Free Motion for Attorney Fees - District Court of Arizona - Arizona

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SUSAN MARTIN (AZ#014226) DANIEL L. BONNETT (AZ#014127) JENNIFER KROLL (AZ#019859) MARTIN & BONNETT, P.L.L.C. 3300 N. Central Avenue, Suite 1720 Phoenix, Arizona 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Barbara Allen; Richard Dippold; Melvin Jones; ) Donald McCarty; Richard Scates and Walter G. ) West, individually and on behalf of all others ) similarly situated, ) ) Plaintiffs, ) ) vs. ) ) Honeywell Retirement Earnings Plan; Honeywell ) Secured Benefit Plan; Plan Administrator of ) Honeywell Retirement Earnings Plan; and Plan ) Administrator of Honeywell Secured Benefit ) Plan, ) ) Defendants. ) ) No. CV04-0424 PHX ROS PLAINTIFFS MOTION FOR AWARD OF ATTORNEYS FEES AND COSTS AND FOR INCENTIVE FEES TO NAMED PLAINTIFFS ON THE PARTIAL SETTLEMENT

Pursuant to Rule 54 of the Federal Rules of Civil Procedure and Local Rule 54.2, the Order of this Court granting Motion for Preliminary Approval of the Partial Settlement, (Doc. 319), and in accordance with the provisions of the Class Action Partial Settlement Agreement ( Agreement ), (Doc.312 Exh. A), and pursuant to the declaration of Susan Martin dated January 23, 2008 ( Martin Decl. ) and the exhibits thereto, Plaintiffs respectfully request the Court to award attorneys fees and costs in the amount of 25% of the common benefit fund created by the Agreement and to approve payment and allocation of the $150,000 in special incentive fees payable to the six named Plaintiffs as provided under the Agreement. As set forth in the following Memorandum of Points and Authorities, the requested award is fair, reasonable and appropriate and consistent with the benchmark percentage for common benefit fund fee awards in comparable cases in this circuit.

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MEMORANDUM OF POINTS AND AUTHORITIES Factual Background This is Plaintiffs Initial Fee Application under the terms of the Agreement. As the parties stated in their Joint Motion For Preliminary Approval of the Partial Settlement, the Partial Settlement achieves an excellent result by providing $35,150,000 in recovery, eliminates the risks that there would be no monetary recovery and significantly advances a payment to class members while the Remaining Claims are litigated and appealed. While providing for immediate payment of substantial benefits to vested Retirement Plan Participants, the Partial Settlement also provides for the right for Class members to recover up to $500 million if they are successful on the Remaining Claims. This case involves claims that Defendants violated ERISA and the terms of the Plan by Plan amendments resulting in unlawful Social Security and SBA offsets for former Garrett Plan participants. Although the case was filed on March 1, 2004, Class Counsel s work in

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this matter actually began in 2001, several years before the lawsuit was commenced, and involved efforts to obtain pertinent plan documents and efforts to present and resolve the claims in the administrative claim and appeal process. In view of the almost seven years of work, the close to four years Class Counsel has spent in litigation of these claims and the significant matters remaining to be litigated and appealed, Plaintiffs respectfully submit that the requested fee is fair, reasonable and just. Given the lengthy proceedings in this Court to date, and the motions currently before the Court, we will not belabor the Court with a recitation of the extensive proceedings in this matter. The sheer number of docket entries (now numbering over 380) somewhat speak for themselves, along with the extensive number of orders this Court has already issued. By way of brief summary, the Class Action Complaint alleged inter alia that Defendants violated the Employee Retirement Income Security Act ( ERISA ) and the terms of the Garrett Retirement and Severance Plans and applicable successor plans by, among other things, reducing accrued pension benefits, failing to give notice of reductions in future pension benefit accruals, applying improper offsets that reduced pension benefits and failing to
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provide requested documents on a timely basis. Class Counsel uncovered many facts and issues pertinent to these claims. In addition to facing difficult and novel legal issues, Plaintiffs have been facing wellfinanced and prominent defense counsel and Defendants with abundant financial resources that have aggressively challenged every aspect of this case. To date Defendants have moved to dismiss and have filed two motions for reconsideration of the claims granted in Plaintiffs favor on summary judgment and have also unsuccessfully petitioned the Ninth Circuit for an interlocutory appeal. Defendants vigorously opposed class certification and have attempted and are attempting to defeat Plaintiffs rights to recovery under the partial summary judgment on a variety of grounds including the statute of limitations and an additional motion for reconsideration. In addition to the foregoing motions, extensive discovery proceedings have been conducted, (Martin Decl. ¶ 6), and other motions addressed to discovery, and affirmative defenses are pending.

