You Can’t Always Get What You Want: D. Mass. Awards Small Fraction of Requested Attorneys’ Fees in ZIP Code Class Settlement

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In an opinion reminiscent of the famous Rolling Stones song, Judge Richard Stearns on December 26th awarded plaintiffs’ class counsel fees of $75,959.00 of a requested amount of $450,000 for work performed in connection with a settled Massachusetts consumer class action.  Brenner v. J.C. Penny Co., C.A. No. 13-11212-RGS (D. Mass.).  For defendants, the case demonstrates the value of pursuing objections to fee awards in class settlements where the parties are unable to agree on a reasonable fee.

The lawsuit alleged that the defendant’s retail stores had unlawfully gathered customer ZIP codes in connection with credit card purchases, and had used them for “intrusive marketing purposes” in violation of a Massachusetts privacy statute.  As Judge Stearns pointed out, the case was “one of a number of ZIP code class actions filed in this district by [Meiselman, Packman, Nealon, Scialabba & Baker P.C.], and it is the third in which Brenner appears as the named plaintiff.”  The other cases were brought against other retailers, and in one of the cases, about which we have previously written, the Massachusetts Supreme Judicial Court had upheld the viability of the claims under the Massachusetts Consumer Protect Act.   Meiselman Packman filed the case against J.C. Penney, as well as cases against two other retailers, shortly after the SJC’s ruling.

The parties in the case before Judge Stearns had mediated their dispute and arrived at a settlement before the lawsuit was filed, and filed a notice of settlement on the same day that plaintiffs filed the complaint.  The settlement provided, inter alia, 1) that gift certificates would be issued to class members, 2) that J.C. Penney expressly denied liability, 3) that Massachusetts law governed the settlement agreement, and 4) that the parties could not reach agreement on attorneys’ fees, and that J.C. Penney reserved the right to object to class counsel’s fee petition.

Finding that there was no common fund, Judge Stearns applied a lodestar analysis to the fee award.  Meiselman Packman submitted billing records reporting a total of 337 billable hours expended on the case, most of which were billed at a rate of $600 an hour.

The court held that Massachusetts law applied and adopted the lodestar method, which it described as “multiplying the number of hours reasonably spent on a case times a reasonable hourly rate.”  Determining the number of hours “reasonably spent” meant “determining the number of hours actually spent” and “subtracting those hours that are ‘duplicative, unproductive, excessive, or otherwise unnecessary.'”

Meiselman Packman billed over 100 hours on tasks described as legal research and motion drafting, which the court reduced.  Judge Stearns based the reduction for time spent on research in part on the fact that more than one partner researched the same issues.  Citing First Circuit case law, he acknowledged that “[t]ime spent by two attorneys on the same general task is not . . . per se duplicative,” but said that “it must be justified by the circumstances of the litigation, such as the ‘ferocity’ of an adversary’s defense.”  Because “J.C. Penney signaled its capitulation within a month of the demand letter being received,” the court found that the duplication of effort was not justified.  He also applied the associate hourly rate of $275 to research rather than the partner hourly rate of $600.

The court followed a similar approach in reducing the time spent drafting legal documents, such as the motion for preliminary approval of the settlement and the brief in support of the fee application.  “The court recognizes that the drafting of legal documents is not a task to be lightly undertaken, but it does not require that multiple partners work on the same drafting task at the same time.”  The court also awarded only one hour, at the associate rate, for the drafting of the complaint because the complaint was nearly identical to a complaint against another retailer that had previously been filed, rejected time entered by a third partner (finding that there was “no justification for adding a third partner to this case,”) and cut travel time by half.  Finally, in a concession to class counsel, “[t]he court has not reduced time documented as involving communications with defense counsel, letter writing, attendance of mediations, court appearances, or conferences, even if attended by more than one partner.”  The court then applied the relevant rates for partner, associate and paralegal work, and arrived at a lodestar fee award of $75,959.00.

Finally, Judge Stearns rejected class counsel’s argument that they should receive a multiplier of the lodestar because of the “extraordinary,” “exceptional,” and “unparalleled” result they secured for the class.  Not only had J.C. Penney agreed to settle almost at the case’s inception, but the SJC decision in the earlier filed case greatly simplified counsel’s task.  As the court observed:  “[T]his is not a case where the firm chose to take on what might have appeared a quixotic quest on behalf of a plaintiff unable to afford counsel.  To the contrary, it was Meiselman Packman that sought out Ms. Brenner as a plaintiff in this and several other nearly identical cases in which the result, given the decision of the SJC in Tyler v. Michael Stores, was virtually preordained.”

Written by former litigation partner, Donald R. Frederico.