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Keepseagle v. Perdue

United States District Court, District of Columbia

September 21, 2018

MARILYN KEEPSEAGLE, et al., Plaintiffs,
v.
SONNY PERDUE, Secretary, U.S. Department of Agriculture, Defendant.

          MEMORANDUM OPINION

          Emmet G. Sullivan United States District Judge

         On April 28, 2011, the Court granted, among other things, Plaintiffs' motion for award of attorneys' fees and costs, awarding class counsel at the high end of the range set forth in the 2011 Settlement Agreement between the parties: 8% of the $760 million compensation fund amount, or $60.8 million, pursuant to the following provision:

Plaintiffs will ask the Court to approve an award of attorneys' fees and costs to Class Counsel, payable as part of the common fund awarded to the Class, with the understanding that the Plaintiffs may seek, and the Court may award, such attorneys' fees and costs the total amount of which shall be at least 4% and not more than 8% of $760, 000, 000.

         Settlement Agreement, ECF No. 576-1 at XV.B; Order, ECF No. 606 at 3. Because a compensation fund had been established, the Court made this award pursuant to the common fund doctrine. See Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1262 (D.C. Cir. 1993)(holding that the “proper measure of [contingent counsel fees in class actions resulting in the creation of a common fund payable to plaintiffs] is a percentage of the [common] fund”). Class counsel provided a lodestar calculation of actual and projected fees[1] and costs of $26, 533, 940.48 for cross-check purposes. Mem. of Law in Support of Pls.' Mot. for an Award of Attorneys' Fees and Expenses, ECF No. 581-1 at 9.[2] The fees awarded by the Court therefore exceeded actual and projected fees and costs by a multiplier of 2.3, which fell “well within the typical range of [comparable] awards.” Id. at 43-45.

         Class counsel now seek a supplemental award from interest accrued from the compensation fund based on a lodestar calculation and pursuant to the following provision of the 2015 Addendum to the Settlement Agreement (“Addendum”):

In the event counsel seek an award of attorneys' fees and costs for work involved in establishing the Trust and Modifying the Agreement, such award may be made from interest that has accrued from the total Compensation Fund, and may only be with approval by the Court upon a properly noticed motion. The Secretary reserves the right to address the entitlement to fees, the amount of fees, or both entitlement and amount, in any opposition or response.

         Addendum, ECF No. 824-2 at IV.C. Specifically, class counsel seek $3, 220, 035.85 in fees and $46, 656.50 in additional costs that they contend were not foreseen and therefore not compensated in the prior award. Final Report to Court on Payments from the Keepseagle Settlement Fund and Mot. for Approval of Final Payments Including Suppl. Att'ys' Fees (“Mot. for Att'ys' Fees”), ECF No. 911 at 10, 18. Class counsel also seek an award of $566, 537.50 in fees and $6, 987.56 in costs for Mrs. Keepseagle's independent counsel, Olsson Frank Weeda Terman Matz PC (“OFW Law”). Id. Mrs. Keepseagle obtained independent counsel after the Court asked if she would like the opportunity to do so to assist her in her efforts to modify the Settlement Agreement. Id. at 22. Class counsel have provided notice of this request to the class and to the Trustees of the Trust. Id. at 11.

         The Addendum was negotiated after the claims process concluded and an unanticipated $380 million remained in the compensation fund for distribution to cy pres beneficiaries. The Addendum was agreed to by class counsel, the government, and Mrs. Keepseagle's counsel, and approved by the Court. See Keepseagle v. Vilsack, No. 99-3119, slip op. (D.D.C. April 20, 2016), aff'd, 856 F.3d 1039 (D.C. Cir. 2017).

         The government disputes that class counsel is entitled to a supplemental award pursuant to the Settlement Agreement. The government argues that the 8% cap on an award of attorneys' fees and costs was not increased by the Addendum and therefore an additional award is not permitted pursuant to the Settlement Agreement. Def.'s Opp'n to Counsels' Second Fee Pet. (Def.'s Opp'n), ECF No. 912 at 6-8. The Court disagrees. The Addendum clearly contemplates that class counsel and Mrs. Keepseagle's counsel[3] would be entitled to seek an award of attorneys' fees and costs, which would be made on motion to the Court, with an opportunity for the government to oppose, and “may be made from interest that has accrued from the total Compensation Fund.” Addendum, ECF No. 824-2 at IV.C. Since the Addendum unambiguously provides that the award would be paid “from interest that has accrued from the total Compensation Fund, ” this provision overrides the 8% award cap in the Settlement Agreement. To accept the government's argument would render this provision of the Addendum meaningless. See Beal Mort., Inc. v. FDIC, 132 F.3d 85, 88 (D.C. Cir. 1998)(“the cardinal interpretative principle [is] that we read a contract to give meaning to all of its provisions and to render them consistent with each other.”)(internal quotation marks and citation omitted). Therefore, class counsel is entitled to seek a supplemental award pursuant to the terms of the Addendum.