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While the Court is undoubtedly aware of Class Counsel s litigation efforts through the many Court filings, the Court may not be entirely aware of Class Counsel s efforts that have brought about the Partial Settlement. The negotiations process for the Partial Settlement was quite difficult and extensive. It began in January 2007 with the retention of two skilled nationally recognized mediators, one experienced in large class actions and one in complex ERISA matters. (Doc. 312, p. 14.) Class Counsel participated in numerous meetings with opposing counsel and the mediators and spent many hundreds of hours in efforts to reach the Partial Settlement through arms length, vigorous and hard-fought negotiations. (Id.; Martin Decl. Exh. 1) In addition to the litigation and partial settlement, Class Counsel has borne responsibility for significant litigation expenses. Overall, total expenses in this matter to date are over $500,000. (Martin Decl. ¶ 12.) While class members have raised money to assist in covering some of these expenses, Class Counsel has paid several hundred thousand dollars of unreimbursed expenses. (Id.) Class Counsel s fee request contemplates reimbursement to class members of their expenses incurred to date as part of the 25% requested on this
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application.(Id.) In November 2007, Plaintiffs mailed notice of the proposed settlement and attorneys fee request to approximately 19,500 persons and published notice of the Partial Settlement in numerous newspapers as approved by the Court. The notice clearly described this fee application, advising class members that Class Counsel would be filing a fee application requesting 25%, which is $8,750,000. As of this filing, not a single class member has objected to the Partial Settlement or the proposed fee award to Class Counsel. This Court has discretion to determine counsel fees based on the lodestar method or the percentage of common fund approach. Class Counsel respectfully requests the Court to exercise its discretion to award the percentage of common fund requested here. Counsel s efforts in this case have produced exceptionally positive results. First, Defendants have agreed to waive any right to further challenge or appeal the Court s certification of this case as a class action. The Settlement Fund is $35,000,000. (Martin Decl ¶ 13.) Fractional

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Reduction participants who had or will have more than 35 years of credited service under the Plan will receive 90% of the value of their claims. (Id.) All vested Participants will receive equal payments of Per Capita Benefits.(Id.) The entire $35 million is guaranteed to be distributed. (Id.) In addition, the Partial Settlement Agreement provides for the prospective elimination of administrative fees on SBA accounts. (Id.) Settlement Class members who have Secured Benefits Accounts will bear no future ordinary administrative fees. In addition to the immediate financial benefits of the settlement, the Class stands to recover up to $500 million through litigation on the Remaining Claims. Considering the uncertainties of trial and appeal and the expected duration of the litigation, the terms of the Agreement and the amount provided are highly favorable. Class Counsel Undertook Significant Risks The risks undertaken by Class Counsel in agreeing to take this case and in mounting this litigation were significant. Not only are there are many difficulties inherent in the prosecution of ERISA actions, there are high costs involved in prosecuting these actions because of the need for actuarial experts. (Martin Decl. ¶ 6.) This case, like many ERISA
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cases involves complex technical and statutory issues and defenses along with the fact that Defendants are clearly well-funded.1 All of these factors present substantial risks. In

