JAMES v. GLOBAL TELLINK CORPORATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

BOBBIE JAMES, et al. on behalf of

Docket No.: 2:13-cv-04989-WJM-MF

themselves and all others similarly situated,

Plaintiffs

v.

GLOBAL TEL*LINK CORP., et al., OPINION

Defendants.

WILLIAM J. MARTINI, U.S.D.J.:

Plaintiffs bring this class action against Defendant Global Tel*Link and its

subsidiaries (collectively, “GTL” or “Defendants”) in connection with GTL’s provision of

inmate calling services (“ICS”) to correctional facilities in New Jersey. Following multiple

rounds of mediation and settlement conferences overseen by the Court, the parties have

agreed on the terms of a settlement (the “Settlement”). ECF No. 250. The Court has

previously granted preliminary approval of the Settlement, permitting the parties to notify

Class members of the terms thereof. Now before the Court is Plaintiffs’ motion to finally

approve the Settlement (the “Motion”). ECF No. 252. For the reasons stated below, the

Motion is GRANTED and the Settlement is finally APPROVED.

I. BACKGROUND

A. Factual Background and Procedural History

The facts and procedural history of this case were set forth in detail in the Court’s

opinions granting class certification, ECF No. 179 (“Class Cert. Opinion”), denying

summary judgment, ECF No. 181 (“SJ Opinion”), and granting certain third parties the

ability to appear as amicus curiae (“Amicus Opinion”), ECF No. 269, familiarity with

which is assumed.

B. The Settlement

On May 28, 2020, the parties entered into, and sought preliminary approval of, the

Settlement which would finally resolve all outstanding claims and issues in this case, and

result in the voluntary dismissal, with prejudice, of this action.

Consistent with the Court’s ruling in the Class Cert. Opinion, the Settlement defines

the Class as:

All persons of the United States, who, between 2006 and 2016, were

incarcerated in a New Jersey prison or correctional institution and who used

the phone system provided by Defendants, or who established an

AdvancePay account with Defendants in order to receive telephone calls

from a person incarcerated in New Jersey, excluding Essex County prior to

June 2010, or persons receiving calls from persons incarcerated in Essex

County prior to June 2011.1

Settlement § 1(e) (defining the “Class”). The Class is entitled to receive up to $25 million

in cash and credits from GTL in total compensation, allocated among Class Members in

accordance with the Plan of Allocation. Id. § 8.

The Plan of Allocation provides for the following distributions for Class Members:

• For Calls made between January 1, 2006 and December 31, 2008, 20% of

the total amount spent for calling time above $.05 per minute;

• For Calls made between January 1, 2009 and December 31, 2011, 15% of

the total amount spent for calling time above $.05 per minute;

• For Calls made between January 1, 20012 and December 31, 2016, 10% of

the total amount spent for calling time above $.05 per minute.

Id. § 14(a). Each of these Settlement Payments will be based on the total spending for each

account as shown on GTL’s calling records and shall be subject to a maximum recovery of

$5,000 per account. Id. §§ 14(b)-(c). The form of consideration will vary depending on

each Class Member’s status as a former or current GTL customer. Former customers will

receive cash payments upon the submission of a Claim Form verifying their identity and

entitlement to such Settlement Payments; current GTL customers will receive a credit into

their AdvancePay accounts equal to the amount of their claim, without the need to submit

any proof of claim. Id. §§ 14(d)-(e). In the event the total amount of Allowed Claims

exceeds the $25 million settlement amount, each Settlement Payment will be subject to a

pro-rata reduction until the total payments equal $25 million. Id. § 14(g).

In exchange for the Settlement Payments, Class Members shall release the

“Released Parties,” including GTL, of liability for all “Released Claims.” Id. § 16(a). In

turn, the Settlement defines “Released Claims” as:

[A]ny an all claims that were brought or could have been brought in the

Action relating to the provision of Defendants’ services for calls originating

from prisons, jails or other correctional institutions in New Jersey during the

Class Period, including without limitation the rates or fees for or related to

such services.

1 The Settlement also excludes the following from the Class: 1) any Class Members who timely

and validly elect to be excluded from the Class in accordance with the Preliminary Approval Order;

2) any Class Members who previously excluded themselves from the Class; 3) any GTL customer

who set up payment by direct bill; and 4) Defendants and their respective parents, subsidiaries,

and affiliates.

Id. § 1(u). Class Members reserved the right to opt-out or object to the Settlement. Id. §§

10-12.

On July 15, 2020, this Court preliminarily approved the Settlement, ECF No. 251

(“Preliminary Approval Order”), finding that the Settlement “resulted from arm’s-length

negotiations between highly experienced counsel and falls within the range of possible

approval” and “raises no obvious reasons to doubt its fairness and raises a reasonable basis

for presuming that it satisfies the requirements under Fed.R.Civ.P. 23 and due process.”

