Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 C. Benjamin Nutley () nutley@zenlaw.com 0 E. Colorado Blvd., th Floor Pasadena, California 0 Telephone: () 0-00 Facsimile: () 0-0 John W. Davis (00) LAW OFFICE OF JOHN W. DAVIS john@johnwdavis.com 0 W. Broadway, Suite 00 San Diego, CA 0 Telephone: () 00-0 Facsimile: () -0 Attorneys for Objector Sarah McDonald UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 0 STEVEN RUSSELL, et al., Plaintiff, v. KOHL S DEPARTMENT STORES, et al., Defendants. Case No. :-cv-0-rgk-sp OBJECTOR S SUPPLEMENTAL REPLY RE FEE REQUESTS AND EXPENSES The Honorable R. Gary Klausner Pursuant to the order of this Court at the final approval hearing held September, 0, Objector McDonald submits the following reply brief in opposition to Class Counsel s request for fees and expenses. Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 0 A. The settling parties Mercury Interactive violation must be cured by additional notice and extending the deadlines to opt-out or object Ninth Circuit authority requires that fee motions must be filed before the deadline for opting out and objecting. DE (McDonald Objection) at -, citing In re Mercury Interactive Corp. Sec. Litig., F.d ( th Cir. 00). That did not happen here. The solution as in the Mercury Interactive case is remedial notice to the class, followed by additional time for objections and opt-outs. That is what the district court ordered on remand in the Mercury Interactive case itself. See In re Mercury Interactive Corp. Sec. Litig., No. :0-CV-0-JF, 0 WL, at * (N.D. Cal. Mar., 0) (district court on remand provided for additional notice to the class, including the mailing of more than,000 class notices regarding the renewed fees motion ); see also Dickerson v. Cable Commc s, Inc., No. :-CV-000-PK, 0 WL 0, at * (D. Or. Nov., 0) (preemptively addressing Mercury Interactive violation, district court continued final approval and ordered supplemental notice to all class members notifying them that they have the right to object to counsel's fee request, and informing them where they could view the documents supporting counsel s fee request. ) For that reason, Class Counsel s repeated argument that Objector McDonald has had plenty of time to analyze their fee request misses the point entirely. The due process concerns addressed by the Mercury Interactive rule apply to all absent class members, not just the ones who appear and object that the rule was violated. As for those unnamed class members, Class Counsel imply the violation was cured by posting, on the settlement website, a link to this Court s minute order from Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 0 the September, 0 final approval hearing. Class Counsel say that the website s link to the minute order alerts class members about an opportunity to provide additional briefing in connection with any objection to the requested Attorney s Fees and Costs. Plaintiff s Supp. Reply, DE at ECF. That argument is unavailing. The opportunity to provide additional briefing in the minute order was not intended to apply to absent class members. Instead, the Court set a schedule for counsel of record to submit additional briefs. DE ( Counsel shall submit additional briefing, not to exceed ten pages... ). Order does not extend the deadline to object or opt-out for unnamed class members who have not appeared. It certainly would not be so construed by any class member who saw it. Class Counsel, in any event, give no reason for this Court to conclude that any material portion of the class would be visiting the website in the ten days between the September, 0 fairness hearing and the September, 0 deadline for additional briefing on the fee, such that they would have an adequate opportunity to analyze the fee papers and object by the deadline. The Mercury Interactive requires that the fee motion and supporting evidence be filed before the deadline to object or opt-out. That requirement has not been met here, and cannot be met without further, effective notice to the class regarding their right to object to the fee request. Complicating Class Counsel s argument is the fact that the minute order reverses the briefing schedule from what the Court announced at the hearing; i.e., it provides for Class Counsel to file first and Objectors to respond, rather than the reverse. The responding parties followed the schedule as it was discussed at the hearing, rather than as set forth in the minute order. Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 0 In this particular case, the additional notice would be useful to inform class members of their right, under California law, to redeem gift cards valued at under $0 for cash. Plaintiff argued, in obtaining this Court s approval of the gift cards in this settlement as non-coupon relief, that class members could redeem gift cards valued under $0 for cash. Cal. Civ. Code.(b)(). But, as McDonald pointed out at the final approval hearing, the original notice makes no mention of that possibility, and in fact appears to foreclose it. See DE - ECF, Exhibit B to Declaration of Orlando Castillejos (long form notice exemplar, telling class members that You may give your Gift Card Credit to someone else, but it cannot be redeemed for cash, except where required by law. ); see also DE- ECF -, Exhibit C to Castillejos Decl. (postcard short-form notice). Thus a remedial notice would allow the class to be informed of the potential for cash redemption of the gift card. B. The Court should not ignore Class Counsel s lodestar in setting the attorneys fee In setting attorneys fees, Class Counsel urge the Court to rely solely on the percent-of-fund method and disregard their lodestar. Plaintiff s Supp. Reply, DE at ECF :0. Courts in this Circuit have discretion to apply either a lodestar or a percentage analysis, but courts discretion to choose which calculation