addition, Defendants have vigorously defended this case on affirmative defense grounds as well and these issues also increase the risks of litigation. I CLASS COUNSEL S FEE REQUEST AS A PERCENTAGE OF THE COMMON FUND IS APPROPRIATE In Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 271 (9th Cir. 1989), the Ninth Circuit reviewed the genesis of the common fund fee award: Since the Supreme Court's 1885 decision in Central Railroad & Banking Co. of Ga. v. Pettus, 113 U.S. 116, 28 L. Ed. 915, 5 S. Ct. 387 (1885), it is well settled that the lawyer who creates a common fund is allowed an extra reward, beyond that which he has arranged with his client, so that he might share the wealth of those upon whom he has conferred a benefit. The right to recovery of common fund fees under statutes like ERISA (where a feeshifting statute is also present) has been confirmed. Staton v. Boeing Co., 327 F.3d 938, 967 (9th Cir. 2003). See e.g., Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) (ERISA case) See also Local 56, United Food & Commer. Workers Union v. Campbell Soup Co., 954 F. Supp. 1000, 1004 (D.N.J. 1997); Mark Berlind, Attorney s Fees under ERISA: When is an Award Appropriate? 71 Cornell L. Rev. 1037, 1060-61 (1986) ( Applying the common benefit doctrine reflects the statute's purpose and enables qualifying potential plaintiffs, regardless of their financial status, to bring ERISA actions. ). Plaintiffs have requested the benchmark award of 25% and propose that costs incurred to date also be payable from this award. The Ninth Circuit has provided that 25% is the appropriate benchmark for common fund fee awards: the district court should take note that 25% has been a proper benchmark figure, which it can then adjust upward or downward to fit the individual circumstances of this case. Such an adjustment, however, must be Defendants have engaged four law firms to oppose this case as well as two additional firms, Akin Gump (to lobby) and Covington & Burlington (who claims to continue to advise Defendants in this matter.) (Doc.225.)
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accompanied by a reasonable explanation of why the benchmark is unreasonable under the circumstances. Paul, Johnson, 886 F.2d at 273. See also Staton v. Boeing Co., 327 F.3d 938, 968 (9th Cir. 2003) ( This circuit has established 25% of the common fund as a benchmark award for attorney fees. ) (citation omitted); Vizcaino, 290 F.3d at 1047 (affirming award of 28% of approximately $97 million common fund in ERISA case); Principe v. Ukropina (In re Pacific Enters. Sec. Litig.), 47 F.3d 373, 379 (9th Cir. 1995) (affirming award of 33% of $12 million recovery in shareholder litigation that attorneys claimed was justified because of complexity of issues and risks); Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1377 (9th Cir. 1993) (affirming 25% fee of $30 million common fund for not only for the hours they had in the case to the date of the settlement, but for carrying the financial burden of the case, effectively prosecuting it and, by reason of their expert handling of the case, achieving a just settlement for the class. ); Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990) (affirming award of 25% of common fund for violations of the Farm Labor Contractor Registration Act). In the ERISA context, courts have generally awarded similar or higher percentages, than the percentage requested here. In Vizcaino, 290 F.3d 1043, in affirming an attorneys fee award in common benefit fund, the court relied on many of the same factors present here including: the exceptional results achieved for the benefit of the class, id. at 1048; the fact that counsel pursued this case in the absence of supporting precedents... and against Microsoft's vigorous opposition throughout the litigation, id; the risks that counsel faced in pursuing the action, id.; the fact that counsel's performance generated benefits beyond the cash settlement fund id at 1049; the fact that 28% was at or below the market rate, id;

