FTC Capital GMBH v. Credit Suisse Group AG

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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In re:

LIBOR-Based Financial Instruments MEMORANDUM AND ORDER

Antitrust Litigation.

11 MD 2262 (NRB)

This Document Applies to:

11 Civ. 2613

Exchange-Based Action

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NAOMI REICE BUCHWALD

UNITED STATES DISTRICT JUDGE

On September 17, 2020, the Court granted final approval

to settlements between the Exchange-Based Plaintiffs (“EBP”)

and Bank of America, Barclays, Citi, Deutsche Bank, HSBC, JP

Morgan Chase, and Société Générale defendants (together, the

“Settling Defendants”), worth a combined $187 million. (ECF

Nos. 3175–80.)1 This Memorandum and Order addresses EBP class

counsel’s application for attorney’s fees in connection with

those settlements. (ECF No. 3144.)

DISCUSSION

I. Work by Firms Other than Class Counsel is Not Compensable

In the fall of 2011, numerous firms applied for

appointment as interim counsel for several LIBOR classes. In

connection with those applications, the Court issued a

1 Unless noted otherwise, all docket numbers referenced in this

Memorandum and Opinion are to the In re LIBOR-Based Financial Instruments

Antitrust Litigation, 11 MD 2262 (S.D.N.Y.) docket.

memorandum raising several concerns. (ECF No. 32.) One of

the issues addressed was whether appointing more than one law

firm would lead to inefficient and duplicative efforts. (Id.

at 8 (citing Manual for Complex Litigation (Fourth) § 10.221

(2004)).)2

After receiving assurances from the law firms of Kirby

McInerney LLP and Lovell Stewart Halebian Jacobson LLP

(together, “EBP Class Counsel”) that they had the “financial,

professional, investigative, international, and

technological resources required to prosecute these claims,”

that they would be “willing and able to devote and expend the

vast resources necessary to properly prosecute this

litigation,” and that appointment of both firms would not

“defeat the efficiency purposes of lead counsel

2 The potential conflict between a class and class counsel in

the context of fee applications is well recognized, especially in the

absence of a meaningful adversary process. See In re Colgate-Palmolive

Co. ERISA Litig., 36 F. Supp. 3d 344, 349 (S.D.N.Y. 2014) (citations

omitted). Accordingly, it falls to the Court to protect the interests of

the class, see Goldberger v. Integrated Res., Inc., 209 F.3d 43, 52 (2d

Cir. 2000) (citation omitted), by discouraging inefficient litigation by

class counsel both prospectively at the outset of the case and

retrospectively in awarding fees at the case’s conclusion.

A recent case in this District illustrates the depth of the Court’s

concern in fulfilling this responsibility. In In re Allergan PLC

Securities Litigation, Chief Judge McMahon ordered that only a single

firm could serve as class counsel, noting that it had been her experience

that “the involvement of multiple firms tends to inflate legal fees to

the detriment of the other class members.” No. 18 Civ. 12089, 2020 WL

5796763, at *4-6 (S.D.N.Y. Sept. 29, 2020). Despite that admonition, the

firm appointed as class counsel proceeded to effectively split the work

with another law firm whose application to serve as co-lead class counsel

had been denied. Id. at *6-7. As a result, Judge McMahon denied lead

plaintiff’s motion for class certification. Id. *5-9.

appointments,” (ECF No. 42 at 2-4, 7), the Court appointed

them as interim co-lead class counsel for the EBP class. (ECF

No. 66.)

Nevertheless, given the Court’s desire to avoid

duplicative litigation that could result from appointing more

than one law firm, the Court ordered that EBP Class Counsel

could only delegate work assignments to other law firms to

the extent necessary “to facilitate the orderly and efficient

prosecution of this litigation and to avoid duplicative or

unproductive effort.” (ECF No. 90 ¶ 18.f. (emphasis added).)3

In light of the Court’s stated concerns and the scope of

its order, the Court was, to say the least, surprised to learn

from their fee application that EBP Class Counsel involved

twelve additional law firms. (ECF No. 3146 ¶ 129.) The fees

claimed by EBP Class Counsel associated with those law firms

are far from merely incidental. Rather, they constitute over

18.5% of the lodestar hours claimed in the fee application

(see id.) and account for more than half of the attorneys who

3 That qualification was intended to give EBP Class Counsel

flexibility to seek outside help if, as never actually happened,

extraordinary circumstances arose, such as finding counsel to assist with

simultaneous triple- or quadruple-tracked depositions or hiring

international counsel to advise on issues of foreign law. It was also a

safeguard in case plaintiffs had to respond to separate briefs from each

of the dozen-plus defendant groups, a situation that never came to pass

because of defense counsel’s admirable cooperation throughout this

lawsuit.

worked on the case (compare id. Exs. B-C, with id. Exs. D–

O).

