Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 1 of 8 PageID #: 5179 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS FAYETTEVILLE DIVISION MARK FOCHTMAN, et al., Individually, and on Behalf of All Others Similarly Situated V. PLAINTIFFS CASE NO. 5:18-CV-5047 DARP, INC. and HENDREN PLASTICS, INC. DEFENDANTS ORDER ON DISTRIBUTION PLAN AND ATTORNEYS’ FEES AND COSTS The Court previously found in Plaintiffs’ favor on summary judgment and ordered the payment of damages. See Docs. 135 & 143. Subsequently, the parties submitted a Joint Stipulation (Doc. 157) as to the total compensatory and liquidated damages owed to the class, subject to Defendants’ previously stated objections and right to appeal. The parties also submitted a proposed Distribution Plan (Doc. 144) concerning the method by which damages would be paid to the class members. All items in the Distribution Plan were agreed to by the parties, with the exception of the following: (1) the length of time the class members would have to claim their portion of the judgment and (2) the disposition of any unclaimed class funds. Finally, Plaintiffs submitted a Motion for Attorneys’ Fees, Costs, and Expenses (Doc. 145), to which each Defendant filed a Response in Opposition (Docs. 153 & 155). On March 5, 2020, the Court ordered Plaintiffs to mail the class members a notice (Doc. 144-2) in compliance with Federal Rule of Civil Procedure 23(h) regarding the Court’s decision on summary judgment, the proposed enhancement fee for class 1 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 2 of 8 PageID #: 5180 representatives, and class counsel’s request for attorneys’ fees, costs, and expenses. 1 The notice was mailed to the class members on or before March 11, 2020, and, to date, no class member has filed written objections in response. For the reasons set forth below, the proposed Distribution Plan (Doc. 144) is APPROVED, subject to certain amendments. Plaintiffs’ Motion for Attorneys’ Fees, Costs, and Expenses (Doc. 145) is GRANTED IN PART AND DENIED IN PART. I. PROPOSED DISTRIBUTION PLAN The parties agree, subject to Defendants’ right to appeal, that there are 172 class members who are entitled to payment for minimum wage, overtime, and liquidated damages under the Court’s prior orders in a total amount of $1,167,350.91. The parties further agree that Defendants’ collective offset for stipends paid to Michael McGee is $65.60, and the offset for stipends paid to Jacob Slade is $285.60. No class members requested exclusion from the class, and the class members have now been identified by name and amount of damages owed. See Damages Summary, Doc. 144-1. Having reviewed the proposed Distribution Plan in detail, the Court hereby approves Plaintiffs’ request for an enhancement award in the amount of $5,000.00 per class representative. The enhancement award is to be paid out of the total damages owed to the class on a pro rata basis. See Tussey v. ABB, Inc., 850 F.3d 951, 961–62 (8th Cir. 2017) (finding that enhancement awards paid to class representatives must be deducted from the class members’ total recovery). The five class representatives are 1 The Court ordered the parties to make only one change to the proposed notice before mailing it to the class. That change concerned the date by which class members could file written objections to class counsel’s request for fees. The deadline was changed to April 3, 2020. 2 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 3 of 8 PageID #: 5181 Mark Fochtman, Michael Spears, Andrew Daniel, Fabian Aguilar, and Sloan Simms. The Court finds that they are entitled to an enhancement award because they devoted significant time and resources in service to the class. For example, all five class representatives were deposed, and four of them were deposed twice; four class representatives attended a settlement conference on behalf of the class; and because this case generated some publicity, all five class representatives faced the potential stigma associated with the public disclosure of their criminal histories and their struggles with addiction. Although the payment of this award will reduce the total damages by approximately 2.5%, the Court nonetheless finds the payment to be justified. 