Preliminary Approval Order ¶ 1. The Preliminary Approval Order scheduled a hearing on

final approval of the Settlement (the “Fairness Hearing”) for October 15, 2020, and set the

deadline for any objections to the Settlement for September 21, 2020. Only five Class

Members sought to be excluded from the Settlement.2 No objections to the Settlement were

filed by any Class Members.

On September 21, 2020, plaintiffs in a separate putative class action pending in the

United States District Court for the Northern District of Georgia sought to intervene, or, in

the alternative, appear as amicus curiae in order to file a “conditional objection” to the

Settlement (the “Conditional Objection”). ECF No. 255-1. In the Amicus Opinion, the

Court granted the proposed intervenors leave to appear as amicus curiae for the purpose of

objecting to the Settlement and appearing at the Fairness Hearing.

The Court now decides the instant Motion to approve the Settlement on a final basis.

Having considered each of the motions and papers attached thereto, the terms of the

Settlement itself, and the Conditional Objection, and having held a Fairness Hearing to

evaluate the terms of the Settlement, the Court finds that the Settlement is fair, reasonable,

and adequate.

II. DISCUSSION

Plaintiffs ask this Court to (1) find that the notice given to Class Members of the

Settlement was adequate; (2) approve the Settlement as fair, reasonable, and adequate; and

(3) approve the award of attorneys’ fees, expenses, and related costs. The Court will

address each request in turn.

A. Adequacy of Notice

Before approving the settlement of a class action, the Court must “direct notice in a

reasonable manner to all class members who would be bound by the proposal.” Fed. R.

Civ. P. 23(e)(1). In order to satisfy this notice requirement, notice of the settlement

provided to Class Members must contain the information required by FRCP 23(c)(2) and

must be made in a form and manner that satisfies the requirements of due process. Shapiro

v. Alliance MMA, Inc., No. 17-2583 (RBK/AMD), 2018 WL 3158812, at *7 (D.N.J. June

28, 2018). FRCP 23(c)(2) provides that notice to Class Members must be the best that is

2Those Class Members are: (1) Jane Bruno; (2) Bruni Nicholas; (3) Marianela Maldonado; (4)

Joanna Salgado; and (5) Aakask Dalal.

“practicable under the circumstances” and must “clearly and concisely state in plain, easily

understood language”:

(i) the nature of the action;

(ii) the definition of the class certified;

(iii) the class claims, issues, or defenses;

(iv) that a class member may enter an appearance through an attorney if the

member so desires;

(v) that the court will exclude from the class any member who requests

exclusion;

(vi) the time and manner for requesting exclusion; and

(vii) the binding effect of a class judgment on members under Rule 23(c)(3).

Fed. R. Civ. Pro. 23(c)(2). In addition, in the context of a settlement, due process

requires that Class Members be notified “(1) of the nature of the pending litigation,

(2) of the settlement's general terms, (3) that complete information is available from

the court files, and (4) that any class member may appear and be heard at the

Fairness Hearing.” In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F.

Supp. 450, 527 (D.N.J. 1997).

Here, the notice provided to Class Members satisfies the requirements of

FRCP 23 and due process. The notice described, in detail, (1) the nature of the

Action and the legal and factual bases for the claims pursued therein, the definition

of the certified class, (2) the key terms of the Settlement, including the settlement

amount, the process for each Class Member to receive Settlement Payments, and

the release of claims against GTL, (3) the binding nature of the Settlement on each

Class Member, (4) the rights of each Class Member to retain separate legal counsel,

object to the Settlement, opt-out of the Class, or appear at the Fairness Hearing, as

well as the deadlines by which to do so, and (5) where to find additional information

about the Action and the proposed Settlement. See Giannotti Decl., Ex. A., ECF No.

252-8. Accordingly, the Court finds that the notice provided to Class Members

“contain[ed] sufficient information to enable class members to make informed

decisions on whether they should take steps to protect their rights.” In re Baby

Prods. Antitrust Litig., 708 F.3d 163, 180 (3d Cir. 2013).

