Grottano v. City Of New York

Background

The decision resolves Class Counsel’s motion for attorneys’ fees and expenses and Defendants’ cross motion for reimbursement of claims-administration costs. The underlying settlement concerned class members who were subjected to invasive searches while visiting New York City Department of Correction facilities between November 23, 2012, and October 30, 2019.

The settlement created a $12.5 million fund for class members and required changes to Department of Correction visitor-search procedures, including two years of oversight by Class Counsel. The agreement allowed Class Counsel to seek up to $5.4 million in attorneys’ fees, to be paid separately by Defendants rather than from the settlement fund. Class Counsel requested $4.5 million in fees and $14,651.48 in expenses.

The first claims notice told potential class members they might receive approximately $4,000. More than 40,000 people submitted claims, which would have resulted in average payments below $300. The parties then revised the settlement structure and claims process. The revised process produced approximately 12,500 substantiated claims, with eligible claimants generally receiving at least $1,000, or $500 for claimants found with contraband during their visit. The problems caused additional proceedings, delayed payments, and increased claims-administration costs.

Attorneys’ Fees

The court applied the percentage-of-the-fund method, using the lodestar—the reasonable hours worked multiplied by reasonable hourly rates—as a cross-check. It considered the six factors from Goldberger v. Integrated Resources, Inc., including the time and labor involved, the case’s complexity and risk, the quality of representation, the fee’s relationship to the settlement, and public-policy considerations.

The court concluded that the requested $4.5 million was excessive. Although Class Counsel devoted substantial time to the case, the court found that the litigation was not unusually complex because liability was not vigorously contested and the case settled early. The court also found that problems with the initial claims notice led to serious delays, reduced payments, and additional claims-administration work. The court considered the fee request’s size—36% of the settlement fund—too high.

The court reduced the proposed lodestar by 10%, from $2,561,625.65 to $2,305,463.08, citing vague billing entries, heavy use of partners and senior counsel, and time spent correcting problems with the initial claims notice. It found that a $2.6 million fee, equal to 20.8% of the settlement fund and producing a 1.13 lodestar multiplier, was reasonable.

Expenses

The court awarded $10,574.94 in expenses. It denied reimbursement for the $3,077.66 mediation expense because Class Counsel had agreed to split that cost with Defendants. The court also stated that it would authorize an additional $998.88 for printing notices if Class Counsel provided supporting documentation by August 15, 2022.

Administrative-Cost Reimbursement

The settlement agreement limited Defendants’ responsibility for claims-administration costs to $500,000. The costs exceeded that amount by more than 100%, in part because of the flawed initial claims notice and the resulting second notice and claims process. Defendants had reserved the right to seek reimbursement from Class Counsel’s fee award.

The court found that both Class Counsel and Defendants shared responsibility for the initial notice problems because both had agreed to the notice’s form and substance and supported it during preliminary settlement approval. The court therefore ordered Class Counsel to reimburse Defendants, from the $2.6 million fee award, for 50% of the total claims-administration fees Defendants had paid or would pay above $500,000.

Disposition

Class Counsel’s Motion for Attorneys’ Fees and Expenses was granted in part and denied in part. The court awarded $2.6 million in attorneys’ fees, $10,574.94 in expenses, and potentially another $998.88 upon submission of supporting documentation. Defendants’ Cross Motion for Reimbursement of Administrative Costs was also granted in part and denied in part. The court ordered reimbursement of half of the claims-administration costs exceeding $500,000.