         “When awarding attorneys' fees, federal courts have a duty to ensure that claims for attorneys' fees are reasonable.” Swedish Hosp. Corp., 1 F.3d at 1265. “In general, a trial court enjoys substantial discretion in making reasonable fee determinations.” Id. at 1271 (citation omitted). “[C]ourts maintain discretion to award supplemental fees to counsel for work performed in relation to the litigation or settlement following counsel's initial fee application.” Cassese v. Washington Mut., 27 F.Supp.3d 335, 339 (E.D.N.Y. 2014) (internal quotation marks and citations omitted). Courts have this discretion whether the work for which the supplemental fees are sought was anticipated or not. Pray v. Lockheed Aircraft Corp., 1987 WL 9757, at *1 (D.D.C. Apr. 3, 1986). That said, “it is reasonable to inquire whether any supplemental award of attorney's fees for work performed . . . is justified.” Goldenberg v. Marriott PLP Corp., 33 F.Supp.2d 434, 440 (D.Md. 1998). “[A] reasonable attorney's fee is one that is adequate to attract competent counsel, but . . . that does not produce windfalls to attorneys.” Blum v. Stenson, 465 U.S. 886, 897 (2010)(internal quotation marks and citation omitted).

         The government argues that an additional award is not reasonable on several grounds: (1) the original award exceeded class counsels' actual and projected fees and costs by nearly $34 million and so the extra fees and costs incurred have been covered by that “cushion”; (2) class counsel was overcompensated for their projected costs when the award was made since the amount of unclaimed funds-$380 million-was so large; and (3) class counsels' original award should have been half of what it was because the settlement amount was twice what it should have been. Def.'s Opp'n, ECF No. 912 at 10-12.

         Class counsel responds that: (1) the Court has already rejected the argument that the award was too high when it awarded to the cap; (2) as a factual matter, it was not overpaid for the projected costs; and (3) regarding the amount of unclaimed funds, the settlement amount was fully justified by the damages calculation of plaintiffs' expert, but a variety of factors lead to not all class members being able to, or choosing to, make their claims. Pls.' Reply, ECF No. 914 at 3-6. Class counsel also points out that the government does not contest the reasonableness of the rates or hours in their request. Id. at 5.

         Class counsels' supplemental request is neither reasonable nor justified. There is no dispute that this supplemental request is for work and costs that were not contemplated in class counsels' 2011 award request. However, the reason class counsel needed to undertake this work and incur these costs, was because of the magnitude of unclaimed funds. Class counsel object to taking into consideration the magnitude of unclaimed funds because the damages calculation was “fully justified.” Pls.' Reply, ECF No. 914 at 5. The Court disagrees that the magnitude of the unclaimed funds should not be considered. Although the damages calculation was fully justified, the fact is that class counsels' original award was based on a percentage of a compensation fund amount that exceeded successful claims by approximately half. The Court recognizes that the Supreme Court has held it to be a proper application of the common fund doctrine for an award of fees to be based on a percentage of the entire fund even if not all funds were disbursed to class members. See Boeing Co. v. Van Gemert, et al., 444 U.S. 472, 473 (1980). However, the amount not disbursed in that case-$1.5 million out of a $3.2 million settlement fund-as compared to $380 million out of the $760 million settlement fund here renders this precedent entirely distinguishable. See id. at 474, 476.

         The Court agrees with class counsel that its work on the Addendum benefitted the class: It resulted in additional payments to successful claimants and the creation of a Trust to benefit the members of the class. And class counsels' work resulted in this Court approving the Addendum and in that approval being upheld on appeal. However, the Court must still determine whether the supplemental award is reasonable. Here, the $60.8 million awarded exceeded class counsels' actual and projected lodestar fees and costs by approximately $34 million.[4]The Court recognizes persuasive authority approving supplemental fees where the prior award exceeded lodestar fees and costs, Pray, 1987 WL 9757, at *2, but doing so here would not be reasonable. It is neither reasonable nor justified to award supplemental fees, even though the work ...


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