Likewise, the Court finds that the manner in which Class Members were

notified comports with the requirements of FRCP 23 and due process. Email notice

was successfully delivered to 473,960 valid email addresses, and postal notice was

made to over 39,722 mailing addresses on the Settlement Class List. Giannotti

Decl., ¶¶ 4-9. Notice of the Settlement was posted on the website that was

established and maintained after the Class was certified, which has had 13,384

unique visitors resulting in approximately 3,835-page views. Id. ¶ 13. Moreover,

notice of the Settlement was printed in the Prison Legal Times on both August 1,

2020 and September 1, 2020, as well as in both the Newark Star Ledger and South

Jersey Times on August 11, 2020 and August 18, 2020. Id. ¶ 10. Finally, notice of

the Settlement, and responses to frequently asked questions with respect thereto,

was available via a toll-free hotline that allowed Class Members the opportunity to

arrange a callback from a live operator. Id. ¶ 11-12.

Based on the foregoing, the Court concludes that the manner in which notice

was provided to Class Members was the best practicable under the circumstances

and satisfies the requirements of FRCP 23 and due process.

B. Approval of the Settlement

FRCP 23(e) requires court approval of any proposed settlement of a class action.

Fed. R. Civ. P. 23(e). In determining whether to approve the Settlement, the Court notes

two important, yet competing, points. First, the law encourages and favors the settlement

of civil actions in federal court, particularly so in complex class actions. In re Gen. Motors

Corp. Pick–Up Truck Fuel Tank Prods. Liab. Litig., (“General Motors” ), 55 F.3d 768,

784 (3d Cir.1995); see also In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 535 (3d

Cir. 2004) (“Warfarin”) (“[T]here is an overriding public interest in settling class action

litigation, and it should therefore be encouraged.”). However, notwithstanding the general

presumption in favor of settlement, in the class action context, the Court “acts as a fiduciary

who must serve as a guardian of the rights of absent class members.” General Motors, 55

F.3d at 785 (citations and quotations omitted). In balancing these interests and objectives,

the key inquiry is whether the proposed settlement is “fair, reasonable, and adequate.” In

re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, (“Prudential I”), 148 F.3d

283, 316 (3d Cir.1998). Whether to approve a settlement as fair, reasonable, and adequate

is committed to the sound discretion of the Court. Id. at 299.

The Third Circuit has identified nine factors for the Court to consider in determining

whether the Settlement is fair, reasonable, and adequate: (1) the complexity, expense and

likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage

of the proceedings and the amount of discovery completed; (4) the risks of establishing

liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action

through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the

range of reasonableness of the settlement fund in light of the best possible recovery; and

(9) the range of reasonableness of the settlement fund to a possible recovery in light of all

the attendant risks of litigation. Girsh v. Jepson, 531 F.2d 153, 157 (3d Cir.1975). Beyond

these nine factors, the Third Circuit has also identified additional factors the Court may

consider when appropriate and relevant, including: the maturity of the underlying

substantive issues; the existence and probable outcome of claims by other classes and

subclasses; the comparison between the results achieved by the settlement for individual

class or subclass members and the results achieved-or likely to be achieved-for other

claimants; whether class or subclass members are accorded the right to opt out of the

settlement; whether any provisions for attorneys' fees are reasonable; and whether the

procedure for processing individual claims under the settlement is fair and reasonable.

Prudential I, 148 F.3d at 323.3 “These factors are a guide and the absence of one or more

does not automatically render the settlement unfair.” In re Am. Family Enters., 256 B.R.

377, 418 (D.N.J. 2000) (quotations omitted). Instead, the Court “must look at all the

circumstances of the case and determine whether the settlement is within the range of

reasonableness under Girsh.” In re Valeant Pharms. Int’l Inc. Sec. Litig., No. 3:15-CV-

07658-MAS-LHG, 2020 WL 3166456, at *7 (D.N.J. June 15, 2020) (“Valeant”). The Court

addresses each Girsh factor, and, where appropriate, Prudential factor, in turn.

1. The complexity, expense and likely duration of the litigation

Analysis of the first Girsh factor “captures the probable costs, in both time and

money, of continued litigation.” In re Nat’l Football League Players Concussion Injury

Litig., 821 F.3d 410, 437 (3d Cir. 2016) (“NFL Players Litig.”). Here, the costs, complexity

and likely duration of this case strongly favor settlement. This case is already seven years

old and has gone through two trips to the Third Circuit. Although the case was on the eve

of trial when the Settlement was announced, the time and expense of a complex class action

trial is substantial, and would very likely lead to post-trial motions and subsequent appeals

that could extend this case for several more years. Indeed, at the time the Settlement was

announced, a number of pre-trial motions, including a motion to decertify the Class, were

pending and would have required resolution by this Court before the trial could take place.

Finally, the Court cannot ignore the exigent circumstances posed by the COVID-19

pandemic, which has considerably slowed the progress of litigation and has forced courts

in this district to reschedule trials or organize virtual hearings where practicable until it is

safe to resume such activities in person.