Moreover, after reviewing the affidavits in support of

the motion for attorney’s fees and given EBP Class Counsel’s

resources, the Court cannot divine any reason why it was

necessary, efficient, or in the best interests of the class

to have twelve additional law firms litigate this case. (See

id. Exs. B–O.) If anything, the hours were claimed for work

that was duplicative, unnecessary, and easily could have been

performed by the two appointed firms. This conclusion is

informed by the Court’s active engagement in resolving an

unusual number of substantive issues, leading to the

issuances of eight lengthy opinions and numerous other

decisions. It is fair to say that this litigation was heavily

weighted to the resolution of legal issues before the Court

rather than, for example, deposition discovery outside the

Court’s view.

EBP Class Counsel’s decision to involve a dozen other

law firms in the class representation thus exceeded the scope

of their authority. Accordingly, none of the work done by

the twelve additional firms will be rewarded or credited

towards any lodestar calculation. See Torres v. Gristede’s

Operating Corp., 519 F. App’x 1, 4 (2d Cir. 2013) (noting

“the recognized practice of percentage cuts as a practical

means of trimming fat from a fee application”) (citation and

quotation marks omitted). Irrespective of our determination

that EBP Class Counsel had no authority to engage a dozen

additional firms, the Court concludes that the 65,000+ hours

of work done on this case by EBP Class Counsel alone was more

than sufficient. Therefore, putting aside that the

additional 15,000 hours of work is from firms not appointed

as class counsel, those hours were not reasonably incurred

and may not be tallied in the lodestar calculation. See id.

II. Determining a Reasonable Fee Award

We now turn to the issue of the appropriate fee to be

awarded EBP Class Counsel. The Court assumes familiarity

with the factors governing fee awards, which it addressed in

a prior opinion in this multidistrict litigation concerning

attorney’s fees for OTC class counsel. In re LIBOR-Based

Fin. Instruments Antitrust Litig., No. 11 Civ. 5450, 2018 WL

3863445, at *3–4 (S.D.N.Y. Aug. 14, 2018) (“OTC Fee Op.”).

Consistent therewith, the Court will utilize the percentage-

of-fund method and then cross-check that baseline fee award

against the lodestar calculation. Id.

A. The Percentage-of-Fund Analysis

To determine an appropriate percentage fee award, the

Court will evaluate: (1) historical fee award data published

in empirical studies; (2) fee award trends from the cases in

this District cited by EBP Class Counsel; and (3) fees awarded

by this Court in other LIBOR class action settlements. As

noted in the OTC Fee Opinion, the percentage award should

reflect a sliding scale in which the portion of the settlement

fund awarded as fees decreases as the size of the fund grows.

Id. at *3 (citing Colgate-Palmolive, 36 F. Supp. 3d at 348).

1. Empirical Studies of Historical Fee Award Data

As a starting point for calibrating an appropriate

sliding scale, “[h]istorical data of fees awarded in common

fund cases provides an unbiased and useful reference for

comparing fees cases of similar magnitude . . . .” Colgate-

Palmolive, 36 F. Supp. 3d at 349.

One empirical study of 458 class actions between 2009

and 2013, often cited in this District, notes that the average

fee award for settlement funds over $67.5 million was 22.3%:

FiGureE 5. FEE PERCENTAGE, BY CLASS RECOVERY AMOUNT

(DeEcILE RAncgs), 2009-2013

8 x

= ° *

°

Sh

= S + ¢

5 .

es

] 2 3 4 a 6 7 8 9 10

Range of Recovery Amount (Deciles)

Class recovery ranges are as follows. First decile: less than

$400,000; second decile: $400,000-$750,000; third decile: $750,000-$1.4

million; fourth decile: $1.4—$2.65 million; fifth decile: $2.65-$3.9 mil-

lion; sixth decile: $3.9-$6.5 million; seventh decile: $6.5-$12 million;

eighth decile: $12-$23.4 million; ninth decile: $23.5-$67.5 million; tenth

decile: greater than $67.5 million.

