Holman v. Student Loan Xpress Inc.

778 F.Supp.2d 1306

22 Fla. L. Weekly Fed. D 589

22 Fla. L. Weekly Fed. D 592

Michael HOLMAN, Plaintiffs,

v.STUDENT LOAN XPRESS, INC., Defendant.

Case No. 8:08–cv–305–T–23MAP.

United States District Court, M.D. Florida,Tampa Division.

March 17, 2011.

Christopher Craig Casper, James, Hoyer, Newcomer, Smiljanich & Yanchunis, PA, Tampa, FL, Andrew A. August, Kevin F. Rooney, Pinnacle Law Group LLP, San Francisco, CA, Edward Martin Waller, Jr., Fowler White Boggs, Tampa, FL, for Plaintiffs.Edward Martin Waller, Jr., Julie S. Sneed, Fowler White Boggs, Tampa, FL, Jennifer Altfeld Landau, Robert M. Stone, Sidley Austin, LLP, Los Angeles, CA, for Defendant.

ORDER

STEVEN D. MERRYDAY, District Judge.

A January 4, 2011, order (Doc. 129) approves a settlement (Doc. 127–1) in this class action under the Ohio Retail and Installment Sales Act (“RISA”) ¹ and permanently enjoins further action against the defendant in accord with the settlement agreement. The plaintiffs and class counsel move (Doc. 126) unopposed for approval of the defendant's paying an attorney's fee, costs, and service awards.

Before filing this action, class counsel and each class representative executed a representation agreement (Doc. 140), in which the class representative agrees that class counsel shall receive as compensation for the representation either (1) “the amount of fees ordered by the court or agreed by the defendant to be paid directly to counsel” or (2) forty percent of the total recovery, “whichever is greater.” The “recovery” under the settlement agreement consists primarily of reduced student loan obligations through forgiveness of principal and interest, interest rate modification, and favorable credit reporting. Little or no “total recovery” occurred within the meaning of the compensation clause of the representation agreement. No common fund with cash exists from which class counsel may seek compensation. RISA, which provides a claim in recoupment for relief from indebtedness, contains no provision awarding an attorney's fee to the prevailing party. Therefore, payment of class counsel's fee in this action depends solely upon the defendant's agreeing to pay. In settlement negotiations assisted by a mediator, the parties agreed in the following terms (Doc. 127–1) to the defendant's payment of fees and costs:

Class Counsel shall apply to the Court for approval of an award of attorneys' fees, costs, and expenses, based on their lodestar, plus an appropriate multiplier, in an amount not to exceed four million nine hundred and seventy thousand dollars ($4,970,000.00), in accordance with the applicable legal precedents therefor, and conditioned upon the Settlement reaching its Final Effective Date. [The defendant] SLX shall pay the attorneys' fees, costs, and expenses awarded by the Court, provided that the amount awarded for attorneys' fees, costs, and expenses does not exceed $4,970,000.00.

In sum, rather than specifying an attorney's fee, the agreement (1) limits the defendant's payment to $4,970,000.00 and (2) delegates to the court the decision as to amount, provided only that the amount both derives from class counsel's lodestar and an appropriate multiplier and accords with applicable precedent. In other words, the parties proved unable to agree on an attorney's fee and agreed instead, akin to an arbitration agreement, to accept the court's decision on the amount of the attorney's fee, subject to a fee cap. In the pending motion (Doc. 126), the plaintiffs and class counsel seek from the defendant a payment equal to the fee cap of $4,970,000.00 ($4,830,958.53 in attorney's fees and $139,041.47 in costs) plus $29,500.00 in service awards.

Discussion

A January 6, 2011, order (Doc. 130)—which is incorporated by reference into, and attached to, this order—finds (1) that class counsel fail to provide sufficient evidence that class counsel's hourly rate qualifies as the prevailing market rate in the Middle District of Florida; (2) that an hourly rate exceeding $500 appears substantially above the prevailing market rate; (3) that class counsel's hours appear neither excessive, redundant, nor otherwise unnecessary; (4) that, although the requested (Doc. 126) 1.77 multiplier appears reasonable for a class action resulting in a cash settlement of the same value as the non-cash settlement in this action, class counsel fail to justify as reasonable in this instance a multiplier of 1.77, which nearly doubles the hourly rate; (5) that counsel's expenses appear reasonable and necessary to achieving ultimate relief for the class; and (6) that the request for service awards for each class and sub-class representative appears both reasonable and consistent with prevailing practice. The order (Doc. 130) provides class counsel with the option of either accepting a proposed award based on the court's tentative assessment or supplementing class counsel's motion.