2. The reaction of the class to the settlement

“The second Girsh factor ‘attempts to gauge whether members of the class support

the settlement.’” Warfarin, 391 F.3d at 536 (quoting Prudential I, 148 F.3d at 318). Here,

Plaintiffs state that the notice records indicate that, for the relevant ten-year class period,

there are over 500,000 Class Members. Mot. at 8; Giannotti Decl. ¶¶ 4-9. Of those Class

Members, none filed any objection to the Settlement, and only five sought to be excluded

therefrom by opting-out. The absence of any objections by Class Members, and the

exceedingly small number of opt-outs relative to the apparent size of the Class, strongly

weighs in favor of approval of the Settlement. See, e.g., NFL Players Litig.¸821 F.3d at

438; Little-King v. Hayt Hayt & Landau, No. 11-5621 (MAH), 2013 WL 4874349, at *21

(D.N.J. Sept. 10, 2013) (collecting cases).

3 Rule 23(e)(2) was amended in 2018 to include a list of factors for courts to consider in evaluating

a proposed settlement of a class action. The Third Circuit has, however, continued to apply the

Girsh and Prudential factors. See In re Google Inc. Cookie Placement Consumer Priv. Litig., 934

F.3d 316, 329 (3d Cir. 2019). Accordingly, this Court likewise focuses its analysis on the

appropriate Girsh and Prudential factors.

3. The stage of the proceedings and the amount of discovery completed

The third Girsh factor “captures the degree of case development that class counsel

have accomplished prior to the settlement. Through this lens, courts can determine whether

class counsel had an adequate appreciation of the merits of this case before negotiating.”

In re Cendant Corp. Litig., 264 F.3d 201, 235 (3d Cir. 2001) (quotations omitted). Here,

this factor undoubtedly favors approval of the Settlement. As noted above, this case has

been pending and actively litigated both before this Court and in the Third Circuit for seven

years. The parties have litigated motions to dismiss, to certify (and decertify) the class,

summary judgment, judgment on the pleadings, and to compel arbitration. In addition, the

parties have completed discovery and have had ample opportunity to develop thoughtful

and thorough evaluations of the relative strengths and weaknesses of their claims or

defenses. Finally, prior to reaching agreement on the terms of the Settlement, the parties

have engaged in multiple rounds of mediation with a Court-appointed mediator, and in

multiple settlement conferences lead by the Court.

4. The risks of establishing liability and damages

Together, the fourth and fifth Girsh factors “survey the potential risks and rewards

of proceeding to litigation in order to weigh the likelihood of success against the benefit of

an immediate settlement.” Warfarin, 391 F.3d at 537. In other words, the Court must

consider “what the potential rewards (or downside) of litigation might have been had class

counsel elected to litigate the claims rather than settle them.” General Motors, 55 F.3d at

814.

Here, as the Court noted in the Class Cert. Opinion, Plaintiffs’ expert had

preliminarily concluded that the total value of Plaintiffs’ claims was “roughly $150

million.” Class Cert. Op. at 12. However, by the time the Settlement was reached, only one

of the two certified claims remained: Plaintiffs’ CFA claim alleging GTL engaged in

unconscionable business practices. This claim was subject to certain defenses, including

GTL’s argument that it was entitled to share in the government’s absolute immunity to a

CFA claim through the application of “derivative immunity.” In addition, as GTL points

out, Plaintiffs’ expert was subject to a pending Daubert motion. Finally, as noted above,

GTL had already moved to decertify the Class, and there was no guarantee that Plaintiffs

would have been able to continue to prosecute this case as a Class Action.

Beyond these technical points, however, is an obvious one: there is no guarantee

that Plaintiffs would have been successful in convincing a jury to hold GTL liable.

Plaintiffs’ lone remaining claim and legal theory under the CFA for unconscionable

business practices would have required Plaintiffs to establish that the fees and other charges

levied by GTL were unconscionable within the meaning of the CFA. While Plaintiffs

certainly may have been successful in establishing such liability at trial, the Court cannot

conclude that such a result was likely with any reasonable certainty. Accordingly, this

factor also weighs in favor of approving the Settlement.

5. The risks of maintaining the class action through the trial

The sixth Girsh factor “measures the likelihood of obtaining and keeping a class

certification if the action were to proceed to trial.” Warfarin, 391 F.3d at 537 (citations

omitted). Although this factor is ordinarily entitled to minimal weight, the Court finds that

the pending motion to decertify or otherwise narrow the Class tilts this factor, however

slightly, towards supporting the Settlement.

6. The ability of the defendants to withstand a greater judgment

Neither party has suggested that the Settlement Amount was in any way related to

GTL’s professed inability to pay. Thus, this factor is not relevant to the Court’s analysis.

