Chavez v. Stellar Management Group VII, LLC

Background

In connection with the plaintiffs’ request for final approval of a class-action settlement, the plaintiffs moved for approval of payments from a $4,250,000 gross common settlement fund. They requested $1,416,666.52 in attorneys’ fees, $34,384.78 in costs, and incentive awards of $12,000 and $10,000 for the two named class representatives, David Chavez and Vincent Slaughter. The court states that it granted final approval of the settlement in a separate order.

Attorneys’ Fees

The requested fee was approximately one-third of the settlement fund. The court explained that the Ninth Circuit generally uses 25% of a common-fund settlement as a benchmark, but permits an adjustment based on circumstances such as the results for class members, the risks counsel assumed, the opportunity cost of taking the case, and comparable market rates. The court also considered the skill required and quality of counsel’s work.

Factors supporting an upward adjustment included defendants’ vigorous litigation at the pleading stage, the plaintiffs’ success on all contested motions, uncertainty about whether the plaintiffs could prevail on some claims, counsel’s contingency-fee risk, and the absence of objections to the fee request. Factors weighing against the full requested amount included the settlement recovery, which was in the low-teen percentage range of total exposure and was not exceptional, and repeated failures by class counsel to follow the court’s guidance about class-action settlements. Those failures required additional briefing and delayed approval.

The court gave little weight to counsel’s lodestar cross-check, which estimated $1,291,655 based on hours multiplied by billing rates before any adjustment. The court stated that some rates were likely reasonable but others exceeded local prevailing rates for attorneys and support staff of comparable skill and experience. The court did not decide whether counsel adequately documented the hours worked.

Ruling

The court found that a fee somewhat above the 25% benchmark was appropriate, but that the requested one-third share was not. It therefore granted the motion to approve attorneys’ fees in part and awarded class counsel $1,232,500, equal to 29% of the common fund.

The court granted the plaintiffs’ requests for costs and incentive awards. It ordered that class counsel recover $1,232,500 in fees and $34,384.78 in costs from the common fund; David Chavez recover $12,000; and Vincent Slaughter recover $10,000. The remaining settlement funds were to be distributed under the settlement agreement and the separate final-approval order. Judge Joseph C. Spero signed the order.