Theodore Eisenberg, Geoffrey P. Miller, & Roy Germano,

Attorneys’ Fees in Class Actions: 2009-2013, 92 N.Y.U. L.

Rev. 937, 948 & fig. 5 (2017).

A second widely cited study of fee awards in 688 class

actions in 2006 and 2007 observed that for settlement funds

between $100 million and $250 million, the average award was

17.9% and the median award was 16.9%. Brian T. Fitzpatrick,

An Empirical Study of Class Action Settlements and Their Fee

Awards, 7 J. Empirical Legal Stud. 811, 839 & tbl. 11 (2010).

—TJ-

And a third empirical study published in a leading

treatise on class actions found that the average fee award

for settlement funds studied by the author between $100

million and $250 million was approximately 17%, as reflected

on the chart below (which also incorporates the data from the

Fitzpatrick study discussed immediately above):

25.00%

i a

15.00%

yess @

$ e ie

@ Fitzpatrick Data

10.00% Rubenstein and Krishna Data

5.00%

0.00%

$72.5 to $100 $100 to $250 $250 to $500 $500to $1,000 $1,000 to $6,600

Settlement Size (in Millions)

5 William B. Rubenstein, Newberg on Class Actions § 15:81 &

graph 2 (5th ed.) (Westlaw 2020).

2. Fee Award Trends from Cases Cited by EBP Class

Counsel in this District

While “the sheer volume of federal court class action

settlements means that [an] isolated string cite[] to cases

in which class counsel received a higher percentage of the

settlement [is] not particularly meaningful,” Alaska Elec.

_ 8 _

Pension Fund v. Bank of Am. Corp., No. 14 Civ. 7126, 2018 WL

6250657, at *3 (S.D.N.Y. Nov. 29, 2018) (citation omitted),

the cases cited in EBP Class Counsel’s brief provide another

set of datapoints. (See ECF No. 3145 at 4 n.8, 10-11 &n.11;

ECF No. 3146-17 at Ex. Q.) The cases EBP Class Counsel cite

from this District for settlement funds over $50 million,

excluding one outlier case, form the following sliding scale:#

Fees Awarded in SDNY Cases Cited by EBP Class Counsel

(Excl. Outlier)

36.0%

Natural Gas

34.0%

e @ Municipal

9 32.03 waa Derivatives

5 ed Kurzweil

A 30.0% te

a 28.0% Deutsche Telekom ® oom

© 26.08 Sumitomo

o @ Velez ee @Christine Asia Co.

§ 24.03 hee

0 we

9 22.08 Teer

Oo

oy

20.03

Beacon Associates

18.0%

$50,000,000 $100,000, $150,000, $200,000, 000 $250,000, 000 $300,000,000

Settlement Fund Size

4 See Christine Asia Co. v. Yun Ma, No. 15 MD 2631, 2019 WL

5257534, at *17 (S.D.N.Y. Oct. 16, 2019), appeal withdrawn sub nom. Tan

Chao v. William, No. 19-3823, 2020 WL 763277 (2d Cir. Jan. 2, 2020); In

re Mun. Derivatives Antitrust Litig., No. 08 Civ. 02516, 2016 WL 11543257,

at *1 (S.D.N.Y. July 8, 2016); In re Beacon Assoc. Litig., No. 09 Civ.

3907, 2013 WL 2450960, at *5, *14 (S.D.N.Y. May 9, 2013); Velez v. Novartis

Pharm. Corp., No. 04 Civ. 09194, 2010 WL 4877852, at *21 (S.D.N.Y. Nov.

30, 2010); Order, In re Nat. Gas Commodity Litig., No. 03 Civ. 6186

(S.D.N.Y. May 24, 2006), ECF No. 445; In re Deutsche Telekom AG Sec.