7. The range of reasonableness of the settlement fund in light of the best

possible recovery and all attendant risks of litigation

The eighth and ninth Girsh factors analyze “whether the settlement represents a

good value for a weak case or a poor value for a strong case.” Warfarin, 391 F.3d at 538.

“The factors test two sides of the same coin: reasonableness in light of the best possible

recovery and reasonableness in light of the risks the parties would face if the case went to

trial.” Id.

Here, the Settlement provides immediate relief to Class Members of up to $25

million. For the most vulnerable members of the Class, those currently incarcerated and

paying for GTL’s services, the Settlement would provide immediate relief in the form of a

credit on such Class Members’ AdvancePay accounts that could be used to pay for

continued communication with such Class Members’ friends and family without the need

to submit a proof of claim form. For former GTL customers, upon the submission of a

proof of claim form and verification of the information contained therein, such Class

Members will receive direct cash payments. These immediate, or near immediate, benefits

are substantial and, particularly for current GTL customers, are arguably more valuable

than theoretically higher cash payouts that might not arrive until after a final judgment is

rendered and appellate options are exhausted.

In addition, as noted above, if (1) the Court denied GTL’s pending decertification

motion; (2) the Plaintiffs’ expert survived GTL’s Daubert challenge, (3) Plaintiffs’

successfully convinced a jury that GTL’s fees and charges were unconscionable business

practices under the CFA, and (4) Defendants failed to establish that they were entitled to

immunity, Plaintiffs may have been entitled to very substantial recovery – perhaps up to

$150 million. However, the pending motions to decertify the class and to challenge the

reliability of Plaintiffs’ damages expert, as well as the availability of a potential immunity

defense created a not insignificant risk that Plaintiffs could have recovered nothing at all,

or that some portion of the Class may have been forced to arbitrate their claims rather than

participate in the class action.

In light of these risks, and the certainty of the benefits provided by the Settlement,

the Court concludes that these factors weigh in favor of approving the Settlement.

8. The Prudential Factors

In addition to the Girsh factors, the Court also finds that consideration of the

relevant Prudential factors also weighs in favor of approving the Settlement. First, Class

Counsel has had seven years to evaluate the substance of the claims asserted in the

Complaint and certified by this Court and was able to make an informed decision about the

appropriate settlement value of such claims. Moreover, while the Court is unaware of

similar “unconscionability” claims under the CFA as it relates to telephone fees and

charges, the Court cannot say that this case raises such a novel or complex legal issue that

the Court cannot reasonably evaluate the fairness of the proposed Settlement. The

Settlement provided ample opportunity for Class Members to object thereto or opt-out from

the Class, along with clear instructions for how to do so. The procedures for processing

individual claims are entirely fair and reasonable, requiring nothing from current GTL

customers and only the submission and verification of a proof of claim form for former

GTL customers. Finally, as explained in more detail below, the Court finds that the

attorneys’ fees requested are also fair and reasonable. See infra Section II.C.

9. Amicus’ Objection

Amicus “conditionally object” to the Settlement on a number of grounds. The Court

has carefully reviewed Amicus’ objection and the pleadings related thereto and concludes

that the objection is without merit.

At the outset, the Court notes that the issues raised in the Conditional Objection are,

as the name suggests, conditional. As Amicus freely admit, the arguments raised in the

Conditional Objection only matter if the Court determines that the release provisions in the

Settlement encompass certain “inactivity” claims that are at the heart of a putative

nationwide class action pending in the United States District Court for the Northern District

of Georgia (the “Githieya Action”). In essence, Amicus asks the Court to rule on the

preclusive effect of the release in the Settlement on a specific set of claims that may come

before the court in the Githieya Action. This, however, the Court is not in a position to do.

This threshold determination would require the Court to engage in a far-reaching

analysis of hypothetical issues that are not properly before it. At present, although a motion

for class certification is pending in the Githieya Action, no class has been certified and no

claims have been certified for class adjudication. It is thus entirely speculative whether the

scope of the release in the Settlement would foreclose any class claims asserted therein.

Moreover, Amicus and both GTL and the Plaintiffs appear to agree that any effect the

release in this case has on the claims that may eventually be litigated in the Githieya Action

is a question for the Githieya court to ultimately decide, and for good reason: it would be

wholly inappropriate for this Court to prejudge the merits of claims or defenses pending in

another action before another court, and the Court refuses to do so here.

Instead, the Court is tasked with ensuring that the release, as with all of the

Settlement’s key terms, is fair, reasonable, and adequate in light of the nature of the case

and the issues that are properly before it. “[A] judgment pursuant to a class settlement can

bar later claims based on the allegations underlying the claims in the settled class action.”

