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Bell v. Pension Committee of Ath Holding Company, LLC

United States District Court, S.D. Indiana, Indianapolis Division

September 4, 2019

MARY BELL, JANICE GRIDER, CINDY PROKISH, JOHN HOFFMAN, and PAMELA LEINONEN, Plaintiffs,
v.
PENSION COMMITTEE OF ATH HOLDING COMPANY, LLC, ATH HOLDING COMPANY, LLC, BOARD OF DIRECTORS OF ATH HOLDING COMPANY, LLC, Defendants.

          ORDER APPROVING FEES, COSTS AND AWARDS

          TANYA WALTON PRATT, JUDGE.

         Pending before the Court is Plaintiffs' Motion for Attorneys' Fees, Reimbursement of Expenses and Case Contribution Awards for Named Plaintiffs. (Filing No. 371.) In their Motion, Class Counsel requests that the Court approve a fee for obtaining a settlement of class claims under the Employee Retirement Income Security Act ("ERISA"). The settlement provides a $23, 650, 000.00 monetary recovery for the benefit of Class Members. Taking into account the significant and powerful non-monetary relief and benefit of tax deferral, the total benefit to the Class exceeds $62 million dollars.

         Class Counsel has asked this Court to approve a fee award of $7, 882, 545 which constitutes one-third of the monetary award. Additional improvements to the Plan as a result of the litigation and settlement bring the actual value to the Class far higher to a total value of over $62 million dollars. Class Counsel has also asked this Court to award it $513, 015.32 for expenses. Additionally, Class Counsel has requested this Court approve incentive awards to the Class Representatives and also to the Individual Named Plaintiffs. For the reasons set forth below, Class Counsel's Motion is GRANTED.

         I. BACKGROUND

         Pursuant to the Settlement Agreement and this Court's Preliminary Approval Order, Class Counsel directed the mailing of individual notices to the Class and created a Class website to provide information to the Class. Individual notices were mailed to over 127, 000 Class Members and, with an objection deadline of August 5, 2019, only one Class Member filed a timely objection. Filing No. 377 at 6.[1] This Court finds that only one objection compared to a total class of over 127, 000 is a remarkable sign of the Class's overwhelming support for this Settlement and Class Counsel's request. As noted in this Court's final approval order and for the reasons stated therein, the lone objection to this Settlement is denied.

         For over a decade, Class Counsel, in pioneering a new area of the law, have continuously demonstrated an unwavering and zealous commitment to represent American employees and retirees seeking to recover losses incurred due to alleged retirement plan mismanagement. Jerome Schlichter and Schlichter Bogard & Denton actually created the field of 401(k) excessive fee litigation which did not exist before. Filing No. 372-1 ¶13-15. Before Jerome Schlichter and the firm of Schlichter Bogard & Denton filed a series of cases in 2006 regarding excessive fees in 401(k) plans, there had never been a case brought for excessive fees in a 401(k) plan by any lawyer in the United States. Id. Class Counsel is firmly established as the "pioneer and the leader in the field of retirement Plan litigation." Abbott v. Lockheed Martin Corp., No. 06-701, 2015 U.S. Dist. LEXIS 93206, at *8 (S.D. Ill. July 17, 2015) (Reagan, C.J.).

         Class Counsel are "experts in ERISA litigation" with extraordinary skill and determination required to litigate these complex cases. Krueger v. Ameriprise Fin., Inc., No. 11-2781, 2015 U.S. Dist. LEXIS 91385, at *6 (D. Minn. July 13, 2015). This Court notes that no 401(k) excessive fee cases had been filed before Class Counsel pioneered them, and agrees with other courts that the work of Jerome Schlichter and Schlichter Bogard & Denton "illustrates an exceptional example of a private attorney general risking large sums of money and investing thousands of hours for the benefit of employees and retirees." Will v. General Dynamics Corp., No. 06-698, 2010 U.S. Dist. LEXIS 123349, at *8 (S.D. Ill. Nov. 22, 2010) (J. Murphy).

         II. FINDINGS AND CONCLUSIONS

         Under the "common-fund" doctrine, class counsel is entitled to a reasonable fee drawn from the commonly held fund created by a settlement for the benefit of the class. See, e.g., Boeing Co. v. VanGemert, 444 U.S. 472, 478 (1980). Additionally, the United States Court of Appeals for the Seventh Circuit has found that attorneys' fees based on the common fund doctrine are appropriate in ERISA cases. See Florin v. Nationsbank, 34 F.3d 560, 563 (7th Cir. 1994). A court must also consider the overall benefit to the class, including non-monetary benefits, when evaluating the fee request. Spano v. Boeing Co., No. 06-743, 2016 U.S. Dist. LEXIS 161078, at *5 (S.D. Ill. Mar. 31, 2016) (J. Rosenstengel) (citing Manual for Complex Litigation, Fourth, § 21.71, at 337 (2004)). An assessment of the non-monetary benefits and relief obtained as part of a settlement is important so as to encourage attorneys to obtain future meaningful relief. As set forth below and as demonstrated through expert testimony offered via declaration, Class Counsel's efforts to secure additional relief beyond the monetary amount added significant value to the Settlement and ultimately to Class Members.

