United States District Court, D. Columbia.
JAMES C. STEPHENS, et al., Plaintiffs,
US AIRWAYS GROUP, INC., et al., Defendants
For James C. Stephens, Plaintiff: Robert P. Trout, LEAD ATTORNEY, TROUT CACHERIS & JANIS PLLC, Washington, DC USA; Jacks C. Nickens, MCGUIREWOODS LLP, Houston, TX USA.
For Floyd G. Stephens, Donald v. Nippert, on behalf of themselves and all others similarly situated, Plaintiffs: Robert P. Trout, LEAD ATTORNEY, TROUT CACHERIS & JANIS PLLC, Washington, DC USA; Roger Eric Zuckerman, LEAD ATTORNEY, ZUCKERMAN SPAEDER, LLP, Washington, DC USA; Jacks C. Nickens, MCGUIREWOODS LLP, Houston, TX USA.
For Richard Mahoney, Plaintiff: Jacks C. Nickens, LEAD ATTORNEY, MCGUIREWOODS LLP, Houston, TX USA; Robert P. Trout, LEAD ATTORNEY, TROUT CACHERIS & JANIS PLLC, Washington, DC USA; Roger Eric Zuckerman, LEAD ATTORNEY, ZUCKERMAN SPAEDER, LLP, Washington, DC USA.
For U.S. Airways Group, Inc., Retirement Income Plan For Pilots of U.S. Air Air Inc., Defendants: Karen M. Wahle, O'MELVENY & MYERS LLP, New York, N.Y. USA.
For Pension Benefit Guaranty Corporation, Defendant: Colin B. Albaugh, LEAD ATTORNEY, Israel Goldowitz, Mark R. Snyder, Stephanie Thomas, PENSION BENEFIT GUARANTY CORPORATION, Washington, DC USA.
ROSEMARY M. COLLYER, United States District Judge.
Before the Court is a class action settlement, which the Court has found to be fair, reasonable, and adequate. To begin the timetable for payments to class members, the Court granted the parties' Joint Motion for Final Approval of Class Action Settlement and Class Counsel's Motion for Approval of Attorneys' Fees and Expenses following a Fairness Hearing held on April 24, 2015. See Order [Dkt. 97]. The Court writes this Opinion to further explain its April 24, 2015 Order.
Class Counsel and Defendant Pension Benefit Guaranty Corporation (PBGC) agreed to a $5.25 million class action settlement to remedy claims of certain retired U.S. Airways pilots. The Class consists of pilots who chose to receive a lump sum payment as a full or partial distribution of their retirement benefits, but who did not receive their lump sum payment on the first day of the month after the pilot retired (the Benefit Commencement Date). U.S. Airways pilots who chose to receive their retirement benefits as a monthly annuity began to receive retirement payments on their Benefit Commencement Date. Pilots who chose the lump sum payment were typically not paid until 45 days after the Benefit Commencement Date and were not paid interest for that period. In 1997, Captain James Stephens filed an administrative claim with U.S. Airways, arguing that the company was required to pay interest for the 45-day delay under the terms of the U.S. Airways retirement plan and the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1054(c)(3). The extensive litigation that ensued is now coming to a close. The parties have reached a settlement on the final issue, which is, what period of delay would have been administratively necessary and reasonable, and what percentage of interest should be paid for such a delay.
This case originated in the District Court for the Northern District of Ohio in 2000 and was appealed to the Sixth Circuit. However, after U.S. Airways sought bankruptcy protection and the pilots' retirement plans were assumed by PBGC, the case was transferred here in 2007. This Court dismissed the pilots' claims in part, 555 F.Supp.2d 112 (D.D.C. 2008), and then granted summary judgment to PBGC on the remaining claims, 696 F.Supp.2d 84 (D.D.C. 2010). The case has been to the D.C. Circuit and back, twice. See Stephens v. U.S. Airways Group, Inc., 644 F.3d 437, 396 U.S.App.D.C. 50 (D.C. Cir. 2011); Stephens v. Pension Ben. Guar. Corp., 755 F.3d 959, 967, 410 U.S.App.D.C. 317 (D.C. Cir. 2014). The first question before the D.C. Circuit was the propriety of the airline's practice of taking forty-five days to calculate and issue lump-sum retirement payments to pilots under the pilots' retirement plans. See Stephens, 644 F.3d at 439-40. Judge Janice Rogers Brown wrote the controlling opinion of the D.C. Circuit, which rejected the pilots' argument that a forty-five day delay violated the ERISA requirement that lump-sum payments be the " actuarial equivalent" of an annuity payment. See Stephens, 644 F.3d at 440. Instead, the D.C. Circuit held, the necessary inquiry was whether Plaintiffs were entitled to interest during the delay, which was determined by " whether [US Airways's] 45-day delay was reasonable." Id. Concluding that the payment was unreasonably delayed and that Captains Stephens and Mahoney were entitled to some amount of interest, the D.C. Circuit remanded the case to this Court " to calculate the appropriate amounts." Id. at 441-42. The Circuit did not decide the duration of a " reasonable" delay inasmuch as the three members of the panel did not agree.