In re Prudential Ins. Co. of Am. Sales Practice Litig. (Prudential II), 261 F.3d 355, 366

(3d Cir. 2001). Courts in this district have long recognized that class action settlements

may release “all claims that arise out of the same course of conduct alleged in the

Complaint.” Varacallo v. Mass. Mut. Life. Ins. Co., 226 F.R.D. 207, 244 (D.N.J. 2005)

(collecting cases). The Third Circuit has repeatedly noted that this rule “serves the

important policy interest of judicial economy by permitting parties to enter into

comprehensive settlements that prevent relitigation of settled questions at the core of a

class action.” Prudential II, 261 F.3d at 366; Halley v. Honeywell Int’l, Inc., 861 F.3d 481,

494 (3d Cir. 2017).

The release at issue here clearly satisfies this standard and is appropriate in light of

the circumstances of this case. Section 16 of the Settlement provides, in relevant part, “[i]n

consideration of this Agreement and the benefits extended to the Class, Class Plaintiffs, on

behalf of themselves and the Class Members, and each Class Member . . . fully release and

forever discharge the Released Parties from the Released Claims.” Settlement § 16(a). In

turn, as noted above, the Settlement defines the “Released Claims” as:

[A]ny an all claims that were brought or could have been brought in the

Action relating to the provision of Defendants’ services for calls originating

from prisons, jails or other correctional institutions in New Jersey during the

Class Period, including without limitation the rates or fees for or related to

such services.

Id. § 1(u). The notice of the Settlement provided to Class Members accurately described in

detail the nature of the release and the rights of Class Members to opt-out of the Settlement

to avoid being bound thereby. Giannotti Decl., Ex. A.

Ultimately, Class Counsel made an informed decision as to which claims to pursue

in this litigation, and only one of those claims was certified by the Court for class

adjudication and remains pending. Class Counsel is experienced in similar class action

litigation and has lived with and worked extensively on this specific case for seven years.

In short, the Court will not second guess Class Counsel’s evaluation of the claims against

GTL or their litigation strategies in determining which claims to pursue or settle, and

because Class Members were adequately notified of the consequences of the Settlement

and the release, the Court concludes that the release is fair, reasonable, and adequate.

Notwithstanding the above determination, however, the Court wishes to be clear on

what it is not holding. The Court does not hold that the release does or does not apply to

the “inactivity” claims at issue in the Githieya Action. Therefore, the Court has not ruled

on whether such “inactivity claims” concern the provision of GTL’s services, relate to the

conduct alleged in the Complaint, or were or could have been brought in this Action. These

questions, as the parties themselves admit, are for the Githieya court to answer at the

appropriate time based on that court’s understanding of the precise nature of the claims

asserted therein.

C. Attorneys’ Fees

Class Counsel requests an award of attorneys’ fees and expenses in the amount of

$8,332,500 to be paid by GTL, in addition to, and separate from, the up to $25 million

payable to Class Members through the Settlement. Pursuant to Rule 23(h), the Court “may

award reasonable attorney’s fees and nontaxable costs that are authorized by law or by the

parties’ agreement.” Fed. R. Civ. P. 23(h). Although the decision to award attorneys’ fees

and expenses is within the Court’s discretion, the Court must carefully review the

negotiated award to ensure that it is fair, reasonable, and adequate. Little-King, 2013 WL

4874349, at *18; see also In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005).

In evaluating an award of attorneys’ fees, courts typically apply one of two methodologies:

(1) the lodestar method in which the number of hours worked by Class Counsel is

multiplied by a reasonable hourly billing rate for such services; or (2) the percentage-of-

recovery method in which Class Counsel is awarded a certain percentage of the Settlement

Amount. In re AT&T Corp., Sec. Litig., 455 F.3d 160, 164 (3d Cir. 2006). Where, as here,

the Settlement provides for the payment of attorneys’ fees from the same source as the pool

of Settlement funds available to Class Members – here, GTL – the arrangement “is, for

practical purposes, a constructive common fund” that is best analyzed using the percentage-

of-recovery methodology. See Dewy v. Volkswagen AG, 558 F. App’x 191, 197 (3d Cir.

2014); see also General Motors, 55 F.3d at 820-21.