Class counsel elect to supplement the motion and provide an additional memorandum (Doc. 135) in support of the motion, supplemental declarations of both Andrew August and Christopher Casper (Docs. 136, 137), and the declaration of Kevin Kelly (Doc. 138), who declined to represent several former students of Silver State in pursuing a claim similar to the claim class counsel pursued. In the supplemental memorandum, class counsel (1) provide three examples of recent cases in the Middle District of Florida and the hourly rate awarded in each case; (2) argue that the “relevant market” analysis should account for “national market considerations” and the quality of opposition counsel; (3) assert that only a few are both able and willing to represent the plaintiffs in this action and that some attorneys (e.g., Kevin Kelly) declined; (4) argue that class counsel possess skill, experience, and reputation comparable to counsel in similar actions; (5) assert that a multiplier resulting in a fee award equal to the parties' negotiated fee cap rests within the range of “appropriate” multipliers; (6) argue that a post-multiplier hourly rate analysis is pertinent only in a case involving a request for fees under a fee-shifting statute; and (7) state that, if analyzed in the same way as an action in which the fee derives from a common fund, the negotiated fee amounts to only 8.6 percent of the unconditional relief provided to the class.

1. A Reasonable Hourly Rate

“To arrive at a lodestar figure ..., the district court must first determine the number of hours reasonably spent by the plaintiffs' counsel on the matter, then multiply those hours by an hourly rate the court deems reasonable for similarly complex non-contingent work.” Camden I Condominium Ass'n, Inc. v. Dunkle, 946 F.2d 768, 772 (11th Cir.1991) (citing Lindy Bros. Builders, Inc. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973)); Loranger v. Stierheim, 10 F.3d 776, 781–82 (11th Cir.1994). Contemporaneous with Lindy Bros., which adopts the lodestar analysis, Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714 (5th Cir.1974), adopts a “twelve-factor method of determining court-awarded attorney's fees.” ² Camden I, 946 F.2d at 772. Although Johnson reviews an award of attorney's fees under a federal fee-shifting statute (and considers neither a contractually negotiated award nor a common fund), the Johnson factors provide a framework applicable beyond statutory fee-shifting. In fact:

most commentators consider Johnson to be little different from Lindy because the first criterion of the Johnson test, and indeed the one most heavily weighted, is the time and labor required. Similarly, many of the Johnson factors are subsumed within the initial calculation of hours reasonably expended at a customary hourly rate.... In Norman [a fee-shifting case], this court noted the lodestar approach has been favored ‘because it produces a more objective estimate and ought to be a better assurance of more even results.’Camden I, 946 F.2d at 772–73 (citations omitted). In this instance, the parties negotiated for application of the lodestar analysis.

“[A] party seeking attorney's fees bears the burden of producing ‘satisfactory evidence that the requested rate is in line with prevailing market rates.’ ” Loranger v. Stierheim, 10 F.3d 776, 781 (11th Cir.1994) (quoting Norman, 836 F.2d at 1299). “Satisfactory evidence” means “ ‘more than the affidavit of the attorney performing the work.’ ” 10 F.3d at 781. However, “[t]he court ... is itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of testimony of witnesses as to value.” Campbell v. Green, 112 F.2d 143, 144 (5th Cir.1940).³

As to the reasonable hourly rate, class counsel adduces neither binding precedent nor persuasive argument in support of incorporating a “national market consideration” into the standard announced in Norman v. Housing Auth., 836 F.2d 1292, 1299 (11th Cir.1988), which considers “the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation.” See Am. Civil Liberties Union v. Barnes, 168 F.3d 423, 436–38 (11th Cir.1999) (reversing an award of attorney's fees based on non-local rates); see also Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir.2008) (finding that “[g]enerally, when determining a reasonable hourly rate, the relevant community is the forum in which the district court sits.”); Manual for Complex Litigation (4th ed.) § 14.122 (“What constitutes a reasonable hourly rate varies according to geographic area and the attorney's experience, reputation, practice, qualifications, and customary charge. The rate should reflect what the attorney would normally command in the relevant marketplace.”). “[R]eputation and experience are usually only proxies for skill, which in a rational economic environment is the ultimate determinant...