method they use must be exercised so as to achieve a reasonable result. In re Bluetooth Headset Products Liability, F.d, (th Cir. 0). The Court should not apply either Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 0 method in a routine or mechanistic way. In Re Wash. Pub. Power Supply Sys. Sec. Litig., F.d, n. (th Cir. ) ( Because a reasonable fee award is the hallmark of common fund cases, and because arbitrary, and thus unreasonable, fee awards are to be avoided, neither method should be applied in a formulaic or mechanical fashion. ). If the Court elects to award fees based on a percentage of the fund, it should consider a lodestar cross-check to ensure a fair and reasonable result. See, e.g., Vizcaino v. Microsoft Corp., F. Supp. d, 0 (W.D. Wash. 00); In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litig, 0 F.d 0, 0 (th Cir. ); Fischel v. Equitable Life Assurance Society, 0 F.d, 00 (th Cir. 00). The problem remains, however, that Class Counsel have elected not to provide sufficient basic information about the time devoted to the case for this Court to set a fee using the lodestar method, or to check the fee arrived at by the percentof-fund method. Given the implicit opportunity to provide meaningful documentation of the time they spent on this case, Class Counsel have effectively declined, and have submitted additional declarations that only barely improve on their original declarations. Class Counsel have deprived the Court of the information necessary to set a lodestar award, such that this Court cannot elect to use the lodestar method without ordering Class Counsel to provide the necessary information. See Hensley v. Eckerhart, U.S., (); Chalmers v. City of Los Angeles, F.d 0, 0- (th Cir. ); see also Camacho v. Bridgeport Fin., Inc., F.d Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 0, -0 (th Cir. 00). Alternatively, this Court will be forced to use a percentage method without a coherent cross-check, not because that is the best way of setting the fee in this case, but because Class Counsel simply declined to provide the information required to do otherwise. That is an insufficient foundation for the exercise of discretion in choosing between the methods. Here, for example, a % benchmark award would arguably overcompensate Class Counsel. The Court must concern itself primarily with the relationship of the fee to the benefit conferred on the class. Bluetooth, F.d at. Even if the settlement gift cards are not coupons under CAFA, neither are they actual cash. It is inevitable that the redemption value of the cards will be less than their aggregate face value, because not all claimants will use the entire amount, and some may not use the card at all. See DE (McDonald Objection) at (ECF ). That separates this case from a true cash common fund, for which a court can confidently conclude that the face value of the fund to be distributed equals the value to the Class. A benchmark percentage would also substantially exceed Class Counsel s reported lodestar figure. In re Thirteen Appeals Arising out of San Juan, F.d, 0 (st Cir. ) (use of percentage method may result in the overcompensation of lawyers in situations where actions are resolved before counsel has invested significant time or resources. ). That problem would of course be mitigated to the extent that claimants are able to exchange the cards for cash, and are aware that they may do so, as discussed supra. Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #: 0 0 That figure is itself subject to some doubt, given Class Counsel s refusal to provide the minimum expected documentation necessary even for a lodestar crosscheck. C. Class Counsel s supplemental declarations fail to cure the lack of specificity plaguing their original request for fees and expenses Plaintiffs counsel should be required to submit charts that break down, by individual attorney for whom fees are claimed, the attorney's work on this case by general category, and by specific categories of tasks performed within that category, and... the total number of hours worked in each category. See Dyer v. Wells Fargo Bank, N.A., 0 F.R.D., (N.D. Cal. 0). Class counsel should produce hourly billing records or similar source documentation. See Hensley v. Eckerhart, U.S., () ( [T]he fee applicant [must] document[] the appropriate hours expended and hourly rates. ) Time reports in a form not reasonably capable of evaluation do not satisfy the burden of submitting detailed time records justifying the hours claimed. Stewart v. Gates, F.d 0, (th Cir. ) citing Chalmers v. City of Los Angeles, F.d 0, 0 (th Cir.). It is an abuse of discretion to award fees for hours not properly documented. Stewart, F.d at. As for expenses, Class Counsel have provided only a single invoice from the mediation, accounting for $ of their claimed costs. See Supplemental Declaration of Douglas Caiafa, DE- at 0. The rest of the costs claimed remain Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp
Case :-cv-0-rgk-sp Document Filed 0/0/ Page of Page ID #:0 0 0 unsupported, and are barely even described. As already set forth (McDonald Suppl. Obj., DE at -), that does not meet the expected standard for reimbursement from a class fund. Class Counsel should only be reimbursed for properly documented expenses. D. Conclusion Objector respectfully requests that this Court decline to award fees and expenses at this time, and enter an order requiring the parties to issue remedial notice. Respectfully submitted this rd day of October, 0. /s/ John W. Davis John W. Davis (00) john@johnwdavis.com 0 W. Broadway, Suite 00 San Diego, California 0 Telephone: () 00-0 Facsimile: () -0 C. Benjamin Nutley () nutley@zenlaw.com 0 E. Colorado Blvd., th Floor Pasadena, California 0 Telephone: () 0-00 Facsimile: () 0-0 Attorneys for Objector Sarah McDonald Objector s Reply Brief re Fees and Expenses :-cv-0-rgk-sp