On remand, Captains Stephens and Mahoney pressed their rights to a class action pursuant to Federal Rule of Civil Procedure 23(b)(3). Plaintiffs' first motion for class certification, which derived from the Third Amended Complaint, was denied without prejudice on July 18, 2012. See Order [Dkt. 54]. Plaintiffs' second motion for class certification, which derived from the Fourth Amended Class Action Complaint, was denied on December 7, 2012. See Mem. Op. [Dkt. 68]; Order [Dkt. 69]. In order to obtain a final appealable judgment, Captain Stephens settled his individual claim with PBGC and Captain Mahoney agreed to dismissal without prejudice. The Court entered Final Judgment on August 3, 2013. See Final Judgment [Dkt. 74]. The parties appealed again to the D.C. Circuit. The D.C. Circuit again reversed, holding that individual class members were not required to exhaust administrative remedies before inclusion in a class in which Captain Stephens, a named plaintiff, had exhausted his administrative remedies. Stephens v. Pension Ben. Guar. Corp., 755 F.3d 959, 966, 410 U.S.App.D.C. 317 (D.C. Cir. 2014). The D.C. Circuit further remanded the issue of class certification and the typicality of the class representatives' claim. Id. at 967. The mandate returned jurisdiction to this Court on August 19, 2014. See Mandate [Dkt. 82].
Upon notice from the parties that they were negotiating a settlement based on anticipated class certification, the Court certified a class. See Order on Class Certification [Dkt. 83]. The class certification was subsequently amended to substitute Captain John Davis as class representative for Captains Stephens and Mahoney. See Order Amending Class Certification [Dkt. 88].
The parties filed a Joint Motion for Preliminary Approval of Class Action Settlement Agreement on November 19, 2014. See Jt. Mot. [Dkt. 87] (Preliminary Mot.). Following a hearing, the Court granted the motion on December 19, 2014, preliminarily approving the settlement and the proposed form of notice, see Notice [Dkt. 87-2], and authorizing its dissemination to the Class. See Order [Dkt. 91]. Class Counsel retained Gilardi & Co., LLC (Gilardi) to mail the Notice and compile the responses. Following the Court's preliminary approval of the Settlement, Gilardi mailed 679 Notices. See Joint Mot. for Final Approval [Dkt. 95] (Final Mot.) at 2; id., Ex. B at 1. Ninety-eight Notices were returned as undeliverable and Gilardi re-mailed 86 of those. Id. There have been no objections. Id. Only one member of the class, who preferred that his share of the settlement be distributed to charity or his fellow pilots, opted out. See Final Mot. at 2.
The Court held a Fairness Hearing on April 24, 2015 to consider the parties' Joint Motion for Final Approval of Class Action Settlement, Dkt. 95, and Class Counsel's Motion for Approval of Attorneys' Fees and Expenses, Dkt. 93. The executed Settlement Agreement is attached as an exhibit to the Final Motion, Dkt. 95-1 (Settlement). Captain Davis, the Class Representative, appeared by telephone in support of the Settlement. No class member filed or appeared in opposition to the Settlement.
For the reasons below, the Court found the $5.25 million Settlement to be fair, reasonable, and adequate and found that Class Counsel, most notably the long-serving Jack Nickens of McGuireWoods LLP, is entitled to its requested award of attorneys' fees and expenses.
A. The Settlement
Settlement of a certified class action requires a court's approval. Fed.R.Civ.P. 23(e). Before granting its approval, a court has a duty to determine that the settlement is " fair, adequate, and reasonable and is not the product of collusion between the parties." In re Vitamins Antitrust Class Actions, 215 F.3d 26, 30, 342 U.S.App.D.C. 26 (D.C. Cir. 2000).
A court " must strike a balance between a rubber stamp approval and 'the detailed and thorough investigation that it would undertake if it were actually trying the case.'" Vista Healthplan, Inc. v. Warner Holdings Co. III, Ltd., 246 F.R.D. 349, 357 (D.D.C. 2007) (citation omitted). Nonetheless, " the discretion of the Court to reject a settlement is restrained by the 'principle of preference' that encourages settlements." In re Black Farmers Discrim. Litig., 856 F.Supp.2d 1, 30 (D.D.C. 2011).
In this Circuit, there is no single test for evaluating a proposed settlement under Rule 23(e). See In re LivingSocial Marketing and Sales Practice Litigation, 298 F.R.D. 1, 11 (D.D.C. 2013). District courts consider the facts and circumstances of the case, and " examine the following factors: (a) whether the settlement is the result of arms-length negotiations; (b) the terms of the settlement in relation to the strength of plaintiffs' case; (c) the stage of the litigation proceedings at the time of settlement; (d) the reaction of the class; and (e) the opinion of experienced counsel." In re ...