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the fact that the litigation entailed hundreds of thousands of dollars of expense, and required counsel to forego significant other work... id. at 1050. See also Berger v. Xerox Corp. Ret. Income Guar. Plan, 2004 WL 287902 (S.D. Ill. 2004) (awarding a 29% fee of a $239 million dollar settlement fund plus $ 300,000.00 in costs and expenses in an ERISA case, noting the fee award requested was at or below the market rate for this and similar litigation ). A lodestar cross-check also confirms that the requested fee is reasonable and appropriate. At current hourly rates, the lodestar multiplier (after subtracting the costs that will be reimbursed to class members and the out-of-pocket expenses borne by Class Counsel) is less than three, solidly within the ranges awarded in this Circuit. (Martin Decl. ¶ 11.) See, e.g., Steiner v. American Broadcasting Co., Inc. 2007 WL 2460326, at *2 (9th Cir. 2007) (noting that lodestar multiplier of 6.85 still falls well within the range of multipliers that courts have allowed ) (citing Vizcaino, 290 F.3d at 1052). The fees requested by Class Counsel are also reasonable under the factors enumerated in Local Rule 54.2(c)(3) for the reasons explained above, which are briefly summarized again as follows: (A) The time and labor required by counsel: As set forth above and in detailed billing statements which are summarized in the Declaration of Susan Martin ¶ 11, through October 2007, (the month preceding the filing of the motion for preliminary approval of the settlement), Class Counsel spent many thousands of hours working on this matter, including engaging in extensive discovery, attempts to obtain discovery, defending against numerous attempts to undo the holding of this Court and defending against efforts to defeat Plaintiffs claims through defenses such as the statute of limitations. Class Counsel has spent many hours working with actuarial and computer experts. (Martin Decl. ¶ 6,11.) In connection with the Partial Settlement, Class Counsel has also undertaken the responsibility of overseeing notice to class members, responding to inquiries from class members and
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reviewing the written paperwork related to claims being filed. Wholly aside from the thousands of hours that have been spent and have yet to be spent on litigation of the three remaining claims and the appeal in this matter, Class Counsel anticipates that substantial additional time will be devoted to partial settlement claim issues. (B) The novelty and difficulty of the questions presented: This case involves difficult issues related to technical and complex areas of ERISA. Even the supplemental issues involved in Defendants numerous post-summary judgment motions have involved complex procedural and legal issues. As set forth above, the case was extremely difficult given the subject matter, Defendants defenses and the costs faced in prosecuting this sort of action. (C) The skill requisite to perform the legal service properly: As set forth above, Class Counsel is one of a small number of plaintiffs attorneys who have the experience skill and expertise and who are willing to represent plaintiffs in this sort of pension class action. (D) The preclusion of other employment: As set forth in the Declaration of Susan Martin ¶ 5, Martin & Bonnett is a small firm and can handle only a limited number of cases at any one time. The prosecution of this case was a significant factor in deciding whether to take other cases and has required Class Counsel to decline several other matters. (Id.) (E) The customary fee charged in matters of the type involved: As set forth herein, 25% of the common fund is the benchmark in this Circuit. (F) Whether the fee contracted between the attorney and the client is fixed or contingent: As set forth in the retainer agreement between Class Counsel and over 800 individuals that signed retainers prior to certification of the class, counsel was to receive the greater of the attorneys fees awarded by the Court or 33.3% of the total recovery and a higher percentage of the total recovery in the event of an appeal. (Martin Decl.¶ 10.) (G) Any time limitations imposed by the client or the circumstances: The vast majority of class members are elderly retirees on fixed incomes. Given this, the substantial benefits achieved at this time through Class Counsel s efforts are significant.
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(H) The amount of money, or the value of the rights involved, and the results obtained: In this case, Class Counsel s efforts helped to create a settlement fund of $35,000,000 as well as valuable relief beyond the settlement fund and the right to recover up to $500 million on the Remaining Claims. (I) The experience, reputation and ability of counsel. Class Counsel are experienced and knowledgeable ERISA attorneys with an excellent reputation. The declarations accompanying the Martin declaration also establish that Class Counsel performed ably in achieving the Partial Settlement. (J) The undesirability of the case: This case was undesirable because of its significant risk, the technical and difficult subject matter, the difficulty of obtaining Plan documents necessary to determine claims, the costs involved in mounting this litigation including the necessity to hire experts and the fact that Plaintiffs were facing a well funded pension plan of a Fortune 100 company. (Martin Decl. ¶ 6.) Given the degree of undesirability, and the significant challenges undertaken, a 25% fee award is reasonable. (K) Awards in similar actions: The Ninth Circuit has held that 25% is the benchmark in common fund actions and has affirmed or awarded more than this amount in similar cases. Given the type of case and the fund created when compared to similar cases, 25% is a reasonable award. II THE AMOUNT TO BE ALLOCATED TO THE NAMED PLAINTIFFS IS APPROPRIATE The Ninth Circuit has held that under certain circumstances, named plaintiffs and class members may be entitled to payment for certain time and expenses: named plaintiffs, as opposed to designated class members who are not named plaintiffs, are eligible for reasonable incentive payments. The district court must evaluate their awards individually, using relevant factors includ[ing] the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefitted from those actions, ... the amount of time and effort the plaintiff expended in pursuing the litigation ... and reasonabl[e] fear[s of] workplace retaliation. Cook, 142 F.3d at 1016.

