Opinion
MASTER FILE NO. CV-96-5238.
August 12, 2009
REPORT AND RECOMMENDATION
In this antitrust action, a class of approximately five million merchants alleged, among other things, that defendants Visa U.S.A. Inc. ("Visa") and MasterCard International Incorporated ("MasterCard") were illegally tying their debit products to their credit cards, in violation of the Sherman Act. On June 4, 2003, the plaintiffs entered into preliminary settlement agreements with the defendants, agreements that provided, among other things, for the creation of a $3.05 billion settlement fund. By Opinion and Order dated December 19, 2003, the Honorable John Gleeson approved both settlements (collectively, the "Settlement Agreements"), awarded Class Counsel $220,290,160.44 in attorneys' fees, and authorized reimbursement of costs in the amount of $18,716,511.44. See In re: Visa Check/MasterMoney Antitrust Litigation. 297 F. Supp. 2d 503 (E.D.N.Y. 2003), aff'd, 396 F.3d 96 (2d Cir. 2005).
By Order dated February 17, 2004, Judge Gleeson appointed me Special Master to issue reports and recommendations regarding referred disputes arising out of or relating to the Visa and MasterCard Settlement Agreements. By Order dated September 8, 2004, Judge Gleeson referred to me for report and recommendation "any applications for reimbursement of fees, costs and expenses incurred by plaintiffs' []lead counsel, Constantine Partners [], in administering the Visa Settlement and the MasterCard Settlement."
On April 1, 2009, Jeffrey I. Shinder, Esq., managing partner of Constantine Cannon LLP (hereinafter "Lead Counsel"), submitted a Declaration in support of Lead Counsel's "application for an award of attorneys' fees billed in connection with services rendered to the Class . . . from October 2008 through December 2008, and for the reimbursement of costs and expenses incurred by the Class during that same time period." April 1, 2009, Declaration of Jeffrey I. Shinder in Support of Supplemental Application for Fees and Reimbursement of Costs and Expenses ("April 1, 2009 Shinder Declaration") ¶ 1. The April 1, 2009 Fee Petition requests an award of legal fees in the amount of $124,730.00 and reimbursement of costs and expenses in the amount of $1,208,221.75. Id. ¶¶ 5, 9. On June 3, 2009, Mr. Shinder submitted a similar application for the period from January through April, 2009. June 3, 2009 Declaration of Jeffrey I. Shinder in Support of Supplemental Application for Fees and Reimbursement of Costs and Expenses ("June 3, 2009 Shinder Declaration") ¶¶ 1. The June 3, 2009 Fee Petition requests an award of legal fees in the amount of $405,451.25 and reimbursement of costs and expenses in the amount of $863,443.28.Id. ¶¶ 5, 8.
Mr. Shinder's April 1, 2009, declaration stated that, "on or about April 1, 2009," "Lead Counsel [would] post [his April 1] Declaration . . . on the case website(www.inrevisacheckmastermoneyantitrust litigation.com)" April 1, 2009 Shinder Declaration ¶ 64. His June 3 declaration stated that, "on or about June 3, 2009," "Lead Counsel [would] post [his June 3] Declaration . . . on the case website." June 3, 2009 Shinder Declaration ¶ 68.
For the reasons set forth below, I respectfully recommend that this Court award Lead Counsel $450,654.06 in legal fees, an amount equal to 85% of the combined fee award Lead Counsel has requested for the period October 2008 through April 2009. I further respectfully recommend that this Court authorize the following additional payments: (1) $1,005,429.10 for the fees and expenses of the law firm of Brown Rudnick Berlack Israels LLP ("Brown Rudnick") for the period July 2008 through April 2009; (2) $423,149.71 for the fees and expenses of the Orrick law firm for the period July 2008 through April 2009; (3) $44,261.09 for the fees and expenses of Richards, Layton Finger ("RLF") for the period June 2008 through April 2009; (4) $9,505.38 for the fees and expenses of Miller Nash LLP for the period April through May 2009; (5) $57,525.50 for the fees and expenses of CRA International, Inc. ("CRA") for the period October 2008 through April 2009; (6) $31,084.77 to N A Consulting LLC for the period October through December 2008; (7) $2,739.99 to Palma Advisors LLC for the period January through April 2009; (8) $443,100 for the fees and expenses of Cannonade Capital LLC ("Cannonade") for the period October 2008 through April 2009; (9) $3,663.75 for the fees and expenses of Apco Worldwide Inc. for the period October 2008 through April 2009; and (10) $7,175.46 for Lead Counsel's miscellaneous costs and expenses for the period October 2008 through April 2009.