1. Percentage of Recovery Analysis

In determining whether a fee award is reasonable under the percentage-of-recovery

analysis, the Third Circuit has identified a number of factors for the Court to consider: (1)

the size of the fund created and the number of persons benefitted; (2) the presence or

absence of substantial objections by members of the class to the settlement terms and/or

fees requested by counsel; (3) the skill and efficiency of the attorneys involved; (4) the

complexity and duration of the litigation; (5) the risk of nonpayment; (6) the amount of

time devoted to the case by plaintiffs’ counsel; and (7) the awards in similar cases. Gunter

v. Ridgewood Energy Corp., 223 F.3d 190, 195 n.1 (3d Cir. 2000). In addition to these

seven factors, the Third Circuit has identified three additional factors for the Court to

consider: (8) the value of benefits attributable to efforts of class counsel relative to the

efforts of other groups, such as government agencies conducting investigations; (9) the

percentage fee that would have been negotiated had the case been subject to a private

contingent fee arrangement at the time counsel was retained; and (10) any innovative terms

of settlement. In re Diet Drugs (Phentermine/Flenfuramine/Dexflenfuramine) Prods. Liab.

Litig., 582 F.3d 524, 541 (3d Cir. 2009).

Several of these factors overlap considerably with those considered by the Court in

approving the Settlement itself as fair, reasonable, and adequate. For example, the Court

has already determined that the duration and complexity of this case (factor 4) were both

substantial: the case, which concerned the rights of thousands of Class Members and raised

complex questions under state and federal law, has been pending for seven years, gone

through two separate appeals to the Third Circuit, and faced the likely prospect of a third

appeal upon the conclusion of the upcoming trial. See Lincoln Adventures LLC v. Those

Certain Underwriters at Lloyd’s, London Members, No. 08-235, 2019 WL 4877563, at *6

(D.N.J. Oct. 3, 2019). Similarly, the Court has already noted the lack of any objections to

the Settlement (factor 2), notice of which included specific information about the fees

requested by Class Counsel. Id.; see also Valeant, 2020 WL 3166456, at *12. Finally, the

Court has already extensively analyzed the risk of nonpayment (factor 5) by noting the

various risks, including the risk of an unsuccessful trial or appeal, that would render

Plaintiffs, and – because Class Counsel has represented Plaintiffs on a wholly contingent

basis – therefore Class Counsel, unable to recover anything at all. In re Merck & Co., Inc.

Vytorin ERISA Litig., No. 08-CV-285 (DMC), 2010 WL 547613, at *11 (D.N.J. Feb. 9,

2010) (“Merck”). Accordingly, as with the Settlement, each of these factors weighs

strongly in favor of approving the award of attorneys’ fees and expenses.

The remaining factors also support the award of attorneys’ fees and expenses. With

respect to the first factor, the $25 million Settlement Amount is a substantial recovery for

Class Members, and provides both immediate relief to the estimated 55,000 currently

incarcerated GTL customers as well as direct cash payments to potentially hundreds of

thousands of former GTL customers who submit a valid claim. This factor therefore

supports the requested award.

Likewise, the third factor unquestionably supports approving the requested fee

award. This factor measures the “quality of the result achieved, the difficulties faced, the

speed and efficiency of the recovery, the standing, experience and expertise of counsel, the

skill and professionalism with which counsel prosecuted the case and the performance and

quality of opposing counsel.” Valeant, 2020 WL 3166456, at *12 (quotations omitted).

Here, as noted, the $25 million recovery for Class Members is substantial and immediate,

particularly in light of the length of this case, the complex issues involved, and the zealous

advocacy on both sides. Moreover, both Class Counsel and counsel for the Defendants are

highly experienced, reputable firms who are no strangers to complex class actions and civil

litigation.

The sixth factor weighs in favor of approving the requested fee award. Over the

course of seven years of complex litigation, Class Counsel devoted a combined 7,627.9

hours to this case. Cecchi Decl. ¶¶ 9, 13; Plaisted Decl. ¶ 8. Class Counsel devoted

substantial time litigating multiple motions to dismiss, motions for summary judgment, a

motion to compel arbitration, a motion for class certification, appeals to the Third Circuit,

multiple rounds of mediation, extensive discovery, and substantial pre-trial preparation.

Cecchi Decl. ¶ 2; Plaisted Decl. ¶¶ 3-6.

In evaluating the reasonableness of a requested fee award, the seventh factor

requires the Court to compare the requested award to those approved in similar cases. The

Third Circuit has found that, in common fund cases such as this one in which the

percentage-of-recovery methodology is used, the fees typically awarded to class counsel

generally range between 19% to 45% of the settlement fund. General Motors, 55 F.3d at

822. Here, the total requested award of fees and expenses of $8,332,500 is exactly 33.33%

of the Settlement Amount and represents 25% of the aggregate amount of the constructive

common fund. Subtracting unreimbursed expenses of $619,793.14, the requested

attorneys’ fee comprise 30.5% of the Settlement Amount and 23% of the aggregate

constructive common fund. Thus, by any measure, the requested award of attorneys’ fees

and expenses is well within the reasonable range of awards approved by the Third Circuit,

and is consistent with similar class action settlements. Compare In re Ins. Brokerage

Antitrust Litig., 297 F.R.D. 136, 155 (D.N.J. 2013) (approving fee award equal to 33.33%

of $10.5 million settlement); Merck, 2010 WL 547613, at *11 (approving fees equal to

33.33% of $41.5 million settlement fund); Milliron v. T-Mobile USA, Inc., No. 08-4149,

2009 WL 3345762, at *14 (D.N.J. Sept. 10, 2009) (approving fees equal to 33.33% of

$13.5 million settlement fund). Accordingly, this factor also supports approval of the

requested fee award.