Litig., No. 00 Civ. 9475, 2005 WL 7984326, at *4 (S.D.N.Y. June 9, 2005);

Kurzweil v. Philip Morris Companies, Inc., No. 94 Civ. 2373, 1999 WL

1076105, at *3 (S.D.N.Y. Nov. 30, 1999); In re Sumitomo Copper Litig., 74

F. Supp. 2d 393, 400 (S.D.N.Y. 1999).

The one notable outlier is In re Initial Public Offering Securities

Litigation in which the court awarded one-third of a $586 million

settlement fund. 671 F. Supp. 2d 467, 471 (S.D.N.Y. 2009). That award

—~Q-

3. Other LIBOR Class Fee Awards

The most immediate benchmarks for determining an

appropriate fee award for EBP Class Counsel are the fees the

Court has already approved as reasonable in other LIBOR class

actions.

In the OTC action, the Court awarded $43,478,572 from

a $250,000,000 settlement fund and $62,788,212 from a

$340,000,000 settlement fund. These awards translate to

18.49% and 18.50% of the remainder of the funds after

deducting expenses, respectively. OTC Fee Op., 2018 WL

3863445, at *5; ECF No. 2745.

In the Lender action, the Court awarded $8,680,000 from

a $31,000,000 settlement fund and $1,120,000 from a

$4,000,000 settlement fund. These awards are the equivalent

to 29.38% and 28.08% of the remainder of the respective funds

after deducting expenses. (ECF Nos. 2777, 3097.)

And, in the Non-Defendant OTC action, the Court recently

awarded class counsel $6,097,000 from a $21,775,000

settlement fund, which represents 28.06% of the fund’s

remainder after deducting expenses. (ECF No. 3185.)

appears to reflect the exceptional circumstances of that case where class

counsel expended over 677,000 hours of work prosecuting over 300 different

actions and the court’s award still resulted in a negative lodestar

multiplier. See id. at 515. The circumstances here are not analogous.

The sliding scale below reflects these awards:

LIBOR Class Action Fee Awards

33.0%

a? a 31.0% cits /uspe/parclays

oo

ON

HG 29.08 |...

g □□ oe ex Non-Defendant OTC

27.08 ne

ender- Me

me

Oo © 23.08 □□

v

3 21.0% We

a 4 Te OTC-DB/HSBC

0 WY 19.03 steer

up 0 Tee, e

oH re

m s 17.0% oTc-Barclays/Cciti

15.0%

$- $100,000,000 $200,000,000 $300,000,000 $400,000,000

Settlement Fund Size

4. A Baseline Percentage Fee Award Range of 17%

to 25% is Reasonable

Based on the above data, the 30% fee award EBP Class

Counsel request is unreasonably high. An award of that size

well exceeds the sliding scales formed by the empirical

studies and the cases from this District cited by EBP Class

Counsel. It also would represent the largest percentage of

a fund awarded in the LIBOR litigation despite that the EBP

settlement fund is several times larger than the Lender and

Non-Defendant OTC settlements.

The trendlines established by these sources instead

suggest that a reasonable fee for EBP Class Counsel would

fall somewhere between approximately 17% and 25% of the

settlement fund.

-11-

B. Other Goldberger Factors Weigh in Favor of a 25%

Award

The baseline fee range of 17%-25% of the fund accounts

for two of the so-called Goldberger factors governing fee

awards in the Second Circuit: (1) the “magnitude and

complexities of the litigation”; and (2) the “fee in relation

to the settlement.” 209 F.3d at 50; see Colgate–Palmolive,

36 F. Supp. 3d at 348.

The Court may adjust the baseline percentage fee based

on the following Goldberger factors: (1) the “risk of the

litigation”; (2) the “quality of representation”; and (3)

“public policy considerations.” 209 F.3d at 50; see Colgate–

Palmolive, 36 F. Supp. 3d at 351–53. While “courts have

traditionally awarded fees . . . in the lower range of what

is reasonable” to avoid “windfalls,” Wal-Mart Stores, Inc. v.