BACKGROUND
In a complaint filed on October 5, 1996, the named plaintiffs "alleged that the defendants' practice of requiring merchants who accepted defendants' credit cards to also accept their debit products . . . was an illegal tying arrangement, in violation of section 1 [of the Sherman Act]." In re: Visa Check/MasterMoney Antitrust Litigation, 297 F. Supp. 2d 503, 507 (E.D.N.Y. 2003). They "further alleged that, through these tying arrangements and other anticompetitive conduct, the defendants attempted to monopolize the debit card market, in violation of section 2 [of the Sherman Act]." Id. This Court certified the Class by Order dated February 22, 2000. Id. The Second Circuit affirmed on October 17, 2001. Id. at 507-08.
After motion practice, and on the brink of trial, the plaintiffs entered into preliminary settlement agreements with each of the defendants. Id. at 508. These Settlement Agreements provided, among other things, for "the creation of a $3.05 billion settlement fund." Id. at 508. With respect to the question of attorneys' fees, the Settlement Agreements stated, among other things, as follows:
On or before August 18, 2003, Plaintiffs' Co-Lead Counsel shall file a Fee and Expense Application for distribution from the Gross Settlement Fund of a Fee Award consisting of an award of Plaintiffs' attorneys' fees and reimbursement of costs and expenses. Plaintiffs' Co-Lead Counsel reserves the right to make additional applications for fees, costs, and expenses incurred in obtaining Final Settlement Approval and administering the Settlement.
Visa Settlement Agreement ¶ 14; see also MasterCard Settlement Agreement ¶ 14 (same).
Notice of the Settlement Agreements was mailed to Class Members. That notice, which was dated June 13, 2003, stated (among other things):
[O]n August 18, 2003, Class Counsel will file a petition for payment of attorneys' fees, costs and expenses, and may, from time to time thereafter, petition the Court for reimbursement of fees, costs and expenses from the Settlement Funds, including fees incurred by Class Counsel and the Administrator while providing Notice to the Class and while administering the Settlement Funds (including the plan of allocation and distribution).
June 13, 2003 Notice ¶ 17.
On August 18, 2003, Lead Counsel sought this Court's approval of the Settlement Agreements and plan of allocation. Visa Check/MasterMoney, 297 F. Supp. 2d at 506-07. Lead Counsel also sought an award of attorneys' fees in the amount of $609 million and reimbursement of expenses. Id. On September 25, 2003, this Court "held a fairness hearing in [the] ceremonial courtroom to hear arguments of th[e Objectors] and any others that might be raised." Id. at 509. On December 19, 2003, this Court issued an Opinion and Order approving the Settlement Agreements, awarding Class Counsel $220,290,160.33 in attorneys' fees, and authorizing the reimbursement of costs in the amount of $18,716,511.44. See id. at 526, aff'd, 396 F.3d 96 (2d Cir. 2005).
On February 17, 2004, this Court appointed me Special Master to issue reports and recommendations regarding referred disputes arising out of or relating to the Visa and MasterCard Settlement Agreements. By Order dated September 8, 2004, this Court referred to me for report and recommendation "any applications for reimbursement of fees, costs and expenses incurred by plaintiffs' co-lead counsel, Constantine Partners and Hagens Berman, in administering the Visa Settlement and the MasterCard Settlement." By order dated February 9, 2005, this Court ordered Lead Counsel to publish the details of all supplemental requests for reimbursement of fees and expenses on the webpage that is dedicated to this litigation.
By order dated November 14, 2006, this Court required Lead Counsel, in advance of future fee applications, to submit a budget to me "setting forth [Lead Counsel's] expected fees and disbursements." By letter to this Court dated December 29, 2006, I directed Lead Counsel to submit fee applications on an annual basis, as well as an annual budget. By letter dated October 10, 2007, Lead Counsel requested a "modification of [the] December 29, 2006 Order requiring that all fee submissions . . . be made on a yearly basis." Lead Counsel requested "the right to make quarterly petitions to the Special Master" instead. This Court granted the request.