The eighth factor, which considers the value of the benefits obtained by the class

that are fairly attributable to the efforts of class counsel relative to outside groups, such as

government agencies, also weighs in favor of approving the requested award for attorneys’

fees and expenses. Although there was separate litigation concerning FCC regulations

relating to excess prison telephone rates and fees, the surviving claims in this case were

independent of that litigation and not dependent on the efforts of anyone other than Class

Counsel. See Valeant, 2020 WL 3166456, at *14.

The requested award of fees and expenses relative to the size of the recovery and

constructive common fund is also in line with contingent fees that are routinely negotiated

in the private marketplace. Merck, 2010 WL 547613, at *12 (citing cases). As such, the

ninth factor also supports approval of the requested award.

The final factor asks the Court to consider any innovative terms of the Settlement.

While perhaps not innovative, the Settlements ability to provide immediate relief to the

most vulnerable Class Members in the form of credits to their respective AdvancePay

accounts without the need to file a proof of claim, is significant and goes beyond simple

cash payments to Class Members. Accordingly, the Court concludes that this factor also

weighs in favor of approving the requested award of fees and expenses.

2. Lodestar Cross-Check

The Third Circuit has encouraged courts in this District to “cross-check” the

reasonableness of percentage fee awards against the lodestar method. See Rite Aid Corp.

Sec. Litig., 396 F.3d at 305-06. Here, the total lodestar amount for Class Counsel is

$5,410,603.07.4 Cecchi Decl. ¶ 9, 13, 14; Plaisted Decl. ¶ 8. Subtracting the portion of the

$8,332,500 award comprised of unreimbursed expenses, this results in a lodestar multiplier

of 1.43, well within the reasonable range approved by the Third Circuit and courts in this

District. See Prudential I, 148 F.3d at 341 (“Multiples ranging from one to four are

4 In the Motion, Class Counsel list this figure as $5,112, 355.57. The Court, upon review of the

submissions and statements made in the accompanying declarations of Class Counsel, believes

$5,410,603.07 is the accurate lodestar.

frequently awarded in common fund cases when the lodestar method is applied.”

(quotations omitted)). The Court thus concludes that the requested fee award is also

reasonable under the lodestar method.

3. Expenses

As part of the $8,332,500 fee award, the Class Counsel requests payment of

$619,791.14 in unreimbursed expenses. Class Counsel is “entitled to reimbursement of

expenses that were adequately documents and reasonably and appropriately incurred in the

prosecution of the class action.” In re Safety Components, Inc. Sec. Litig., 166 F. Supp. 2d

72, 108 (D.N.J. 2001). Here, Class Counsel has produced an itemized list of expenditures

and has certified that detailed records with respect thereto are maintained by and reflected

in the respective firms’ books and records. Cecchi Decl. ¶¶ 11-12; Plaisted Decl. ¶¶ 10-11.

In addition, the Court concludes that the expenditures for which Class Counsel seek

reimbursement, such as expert or consultant fees, computer research, and travel, “are the

type of expenses routinely charged to hourly paying clients and, therefore, should be

reimbursed out of the common fund.” In re Ocean Power Techs., Inc., No. 3:14-CV-3799,

2016 WL 6778218, at *29 (D.N.J. Nov. 15, 2016). Accordingly, Class Counsel’s request

for reimbursement of $619,791.14 in expenses is approved.

4. Case Contributions to Representative Plaintiffs

Finally, Class Counsel requests approval of $15,000 awards to each of the four Class

Representatives. The Court finds the requested case contribution awards to be fair and

reasonable. Class Representatives provided the information necessary to file the

Complaint, produced documents and sat for depositions, and have adequately represented

the Class for over seven years. Accordingly, the Court will approve case contribution

awards of $15,000 for each of the four named Class Representatives.

III. CONCLUSION

For the reasons stated above, Plaintiffs’ motion is GRANTED, and the Settlement,

request for attorneys’ fees and expenses and case contribution awards is APPROVED.

/s/ William J. Martini

WILLIAM J. MARTINI, U.S.D.J.

Date: October 20, 2020