2 Paragraph 6 of the proposed Distribution Plan requires the parties to “agree on the [retention of a] third-party administrator,” at Defendants’ cost and expense. (Doc. 144, p. 2). Paragraph 10 of the proposed Distribution Plan contemplates that the parties will provide a third-party administrator with a written notice advising the class on “how to claim their portion of the judgment, how long they [have until they] must claim their payment, and what happens if they do not claim their payment.” (Doc. 144, p. 3). The Court finds this additional notice procedure unnecessary since there is no dispute as to exactly how much money each class member should receive. See Doc. 144-1. The Court therefore ORDERS that the third-party administrator be provided instead with the names, last known addresses, and any other pertinent and necessary identifying information to help locate each class member. The parties must also provide the spreadsheet listing the payments owed to the class members, along with agreed instructions as to the pro rata 2 Moreover, all class members were sent notice of the proposal to pay the enhancement award, and no class members filed objections. 3 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 4 of 8 PageID #: 5182 deductions to account for the enhancement awards as noted in the ruling above. The Court further ORDERS that the administrator mail all checks in the agreed-upon amounts to the class members. The third-party administrator shall employ customary skip-tracing methods to obtain current mailing addresses and re-mail any checks that might be returned as undeliverable. After reasonable efforts to locate the class members are exhausted, any checks that are subsequently returned as undeliverable or not cashed within two years of the date they were initially mailed will revert to the Defendants jointly and severally. 3 IT IS THEREFORE ORDERED that the Distribution Plan (Doc. 144) is otherwise APPROVED, subject to the Court’s orders above. II. MOTION FOR ATTORNEYS’ FEES, COSTS, AND EXPENSES The Arkansas Minimum Wage Act provides that any employer that violates the law shall be liable to the employee for “costs and such reasonable attorney’s fees as may be allowed by the court.” Ark. Code Ann. § 11-4-218(a)(1)(B)(ii). These fees and costs are to be paid in addition to the damages the employer owes to the class. Id. To calculate a reasonable attorney’s fee, the Eighth Circuit has offered the following guidance: In exercising its discretion to award attorney’s fees, a district court generally applies one of two methods to determine a reasonable fee amount: the “lodestar” method, under which the hours expended by an attorney are multiplied by a reasonable hourly rate of compensation so as to produce a fee amount which can be adjusted, up or down, to reflect the individualized characteristics of a given action, or the “percentage of the benefit” method, under which the fee amount is equal to some fraction of the common fund that the attorneys were successful in gathering during the course of the litigation. 3 Along with the checks, the claims administrator will also mail a W-4 or W-9 tax form to each class member, as appropriate, and include directions on how to complete the forms and where to return them. 4 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 5 of 8 PageID #: 5183 In re Life Time Fitness, Inc., Tel. Consumer Prot. Act (TCPA) Litig., 847 F.3d 619, 622 (8th Cir. 2017) (internal quotation and citation omitted). Plaintiffs suggest that the Court award them a total of $542,021.36 in attorneys’ fees, costs, and expenses, to be paid by Defendants jointly and severally. (Doc. 145, p. 1). This amount breaks down to an award of $525,307.91 in fees and $16,713.45 in costs. (Doc. 146, p. 7). The fee request represents 45% of $1,167,350.91—the total amount of damages to be paid to the class on summary judgment. Although class counsel represent that they entered into a contingency-fee agreement with their clients at the start of the litigation and a 45% fee was contemplated at that time, counsel did not provide the Court with a copy of that contract. See Doc. 145-1, Decl. of John Holleman. However, class counsel did provide an itemized billing statement for the work they performed on the case, see id. at pp. 9–102, and that billed amount is $528,975.00—an amount strikingly similar to 45% of the total damages award. After scrutinizing class counsel’s billing records and considering Defendants’ arguments in response, the Court finds that a fee award representing 45% of the total recovery is excessive. The Court makes this finding despite the fact that class counsel secured a hard-fought and near-total victory for the class. Nevertheless, Defendants correctly point out that class counsel’s itemized billing statements are inflated, in that they include: (1) duplicate and sometimes triplicate entries of time billed by multiple lawyers performing essentially the same task, (2) unreasonable amounts of time charged for certain tasks, and (3) attorney billing rates that are slightly too high for the Northwest Arkansas legal market. Though the total amount billed by class counsel approximates 45% of the damages award, the billing records cannot be used to perform a lodestar 5 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 6 of 8 PageID #: 5184 “crosscheck” because the bills themselves are overstated. 