By letter dated June 30, 2008, Mr. Shinder provided Lead Counsel's Projected Budget for the period July 2008 through June 2009. The 2008-2009 Projected Budget anticipated the following fees and expenses for the period July 2008 through June 2009: SOURCE PROJECTED AMOUNT Constantine Cannon Fees $220,000 Counsel Counsel Total $675,000 — $1,200,000 Consulting Consulting Total $777,552 — $997,552 Miscellaneous Expenses $50,000 Total $1,722,552 — $2,447,552
Brown Rudnick $500,000-$900,000 Orrick $175,000-$300,000 CRA International, Inc. $194,000 N A Consulting LLC $123,552 Apco Worldwide $10,000 Cannonade Capital LLC $450,000 — $650,000 For the October through December 2008 time period, the fees and expenses for which Lead Counsel seeks payment fall into the following categories (id. ¶¶ 5, 9): SOURCE AMOUNT Constantine Cannon Fees $124,730.00 Consulting Consulting Total $215,199.52 Counsel Total Counsel $990,957.57 Miscellaneous Expenses Miscellaneous Expenses Total $2,064.66 CRA International, Inc. $43,033 .50 N A Consulting LLC $31,084.77 Cannonade Capital LLC $138,660.00 Apco Worldwide Inc. $2,421.25 Brown Rudnick $686.771.12 Orrick $277,595.05 Richards Layton Finger $26,591.40 Court Filing Transcript Fees $25.00 Document Scanning $1.50 Facsimile $40.00 Federal Express $54.74 Messenger Service $50.88 Photocopies $15.60 Offsite Storage $338.70 PACER Research $63.92 Postage $0.42 Teleconference $272.50 Transportation Travel $1,120.30 Westlaw Research $81.10 For the January through April 2009 time period, the fees and expenses for which Lead Counsel seeks payment fall into the following categories (id. ¶¶ 5, 9): SOURCE AMOUNT Constantine Cannon Fees $405,451.25 Consulting Consulting Total $322,914.38 Counsel Total Counsel $535,418.10 Miscellaneous Expenses Miscellaneous Expenses Total $5,110.80 CRA International, Inc. $14,492.00 Palma Advisors LLC $2,739.88 Cannonade Capital LLC $304,440.00 Apco Worldwide Inc. $1,242.50 Brown Rudnick LLP $335,104.96 Orrick, Herrington Sutcliffe $167,825.70 Richards, Layton Finger $22,485.94 Miller Nash LLP $10,001.50 Document Scanning $18.42 Facsimile $221.25 Federal Express $144.68 Meals $45.37 Messenger Service $267.13 Photocopies $172.60 Offsite Storage $451.33 PACER Research $66.56 Postage $547.29 Teleconference $385.91 Travel Transportation $2,039.95 Westlaw Research $750.31 Paragraph 8 of Lead Counsel's April 1, 2009 fee application acknowledges that, "[w]ith regard to budgeting, . . . Lead Counsel's total accumulated fees for the first half of the July 2008-2009 budget period ($160,436.24 for July-September 2009 and $124,730.00 for October-December 2009, totaling $285,166.25) have now already exceeded the $220,000 estimate that we set forth in our June 30, 2008 budget submission":
As we indicated in that submission we believed we were erring on the high side to account for unexpected disputes that would likely arise during the course of the year. We based our July 2008-June 2009 estimate on the prior year's budget projection and actual amounts billed, our reasonable expectations for the case over the coming months, and our expectation that the events that would occur during the current budget period would continue in relatively similar fashion from those of the past two years. However, our budget amount has proved to be inaccurate for several unanticipated reasons. For example, the September 2008 claims and check-cashing deadline resulted in an unexpected flurry of Class Member telephone calls to Lead Counsel and the handling of thousands of claims filed on the eve of that deadline. Lead Counsel also has been working to resolve some of the more difficult and lengthy challenges and appeals during this period. At the same time, we have been responding to a heightened number of Class Member questions regarding claims, distributions, and securitization, as well as an unanticipated number of questions regarding future residual distributions, partly in response to recent offers from third party entities to purchase Class Members' rights to those distributions. Moreover, the October 2008 PIN debit notice mailing has resulted in more inquires from Class members than were expected and further challenges to be resolved. In addition, the preparation of the motion for the approval of the MasterCard securitization, as well as legal issues that arose regarding that motion, has resulted in much more work than was originally anticipated. Based on our knowledge that the level of work on the foregoing has increased since December 2008, the expectation that this and related work (such as responding to recent objections to the MasterCard securitization motion) will continue at a similar level through the end of June 2009, and the anticipation that work will begin on the Visa securitization, we estimate that Lead Counsel's total fees for the July 2008-June 2009 period will run upwards of $975,000.00.
Much of the work addressed in both fee applications at issue in this Report and Recommendation related to the anticipated securitization of MasterCard's payments. On July 2, 2009, Lead Counsel sought this Court's approval of a July 1, 2009 agreement with Master Card International Incorporated pursuant to which MasterCard agreed to prepay the remaining payments due under the June 2003 Settlement Agreement by making a single payment of $335 million.