Visa U.S.A., Inc., 396 F.3d 96, 122–23 (2d Cir. 2005)

(citation omitted), an award of 25% of the fund after

deducting for expenses is appropriate here in light of these

other Goldberger factors. See, e.g., Alaska Elec., 2018 WL

6250657, at *3. Based on the $181,386,421.14 settlement fund

remaining after deducting $5,613,578.86 in expenses, a 25%

award would be $45,346,605.29.

No further adjustment to that baseline percentage award

is warranted under the circumstances of this case. See

Colgate–Palmolive, 36 F. Supp. 3d at 351 (If a case was

“demonstrably exceptional in any of these areas, then an

increase or decrease of the baseline percentage would be

warranted.”).

C. Lodestar Cross-Check

The last step in the Court’s analysis is to cross check

the 25% award against a lodestar calculation of EBP Class

Counsel’s fees, which satisfies the final Goldberger factor:

the time and effort contributed by counsel. 209 F.3d at 50;

see Colgate–Palmolive, 36 F. Supp. 3d at 353. To calculate

fees under the lodestar method, the Court multiplies the

reasonable hours billed by a reasonable hourly rate.

Goldberger, 209 F.3d at 47 (citation omitted).

As discussed above, the Court will not credit the hours

represented by work done by non-EBP Class Counsel towards the

lodestar calculation. Alone, EBP Class Counsel’s hours total

65,787.36. (See ECF No. 3146 ¶ 129.) That is over 10,000

hours more than what OTC class counsel claimed in support of

their fee application for a case of similar magnitude,

(compare id., with ECF No. 2706 ¶¶ 48–50), and is also the

rough equivalent to a four-person law firm working on this

case full-time for nine years billing 40 hours-per-week, 48

weeks-per-year. While the sheer quantum of hours suggests

some amount of over-litigation, the Court will credit EBP

Class Counsel the full amount of time they claim.

EBP Class Counsel’s hourly rates, which produce blended

rates of roughly $860 for partners, $470 for associates, and

$230 for paralegals, are not out of line with the amounts

sought and approved in other cases in this District.5 (See

ECF No. 3146 Exs. B, C.) For purposes of the lodestar cross-

check, the Court will thus apply the full rates claimed by

EBP Class Counsel.

Fully credited, EBP Class Counsel’s lodestar is

$42,463,194.85. (Id. ¶ 129.) When compared to the 25%

baseline fee award of $45,346,605.29, the cross-check results

in a lodestar multiplier of 1.07. This cross-check confirms

that the 25% award is reasonable.

CONCLUSION

EBP Class Counsel’s motion for attorney’s fees is

granted in part and denied in part. The Court awards EBP

Class Counsel $45,346,605.29 in attorney’s fees, equal to 25%

of the remainder of the $187,000,000 settlement fund after

deducting $5,613,578.86 in expenses. The fee award shall be

paid pro rata across the settlement funds created by the

5 In a recent opinion, Judge Failla surveyed fee decisions in

this District and approved of reasonable hourly rates of up to $900 for

experienced partners, up to $425 for senior associates, and up to $200

for paralegals. Carrington v. Graden, No. 18 Civ. 4609, 2020 WL 5758916,

at *12–15 (S.D.N.Y. Sept. 28, 2020) (listing cases).

settlements between Exchange-Based Plaintiffs and Settling

Defendants. That fee shall be paid to EBP Class Counsel

pursuant to the terms, conditions, and obligations of the

settlement agreements. Consistent with Pretrial Order No. 1,

EBP Class Counsel may distribute those fees to other counsel

in their discretion. (ECF No. 90 q 18.3.)

As stated at the Fairness Hearing, the Court also

approves the Exchange-Based Plaintiffs’ request for

$5,613,578.86 in litigation costs and expenses and for

$25,000 service awards for each of the six named plaintiffs.

The expenses and service awards shall be paid be pro rata

across the settlement funds created by the settlements

between Exchange-Based Plaintiffs and the Settling

Defendants.

The Clerk of Court is respectfully directed to terminate

the motions currently pending at ECF No. 3144 in Case No. 11

MD 2262 and ECF No. 787 in Case No. 11 Civ. 2613.

SO ORDERED.

Dated: New York, New York

November 24, 2020

fi ,) □□ —

Metta? Kid Sectusa leh

NAOMI REICE BUCHWALD

UNITED STATES DISTRICT JUDGE

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