         In determining whether to grant a requested fee in a class action settlement, the Seventh Circuit Court of Appeals requires an analysis of whether the requested fee is within the range of fees that would have been agreed to at the outset of the litigation in an arms-length negotiation given the risk of nonpayment and the normal rate of compensation in the market at the time. See In re Synthroid Marketing Litig., 264 F.3d 712, 718 (7th Cir. 2001). In common fund cases, "the measure of what is reasonable [as an attorney fee] is what an attorney would receive from a paying client in a similar case" Montgomery v. Aetna Plywood, Inc., 231 F.3d 399, 408 (7th Cir. 2000). "[I]t is not the function of judges in fee litigation to determine the equivalent of the medieval just price. It is to determine what the lawyer would receive if he were selling his services in the market rather than being paid by court order." Matter of Cont'l Ill. Sec. Litig., 962 F.2d 566, 568 (7th Cir. 1992). This requires the district judge to "ascertain the appropriate rate for cases of similar difficulty and risk, and of similarly limited potential recovery." Kirchoff v. Flynn, 786 F.2d 320, 326 (7th Cir. 1986).

         In a common fund class action settlement, the Seventh Circuit Court of Appeals uses a percentage of the relief obtained rather than a lodestar or other basis. See Gaskill v. Gordon, 160 F.3d 361, 363 (7th Cir. 1998); see also Florin, 34 F.3d at 566 (but leaving to the discretion of the district court the determination as to which method is the most efficient and suitable in a given case). "A one-third fee [percentage] is consistent with the market rate in settlements concerning this particularly complex area of law." Spano, 2016 U.S. Dist. LEXIS 161078, at *7 (quoting Abbott, 2015 U.S. Dist. LEXIS 93206, at *7); Beesley v. Int'l Paper Co., No. 06-703, 2014 U.S. Dist. LEXIS 12037, at *10 (S.D. Ill. Jan 31, 2014) (J. Herndon); Will, 2010 U.S. Dist. LEXIS 123349, at *9 (finding that in ERISA 401(k) fee litigation, "a one-third fee is consistent with the market rate"). In this case, Class Counsel's fee request totaling 33 1/3% of the monetary recovery, and a much smaller percentage when including non-monetary relief (as it must be), is reasonable and consistent with the awards in many other cases also brought by Class Counsel, including those in this Circuit.

Case

Fee %

Sims v. BB&T, No. 15-732, Filing No. 450 (M.D. N.C. May 6, 2019)

33.3%

Ramsey v. Philips N.A., No. 18-1099, Filing No. 27 (S.D.Ill. Oct. 15, 2018)

33.3%

In re Northrop Grumman Corp. ERISA Litig., No. 06-6213, 2017 WL 9614818 (C.D.Cal. Oct. 24, 2017)

33.3%

Gordan v. Mass. Mut. Life Ins. Co., No. 13-30184, 2016 WL 11272044 (D.Mass. Nov. 3, 2016)

33.3%

Kruger v. Novant Health, Inc., No. 14-208, 2016 WL 6769066, 1-2 (M.D. N.C. Sept. 29, 2016)

33.3%

Spano v. Boeing Co., No. 06-743, 2016 WL 3791123 (S.D.Ill. Mar. 31, 2016)

33.3%

Abbott v Lockheed Martin Corp., No. 06-701, 2015 WL 4398475 (S.D.Ill. July 17, 2015)

33.3%

Krueger v. Ameriprise Fin., Inc., No. 11-2781, 2015 WL 4246879 (D.Minn. July 13, 2015)

33.3%

Beesley v. Int'l Paper Co., No. 06-703, 2014 WL 375432 (S.D.Ill. Jan. 31, 2014)

33.33%

Nolte v. Cigna Corp., No. 07-2046, 2013 WL 12242015 (C.D.Ill. Oct. 15, 2013)

33.33%

George v. Kraft Foods Global, Inc., Nos. 08-3899, 07-1713, 2012 WL 13089487 (N.D.Ill. June 26, 2012)

33.33%

Will v. Gen. Dynamics Corp., No. 06-698, 2010 WL 4818174 (S.D.Ill. Nov. 22, 2010)

33.33%

Martin v. Caterpillar Inc., No. 07-1009, 2010 WL 11614985 (C.D.Ill. Sept. 10, 2010)

33.33%

         Class Counsel's fee request is wholly appropriate given the extraordinary risk Class Counsel accepted in agreeing to represent the Class; the fact that Class Counsel brought this kind of case when no one else had; Class Counsel's demonstrated willingness to devote tremendous resources for many years to the case as it has done in other cases; the substantial monetary recovery; and the additional value of the future relief included in this settlement to Plan participants.

         A $7, 882, 545 fee would be justified without considering non-monetary relief and other benefits to the Class. However, as it must, the Court finds that the non-monetary benefits are real and significant improvements to the Plan that must be considered. The Court finds that the ...


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