Hawes v. Macy's, Inc.

• Docket Number: 1:17-cv-754
• Decision Date: 13 May 2024
• Citation: Hawes v. Macy's, Inc., 1:17-cv-754 (S.D. Ohio May 13, 2024)
• Parties: SARA HAWES, et al., Plaintiffs, v. MACY'S INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

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SARA HAWES, et al., Plaintiffs, v. MACY'S INC., et al., Defendants.

No. 1:17-cv-754

United States District Court, S.D. Ohio, Western Division

May 13, 2024

OPINION AND ORDER

DOUGLAS R. COLE, UNITED STATES DISTRICT JUDGE.

Before the Court is the Plaintiffs' motion for attorneys' fees, (Doc. 173),^[1]which asks the Court to award $3,500,000 in attorneys' fees, $216,561.44 in litigation expenses, and $6,500 in incentive awards for the named plaintiffs($3,500 for Plaintiff Hawes, $1,500 for Plaintiff Chiaraluce, and $1,500 for Plaintiff Fontaine), (id.(crossreferencing Doc. 147)), from the now-approved class action settlement, (see Docs. 1432, 170-3, 172).For the reasons below, the CourtGRANTS the motion (Doc. 173)IN PART.Specifically, it AWARDS class counsel$3,500,000 in attorneys' fees and $216,561.44 in litigation expenses, but only partially awards incentive payments for the named plaintiffs.On that latter score, the CourtAWARDSPlaintiff Hawes $750, Plaintiff Chiaraluce $150, and Plaintiff Fontaine $150.

BACKGROUND

The factual background to this case is lengthy and largely irrelevant to this Opinion and Order.In short, this case began when Plaintiffs sued Macy's (along with other manufacturers and retailers no longer part of the suit) because Macy's allegedly misrepresented the thread-count on some of its bedsheets.Hawes v. Macy's Inc.No. 1:17-cv-754, 2023 WL 8811499, at *1(S.D. OhioDec. 20 2023).The suit was eventually certified as a class action.Id. at *2.Settlement negotiations ensued.

The parties struck a bargain and sought this Court's approval under Federal Rule of Civil Procedure 23(e) of the class action settlement.The agreement called for Macy's to pay $10,500,000 into a common fund that would be used to settle class claims.Id.The fund would satisfy class claims according to a tiered structure.Claimants who could prove they purchased (or whom Macy's could verify had purchased) the sheets in question would receive $7.50 on a first distribution.Id. at *3.Meanwhile, claimants who could not prove they purchased sheets, but who nevertheless attested under penalty of perjury that they did so, would receive $2.50 on a first distribution.Id.Then, after the first distribution, claimants in the first tier of claims would receive a pro-rata second distribution of up to 50% of the purchase price of their sheets.Id.After that second distribution, the remaining funds, under what is known as a cy pres provision, were to go to an unrelated nonprofit group.Id.

The Court denied approval of the original agreement because the cy pres provision rendered the agreement unfair unreasonable, and inadequate.Id. at *13-*18.The Court also denied the original Motion for an Award of Attorneys' Fees, Reimbursement of Expenses, and Award of Class Representative Service Awards 2 (Doc. 147) as moot because it rejected the settlement agreement.Hawes, 2023 WL 8811499, at *18.But the Court noted that the agreement was otherwise fair, save the cy pres provision.Id.

The parties amended the settlement agreement.(Doc. 170-3).The amendments eliminated the cy pres provision and instead provided that both the first and second tiers of claimants(the latter being those who could not prove they owned sheets) would receive a pro-rata share of a third distribution.(Id. at #4759).The Court approved the amended settlement.(Doc. 172).

The parties now renew their motion for attorneys' fees, which motion incorporates the same facts and arguments as their previous motion.(Doc. 173(crossreferencing Doc. 147)).

LAW AND ANALYSIS

As the Court noted previously when rejecting the original settlement agreement, the Erie doctrine demands that the Court apply state substantive law to this diversity class action.Hawes, 2023 WL 8811499, at *5.And as the Court forecasted in that Opinion and Order, attorneys' fees and awards, “particularly when they depend on the outcome of the suit”(as they do in all common fund cases like this one), involve an application of substantive state law.Id.

When attorneys' fees and awards depend on the outcome of the suit, they become “part and parcel” with the cause of action.Chieftain Royalty Co. v. Enervest Energy Institutional Fund XIII-A, L.P., 888 F.3d 455, 460(10th Cir.2017).The Court previously held that the causes of action underlying the settlement agreement and class certification were governed by Ohio law.Hawes,2023 WL 8811499, at *6-*7.So the Court will apply Ohio law when awarding attorneys' fees, expenses, and incentive awards.

