final number of claims received and approved was 3446, with a total value of $4,307,500. The overall response rate from the class is approximately 26%. Because the value of the vouchers claimed is less than $8 million, there will be money ($3,692,500) distributed into the cy pres fund. The parties have agreed on a set of criteria that will govern the distribution of the cy pres fund. As explained below, the Court is satisfied that the parties' agreement will ensure a fair distribution of the cy pres fund, and therefore the Court shall grant final approval over this aspect of the class settlement.

Also pending before the Court is Plaintiffs' unopposed [25] Motion for Attorneys' Fees, Expenses, and Class Representative Service Awards. The Court previously held this motion in abeyance, and Plaintiffs have now filed a [43] Supplemental Memorandum and [44] Second Supplemental Memorandum in support of their motion. The Court has considered the affidavits submitted by the parties and entire record herein. For the reasons explained below, the Court shall GRANT Plaintiffs' [25] Motion for Attorneys' Fees, Expenses, and Class Representative Service Awards.

I. DISCUSSION*fn1

A. The Court Approves the Parties' Agreement Regarding the Class Settlement Scholarship Fund

Because class members have claimed less than $8 million worth of vouchers, the terms of the class settlement agreement call for the establishment of a Class Settlement Scholarship Fund. The terms of the settlement agreement, as amended, call for Envision to award partial or total scholarships to academically qualified applicants seeking to attend future Envision programs. Envision is required to distribute scholarships totaling at least 15% of the amount in the Fund each year until the Fund is depleted, which must occur within seven years. Scholarships must actually be redeemed by individuals attending Envision programs in order to deplete the Fund, not just offered to applicants. Envision may, in its discretion, distribute additional scholarships totaling up to 5% of the Fund to independent, nationally recognized organizations that focus on education and/or leadership skills such as the National 4-H Council, Boy Scouts of America, and the Girl Scouts of the USA.

In its Memorandum Opinion granting final approval of the settlement agreement, the Court expressed concern that there were no standards established to govern the distribution of money from the Fund. In their Joint Status Report filed on October 29, 2010, the parties addressed this concern, explaining that they had reached further agreement as to how the proceeds from the Fund shall be distributed. Specifically, the parties agree that scholarships shall be awarded based on the following eligibility criteria: (1) financial need, based on household income and the cost of the program, including travel costs and other incidental expenses; (2) academic performance, including honors and awards received at the time of the application; (3) extracurricular activities; and (4) a short essay, between 300 and 500 words, on a subject relevant to the program for which the applicant seeks a scholarship. Envision also agrees to establish a Scholarship Committee consisting of at least six individuals, at least two of whom shall be selected from Envision's Parents Advisory Board, that will be responsible for awarding scholarships from the fund. The Parents Advisory Board consists of seven independent members, each of whom is a parent of a scholar who previously attended an Envision program. Information about scholarships will be published on all Envision program web sites. Envision also agrees to provide semi-annual reports to Class Counsel identifying the number of applications for scholarships received, the number and amount of scholarships awarded and redeemed, and the programs for which the scholarships were awarded.

The Court finds that this distribution plan adequately addresses the concerns previously raised by the Court and ensures that funds will be fairly distributed to future program attendees. Accordingly, the Court shall grant the request for final approval of the provisions of the settlement agreement relating to the cy pres fund.

B. Motion for Attorneys' Fees, Expenses, and Class Representative Service Awards

Pending before the Court is Plaintiffs' Motion for Attorneys' Fees, Expenses, and Class Representative Service Awards. As part of the settlement agreement, Envision agreed to pay, subject to the Court's approval, a total award to Class Counsel of up to $1,455,000 inclusive of all fees, costs, and expenses of any kind. Envision also agreed to provide $2500 to each of the six named class representatives, subject to court approval. Plaintiffs' motion seeks awards totaling these amounts.

1. Attorneys' Fees "When awarding attorneys' fees, federal courts have a duty to ensure that claims for attorneys' fees are reasonable."

Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1265 (D.C. Cir. 1993). "The usual method of calculating reasonable attorney's fees is to multiply the hours reasonably expended in the litigation by a reasonable hourly fee, producing the 'lodestar' amount." Bd. of Trs. of Hotel & Restaurant Employees Local 25 v. JPR, Inc., 136 F.3d 794, 801 (D.C. Cir. 1998). In "rare" and "exceptional" circumstances, the lodestar amount may be adjusted by a multiplier. Id. (citing Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986)). However, in class action cases in which the plaintiff class recovers benefits from a common fund, the favored method of calculating attorneys' fees is to award a percentage of the fund. See Swedish Hosp., 1 F.3d at 1267-71. Such awards are favored because they directly align the interests of the class and its counsel and provide a powerful incentive for the efficient prosecution and early resolution of litigation. Wells v. Allstate Ins. Co., 557 F. Supp. 2d 1, 6 (D.D.C. 2008) (citations omitted). Awards of between twenty and thirty percent of the common fund have been deemed reasonable. See Swedish Hosp., 1 F.3d at 1272; see also Wells, 557 F. Supp. 2d at 6 (approving a 45% award).

This is not a true common fund case because the attorneys' fees were negotiated separately and will not be awarded from the common fund.*fn2 However, this Court has previously considered similar settlement agreements as constructive common funds and awarded fees on a percentage basis. See Vista Healthplan, Inc. v. Warner Holdings Co. III, 246 F.R.D. 349, 364 (D.D.C. 2007); Cohen v. Chilcott, 522 F. Supp. 2d 105, 122 (D.D.C. 2007). That approach has been followed by courts in this district based on this circuit's stated preference for percentage-of-common-fund fee awards. See In re Lorazepam & Cloarzepate Antitrust Litig., No. MDL 1290, 2003 WL 22037741, *4 (D.D.C. June 16, 2003); In re Vitamins Antitrust Litig., Misc. Action No. 99-197, 2001 WL 34312839, at *4-6 (D.D.C. July 16, 2001). Because the value of the vouchers made available to class ...

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