ANALYSIS Lead Counsel's Legal Fees
Lead Counsel seeks a fee award of $124,730.00 for a total of 371.75 attorney and paralegal hours that it devoted to this litigation from October through December 2008. April 1, 2009 Shinder Declaration ¶ 5. For the period from January through April 2009, Lead Counsel seeks a fee award of $405,451.25 for a total of 919.50 attorney and paralegal hours that it devoted to this litigation. See June 3, 2009 Shinder Declaration ¶ 5. According to Mr. Shinder, the work Lead Counsel performed during these time periods included efforts dedicated primarily to:
(a) administering the general claims process (including (i) handling and resolving outstanding Class Member appeals and disputes; (ii) working with and overseeing the efforts of the Claims Administrator, The Garden City Group, and Lead Counsel's consultants regarding Class Member distributions, claims deadlines, and outstanding claims, challenges and appeals; and (iii) responding to Class Member questions and concerns, including with regard to future residual distributions from the Settlement Funds and offers by third party entities that have contacted Class Members about purchasing their rights to those distributions); (b) administering the PIN debit claims process, including working with and overseeing the efforts of the Claims Administrator, Lead Counsel's consultants, and Class Members in processing PIN debit claims and handling Class Member questions and disputes regarding those claims; (c) continuing to prepare the groundwork for securitizing the Settlement Funds (including (i) reviewing, editing, and revising documentation regarding the securitization of the remaining MasterCard payments to the Settlement Fund; (ii) engaging in efforts related to the retention of replacement underwriters, Barclays and Citigroup, and the retention of Special Washington Counsel Miller Nash LLP; (iii) preparing correspondence to the Court requesting approval of the engagements of Barclays and Citigroup, Special Delaware Counsel Richards, Layton Finger, and Special Washington Counsel; (iv) appearing before Judge Gleeson and conferring with Special Master Wilcox and the Court-appointed independent securitization expert regarding securitization progress; (v) revising, finalizing and filing the motion (and supporting materials) concerning the approval of the MasterCard securitization (vi) preparing materials for and effecting the publication of notice to Class Members regarding the motion for the MasterCard securitization; (vii) addressing, responding to and, where possible, resolving MasterCard and Class Member objections to the MasterCard securitization motion and issues arising from same; (viii) preparing for and attending a fairness hearing regarding the MasterCard securitization motion; (ix) commencing the securitization of the remaining Visa payments to the Settlement Fund, including interviewing potential counsel to act as Issuer's Counsel and initiating contact with Visa counsel concerning Visa's cooperation with regard to the securitization; and (x) responding to Class Member questions about securitization; (d) preparing merchant advisories concerning the December 2008 PIN debit distribution and securitization; (e) directing the investment of the Settlement Funds; (f) reviewing and executing tax returns for the Settlement Fund accounts; and (g) confirming continued compliance with the Settlement Agreements.Id. ¶ 4; see also April 1, 2009 Shinder Declaration ¶ 4 (describing similar efforts for the October through December 2008 time period).
There is no question but that the above-described efforts provided a significant benefit to the Class. I therefore respectfully recommend that this Court find that Lead Counsel is entitled to an award of reasonable attorneys' fees for this time period. See Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 47 (2d Cir. 2000) (noting that, in common fund cases, "the attorneys whose efforts created the fund are entitled to a reasonable fee — set by the court — to be taken from the fund" in order to "prevent[] unjust enrichment of those benefiting from a lawsuit without contributing to its cost"); Olick v. Parker Parsley Petroleum Co., 145 F.3d 513, 516 (2d Cir. 1998) (district court did not abuse its discretion by granting class counsel's supplemental fee request for time spent defending settlement).
If this Court agrees with my recommendation, the next inquiry regards the reasonableness of the requested amount. Lead Counsel's fee request employs the lodestar method, pursuant to which the district court "`scrutinizes the fee petition to ascertain the number of hours reasonably billed and then multiplies the figure by an appropriate hourly rate.'" In re Independent Energy Holdings PLC Securities Litigation, No. 00 Civ. 6689 SAS, 2003 WL 22801724, at *1 (S.D.N.Y. Nov. 24, 2003) (quoting Goldberger, 209 F.3d at 47). "[T]he key consideration in awarding fees is what is reasonable under the circumstances."Visa Check/MasterMoney, 297 F. Supp. 2d at 521. When calculating a reasonable fee, the district court is obliged "to act as a `fiduciary . . . a guardian of the rights of absent class members." Id. (quoting City of Detroit v. Grinnell Corp., 560 F.2d 1093, 1099 (2d Cir. 1977)).
