City of Birmingham Retirement and Relief System v. Credit Suisse Group AG

Background

The plaintiffs brought a securities class action alleging violations of the Securities Exchange Act of 1934 related to Credit Suisse Group AG’s management of American Depositary Receipts. The case was litigated for more than two years, including discovery, opposition to a motion to dismiss, preparation for class certification, and settlement negotiations. The parties reached a $15.5 million class-action settlement. The court separately approved the settlement agreement and plan of allocation as fair and adequate under Federal Rule of Civil Procedure 23(e). No objections were filed, and no objectors appeared at the fairness hearing.

Plaintiffs then sought attorneys’ fees and costs from the settlement fund under Rule 23(h). Lead counsel requested 30% of the fund, or $4,650,000, and $367,083.75 in litigation expenses. The four lead plaintiffs—City of Birmingham Retirement and Relief System, Westchester Putnam Counties Heavy and Highway Laborers Local 60 Benefit Funds, Teamsters Local 456 Pension and Annuity Funds, and International Brotherhood of Teamsters Local No. 710 Pension Plan—also sought reimbursement for their time and expenses.

Attorneys’ Fees

The court used the percentage-of-the-fund method, with the lodestar method as a cross-check. The percentage method awards counsel a reasonable percentage of the settlement fund; the lodestar method multiplies reasonable hours by reasonable hourly rates and can be used to test the percentage award.

The court considered the factors identified in Goldberger v. Integrated Resources, Inc., including the time and labor spent, the litigation’s size and complexity, the risk of loss, the quality of representation, the fee’s relationship to the settlement, and public-policy considerations. Comparable common-fund and securities settlements generally involved fees lower than the requested 30%. The court found that this case was not shown to be unusually complex compared with other securities class actions and that the ordinary risk of proceeding to trial did not justify increasing the fee percentage.

The court nevertheless found that the settlement benefited the class more than typical securities settlements and that the quality of representation supported an increase above the baseline. The lodestar cross-check also supported only a modest increase. The court therefore granted the fee request in part and awarded lead counsel 26% of the $15.5 million fund, or $4,030,000.

Litigation Costs

The court granted the request for $367,083.75 in litigation costs. The expenses covered expert witnesses, filings, postage, mediations, factual investigation, legal research, travel, and conference logistics. The court found these costs necessarily incurred in the litigation and routinely charged to clients.

Service Awards

The court considered the lead plaintiffs’ requests under the Private Securities Litigation Reform Act, which permits reasonable costs and expenses directly related to representing the class. The lead plaintiffs consulted with counsel, reviewed pleadings and other filings, produced documents and information during discovery, and supervised and participated in settlement activities.

The court awarded Birmingham $1,868.75, Local 60 $3,177.25, and Local 456 $3,648. For Local 710, the court reduced the requested hourly rate for eight hours of assistant-administrator time from $200 to $100 per hour and approved reimbursement for an outside attorney’s work.

Disposition

Judge Lorna G. Schofield awarded lead counsel $4,030,000 in attorneys’ fees from the settlement fund. Three quarters, $3,022,500, was payable immediately, and the remaining $1,007,500 was payable after distributions to class members were complete. The court also awarded $367,083.75 in expenses immediately from the fund. The conclusion listed service awards of $1,868.75 to Birmingham, $3,177.25 to Local 60, $3,648 to Local 456, and $11,285 to Local 710, payable after distributions were complete.