A.Attorneys' Fees

Class counsel requests the Court award $3,500,000 in attorneys' fees, which amounts to one third of the total common fund.(Doc. 147-1, #4286).While Ohio law authorizes attorney's fees in common fund cases, seeSmith v. Kroeger, 37 N.E.2d 45, 48(Ohio1941), few Ohio cases delineate the appropriate amount of fees.

The principal case, State ex rel. Montrie Nursing Home, Inc. v. Creasy, involved a suit between nursing homes and the Ohio Department of Public Welfare over Medicaid reimbursement rates.449 N.E.2d 763, 764(Ohio1983).The nursing homes sued as a class and eventually prevailed on the liability issue.Id.The trial court awarded over $900,000 in attorney's fees, to be paid by the state in addition to the $9,000,000 fund.Seeid. at 765.The Supreme Court of Ohio vacated the fee award, finding that any attorneys' fees “must come from the fund itself” rather than as an additional assessment against the state.Id. at 767.The Ohio Supreme Court then instructed the trial court on remand to recalculate an appropriate fee award based not on a percentage of the fund but “upon a determination of the amount of reasonable compensation for the legal services rendered by counsel.”Id.It also instructed the trial court to consider five factors when assessing what compensation is “reasonable”:

(1) the time and labor involved in maintaining th[e] litigation, (2) the novelty, complexity, and difficulty of the questions involved, (3) the professional skill required to perform the necessary legal services, (4) the experience, reputation, and ability of the attorneys, and (5) the miscellaneous expenses of th[e] litigation.^[2]

Id.

The first four of the factors largely map onto what federal courts would typically call a lodestar analysis.In a lodestar analysis, courts determine the reasonableness of the hours the various attorneys spent on the matter, the propriety of their respective levels of experience for the task at hand, and the reasonable rates that such attorneys would charge.Linneman v. Vita-Mix Corp., 970 F.3d 621, 624(6th Cir.2020);Perdue v. Kenny A. ex rel. Winn,559 U.S. 542, 551-52(2010).Courts then multiply the reasonable rate by the reasonable hours for each class attorney and sum such values across all the class attorneys to determine the lodestar.SeeLinneman, 970 F.3d at 624.

Compare that to Creasy.The question of what constitutes a reasonable number of hours is largely subsumed in the first Creasy factor.The appropriateness of the task to the experience of a given attorneys is addressed in the third.And the reasonableness of the hourly rates is covered by the fourth.The second Creasy factor appears to correspond to what federal courts sometimes refer to as a risk multiplier, which they sometimes apply to the lodestar calculation to account for the novelty, complexity, and difficulty of the issues that a case presents (and the corresponding risk that the attorneys will not prevail and obtain fees).SeeLinneman, 970 F.3d at 624(“The lodestar method attempts to approximate the work done ... with the possibility of an enhancement in certain cases.”).

More recently, at least some Ohio courts also have blessed the percentage-of-the-fund approach for determining attorneys' fees for common fund cases.Steiner v. Van Dorn Co., 660 N.E.2d 1256, 1258 n.2(Ohio Ct. App.1995);Musial Offs., Ltd. v. Cnty. of Cuyahoga, 163 N.E.3d 84, 92(Ohio Ct. App.2020)(affirming an award of counsel fees valued at 50% of common fund).This approach to setting fees likewise mirrors in some ways typical federal class action practice, where attorneys' fee awards that are based on a lodestar may be subject to a percentage-of-the-fund crosscheck.E.g., Gascho v. Glob. Fitness Holdings, LLC, 822 F.3d 269, 281-82(6th Cir.2016).

Given the basic similarities between Ohio law and general federal practice in awarding class counsel fees, and mindful of the Sixth Circuit's admonition that, “[i]n determining fee awards, courts should not become green-eyeshade accountants, but instead must content themselves with rough justice,”Rembert v. A Plus Home Health Care Agency LLC, 986 F.3d 613, 618(6th Cir.2021)(cleaned up), the Court here will start with a typical lodestar analysis and will then conduct a percentage-of-the-fund cross-check.As described below, based on the combination of the two, the Court finds that the requested $3,500,000 attorney fee award is reasonable.

1.Lodestar Analysis

Based on the billing materials class counsel presented, it appears class counsel(some 25 separate attorneys) and their professional staff spent over 6,154 hours on this matter during more than five years of litigation.(Doc. 147-1, #4309;Doc. 147-2, #4338-40).At the fairness hearing, the Court inquired further of class counsel regarding the various activities they undertook.Class counsel represented, for example, that they reviewed over a million pages of discovery that were produced in response to the document requests they had drafted.Apart from those discovery activities, class counsel drafted several motions, including a successful motion to certify a class, as well as responses to motions to dismiss and a motion...