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Staton v. Boeing Co., 327 F.3d 938, 977 (9th Cir. 2003). In Staton, the Ninth Circuit cited with approval Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998), in which the Seventh Circuit approved a $25,000 fee award to an individual plaintiff. See also In re Elec. Carbon Products Antitrust Litigation, 447 F.Supp.2d 389, 412 (D.N.J. 2006) (approving incentive award of $72,000 to be paid out of common fund: In a case such as this one where extensive discovery efforts were required of the class representatives and a benefit was conferred by those efforts upon the class as a whole, such incentive awards commensurate with the representatives' time and effort are appropriate. ) (citations omitted); Roberts v. Texaco, Inc., 979 F.Supp. 185 (S.D.N.Y. 1997) (approving incentive awards of $50,000,$85,000, $25,000 and $2,500 to named plaintiffs). The Partial Settlement provides for a payment of $150,000 over and above the $35 million dollars payable to class members. These payments are to be allocated amongst the named Plaintiffs in the amounts set forth in the Partial Settlement Agreement on the basis of the time and effort expended by the named Plaintiffs. As set forth in the Martin Decl. ¶ 14 and the Declarations of the named Plaintiffs, which are attached to the Martin Decl. as Exh. 2, all of the six named Plaintiffs were exceptionally helpful in achieving the Partial Settlement. (Martin Decl. ¶ 14.) Each of them assisted by scouring their files to respond to Defendants discovery requests, preparing for and attending depositions, (Id.) attending

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numerous meetings and briefings with Class Counsel and reviewing and discussing
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developments throughout the course of the settlement negotiations. (Id.) All of the class members have benefitted from the many hours and efforts of the named Plaintiffs. As further set forth in the attached declarations, named Plaintiffs Richard Scates, Walter West and Melvin Jones have spent thousands of hours since the inception of this case as liaisons with Class Counsel in helping to obtain and forward to Class Counsel information from class members that was used in the litigation. (Martin Decl. ¶ 15 & Exh. 2.) They helped organize and raise funds to help offset some of the expenses of the litigation, have maintained records regarding class members and have kept class members up to date on various developments.

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(Id.) They have also established and maintained a website including communicating with class members regarding the proposed Partial Settlement. (Id.) Accordingly, the award of incentive fees is fair and appropriate and consistent with Ninth Circuit precedent. CONCLUSION For the foregoing reasons, Plaintiffs respectfully request that the Court, in the exercise

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of its discretion, grant Plaintiffs motion for an award for attorneys fees and costs in the amount of $8,750,000.00, which is twenty-five percent of the partial Settlement Fund. In addition, Plaintiffs respectfully request that the Court also approve the award and allocation of the incentive fees to named Plaintiffs as set forth in the Partial Settlement Agreement. Respectfully submitted this 23nd day of January, 2008. MARTIN & BONNETT, P.L.L.C. By: s/Susan Martin Susan Martin Daniel L. Bonnett Jennifer L. Kroll 3300 North Central Avenue Suite 1720 Phoenix, AZ 85012-2517 Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE I hereby certify that on January 23, 2008, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: David B. Rosenbaum Dawn L. Dauphine Osborn Maledon, P.A. 2929 North Central Ave., Suite 2100 Phoenix, AZ 85012-2794 Michael Banks Azeez Hayne Morgan Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 Howard Shapiro Proskauer Rose LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112 Amy Covert Proskauer Rose LLP One Newark Center, 18th Floor Newark , NJ 07102-5211 Christopher Landau Eleanor R. Barrett Craig Primis Kirkland & Ellis LLP 655 Fifteenth Street, N.W. Washington, D.C. 20005 Attorneys for the Defendants

s/ J. Kroll

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