Merryman v. JP Morgan Chase Bank, N.A.

Background

The plaintiffs owned American Depositary Receipts, which represent ownership interests in shares of foreign corporations. Under deposit agreements, JPMorgan Chase Bank converted dividends and other cash distributions from foreign companies into U.S. dollars before distributing them to the receipt holders. The plaintiffs alleged that the bank added a spread to the foreign-exchange rates it obtained and thereby breached the deposit agreements. They asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and conversion.

The case was first filed in the Western District of Arkansas and was dismissed without prejudice for lack of personal jurisdiction. The plaintiffs then filed the case in the Southern District of New York. The defendant’s motions to dismiss in the New York case were granted in part and denied in part. The plaintiffs later added Chester County Employees Retirement Fund as a plaintiff.

The parties reached an agreement providing for a $9.5 million settlement, less attorneys’ fees and litigation expenses, notice and administration costs, and taxes. In separate orders, the court certified a settlement class, approved the settlement as fair and adequate, and approved the plan for distributing the settlement.

Attorneys’ Fees

This opinion addressed only the motion for attorneys’ fees, litigation expenses, and service awards. Class counsel requested one-third of the settlement, or $3,166,666.67, based on a claimed lodestar of $3,191,242.50. A lodestar is the reasonable number of hours worked multiplied by reasonable hourly rates.

The court found the requested fees unreasonable. It emphasized the substantial similarity between this case and a related case against Citibank, for which the same law firm had already received $4,916,666.67 in fees and $678,434.41 in litigation expenses. The court also found substantial overlap between the complaint and motion-to-dismiss work performed in Arkansas and the nearly identical filings in New York. The court concluded that counsel had not shown that the billed work was not duplicated.

The court reduced the claimed hours for pre-complaint investigation and the Arkansas complaint and motion to dismiss by 80 percent. It reduced the claimed hours for the New York complaint, motion to dismiss, and motion for reconsideration by 85 percent. It reduced the hours for the remaining litigation phases by 75 percent. The resulting recalculated lodestar was $731,063.99. The court did not apply an additional multiplier because, in its view, the risks of the litigation had already been compensated in the related Citibank case.

Litigation Expenses

Class counsel requested $264,680.05 in expenses. The court reduced reimbursement for expert work by 75 percent because counsel had not shown that the expert’s work was not substantially duplicated in the related case. The court also reduced travel expenses by 20 percent because the requested amounts and supporting details were inadequate, including the lack of sufficient information about attendance at depositions and the length of attorneys’ stays.

The court disallowed all requested costs for computerized legal research, treating services such as Westlaw, LexisNexis, and PACER as law-firm overhead. It allowed $1,133 in court fees. The total award for expert expenses, travel expenses, and court fees was $63,772.57.

Service Awards and Disposition

Class counsel requested $2,500 service awards for the Merryman Plaintiffs and Chester County. The court awarded nothing to the Merryman Plaintiffs, finding it difficult to believe that their additional work in this case justified another $2,500 after they had received $20,000 from the related settlement. The court awarded Chester County the requested $2,500, noting that Chester County had also received a $2,500 service award in the related case.

Judge Valerie Caproni granted in part and denied in part the motion. The court awarded $731,063.99 in attorneys’ fees, $63,772.57 in litigation expenses, and a $2,500 service fee to Chester County. The clerk was directed to close the motion.