5 DARP’s proposed reductions to the billed amounts are well taken. DARP suggests that the total fee award should be $374,605.00. See Doc. 153, p. 9. Hendren Plastics suggests that the overbilled amounts total “at least $132,000.00.” (Doc. 155, p. 12). Subtracting that figure from the billed amount of $528,975.00 equals $396,975.00. The Court therefore surmises that Hendren Plastics believes that the fee award should total no more than $396,975.00. The Eighth Circuit has approved fee awards using the percentage-of-the benefit method. See Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1999) (approving an award constituting 24% of the total award); Keil v. Lopez, 862 F.3d 685, 701 (8th Cir. 2017) (approving an award of 25% of the total recovery). In determining the appropriate fee in this case, the Court will consider the following factors, which are set forth in Chrisco v. Sun Indus., Inc., 800 S.W.2d 717, 718–19 (Ark. 1990) (cited with approval by All-Ways Logistics, Inc. v. USA Truck, Inc., 583 F.3d 511, 520–21 (8th Cir. 2009)): the experience and ability of the attorney, the time and labor required to perform the legal service properly, the amount involved in the case and the results obtained, the novelty and difficulty of the issues involved, the fee customarily charged in the locality for similar legal services, whether the fee is fixed or contingent, the time limitations imposed upon the client or by the circumstances, and the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer. In the case at bar, the Court finds that class counsel were both experienced and able. Counsel devoted significant time and resources to litigating this case, which was contested vigorously by the Defendants at each and every stage of the process. Many 5 The Court largely agrees with Hendren Plastics, Inc.’s (“Hendren Plastics”) and DARP, Inc.’s (“DARP”) separate, though similar, critiques of class counsel’s billing practices. See Doc. 155, p. 12; Doc. 155–3; Doc. 153, p. 6; Doc. 153–1. 6 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 7 of 8 PageID #: 5185 of the issues presented to the Court were both difficult and novel, and the demanding circumstances of the case imposed significant time limitations. Finally, class counsel’s result for the class was very favorable. This case was decided on cross-motions for summary judgment, and Plaintiffs prevailed on nearly every issue. Accordingly, the Court finds that an attorneys’ fee equal to one-third of the total class recovery, or $389,116.97, is fair and reasonable under the circumstances. This amount cross-checks against class counsel’s billed amount (after appropriate deductions are made, see supra). As for costs, Plaintiffs request a total of $16,713.45. Although DARP does not object to this amount of costs, Hendren Plastics suggests that certain costs should be discounted. In particular, Hendren Plastics objects to class counsel charging $0.25 per page for photocopies but does not dispute that the copies were “necessarily obtained for use in the case,” as 28 U.S.C. § 1920 provides. The Court agrees that billing $0.25 per page for photocopies is excessive and finds that a more reasonable rate of $0.15 per page is warranted. Plaintiffs made a total of 31,756 copies. Since the Court finds that copying costs should be reduced by $0.10 per page, the total award will be reduced by $3,175.60. Next, Hendren Plastics objects to class counsel billing $87.10 for a transcript of the Arkansas General Assembly’s proceedings for Act 853; however, the Court finds that it was necessary for class counsel to request this transcript in order to respond to Hendren Plastics’ Motion for Reconsideration (Doc. 72). Having reviewed the bill thoroughly, the Court finds that a total award of costs in the amount of $13,537.85 is appropriate ($16,713.45-$3,175.60). 7 Case 5:18-cv-05047-TLB Document 158 Filed 04/20/20 Page 8 of 8 PageID #: 5186 t. coNcLUstoN lT lS THEREFORE ORDERED that the proposed Distribution ptan (Doc. 144) is APPROVED, subject to the amendments set forth above. lT lS FURTHER ORDERED that ptaintiffs' [,totion for Attorneys, Fees, Costs, and Expenses (Doc. 145) is cRANTEo rN PART AND DENTED rN PART in that an attorneys, fee equal to one{hird of the total class recovery, or 83g9,j16.97, is ordered due and payable to class counsel by the Defendants, joinfly and severally; and an award of costs in the amount of 913,537.85 is also awarded, to be paid in the same manner as the award of fees. Finaljudgment will issue concurrenfly with this Order. lT lS SO ORDERED on tfris,FOay 8 ornprit,