The first inquiry is whether Lead Counsel billed a reasonable number of hours in furtherance of its efforts on behalf of the Class during this time period. Lead Counsel seeks reimbursement for a combined total of 1291.25 attorney and paralegal hours billed from October 2008 to April 2009 — the approximate equivalent of one professional working full time on the case for that seven-month period. Mr. Shinder asserts: "The work performed by our attorneys and staff has been largely under my supervision. It has been conducted effectively, efficiently, and economically, and to avoid unnecessary expenditures of time and expense." April 1, 2009 Shinder Declaration ¶ 4; see also June 3, 2009 Shinder Declaration ¶ 4 (same).
In my opinion, a total of 1291.25 hours is not an unreasonable amount of time to devote to the at times complex tasks that Lead Counsel undertook on behalf of the class during this time period. I therefore respectfully recommend that Lead Counsel be reimbursed for all of these hours.
The second inquiry concerns the hourly rates requested by Lead Counsel. Case law requires that this Court apply hourly rates that are "in line with those [rates] prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Luciano v. Olsten Corp., 109 F.3d 111, 116 (2d Cir. 1997) (internal quotation marks omitted). "It is well-established that the `prevailing community' the district court should consider . . . is the `district in which the court sits.'" Id.; see also New Leadership Committee v. Davidson, 23 F. Supp. 2d 301, 304 (E.D.N.Y. 1998). "The burden is on the applicant to produce satisfactory evidence in addition to the attorney's own affidavits showing that the requested rates are at the prevailing market level." Paulino v. Upper West Side Parking Garage, Inc., No. 96 Civ. 4910, 1999 WL 325363, at *3 (S.D.N.Y. May 20, 1999) (citing Blum v. Stenson, 465 U.S. 886, 896 n. 11 (1984)); see also New Leadership Committee, 23 F. Supp. 2d at 304 (declining to consider affidavits supporting requested hourly rate where parties submitted such evidence for the first time in objecting to Magistrate Judge's report and recommendation). "The court may also look to attorneys' fees granted in other cases and rely on its own knowledge of similar cases to determine a reasonable rate." Paulino, 1999 WL 325363, at *3.
Lead Counsel requests hourly attorney rates ranging from $250 (David Golden Esq.'s hourly rate for January through April 2009) to $625 (the hourly rate of Robert Begleiter Esq. for the entire seven-month period) and hourly paralegal rates of between $110 and $170. April 1, 2009 Shinder Declaration ¶¶ 5-6; June 3, 2009 Shinder Declaration ¶¶ 5-6. Case law makes clear that these hourly rates fall at the high end of the billing rate spectrum.See In re Independent Energy Holdings, 2003 WL 22244676, at *9 (partner rates ranging from $650 to $695 and associate rates ranging from $300 to $425 are "high" but "not extraordinary");Moon v. Gab Kwon, No. 99 Civ. 11810 (GEL), 2002 WL 31512816, at *2 (S.D.N.Y. Nov. 8, 2002) (hourly paralegal rate of $100);Marathon Ashland Petroleum, No. 00 Civ. 2935, 2003 WL 21355216, at *2 (S.D.N.Y. June 10, 2003) ($99 per hour for paralegal work).
The question is whether, when the number of hours for which Lead Counsel seeks compensation is combined with the hourly rates requested by Lead Counsel — which, as stated above, fall at the high end of the billing rate spectrum — the resulting fee request is higher than is reasonable under the circumstances. In my opinion, it is.
In prior Reports and Recommendations, I have respectfully recommended that this Court reduce Lead Counsel's total fee by 10%. See Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 124 (2d Cir. 2005) ("In approving the district court's fee award, we recognize the sacrifice and commitment plaintiffs' counsel made to its clients while preserving as much as possible for those who were harmed." (emphasis added)); New York State Ass'n for Retarded Children, Inc. v. Carey. 711 F.2d 1136, 1146 (2d Cir. 1983) (noting that various courts "have endorsed percentage cuts as a practical means of trimming fat from a fee application"). However, these fee applications seek reimbursement for the period October 2008 through April 2009. During that time period, the legal market in New York was experiencing a downturn. Several law firms went out of business; others reduced their ranks by laying off attorneys; and billable hours were down. By contrast, Lead Counsel was in the enviable position of having a guaranteed source of business. If, hypothetically speaking, the Class had gone to the market to hire new counsel, the Class would have been in a position of bargaining strength, and would likely have been able to negotiate a significant discount in legal fees. Bearing this in mind, I respectfully recommend that this Court reduce Lead Counsel's fees by 15%.
I believe that the six Goldberger factors support a reduction.See Wal-Mart Stores, 396 F.3d at 121 ("[T]he `Goldberger factors' ultimately determine the reasonableness of a common fund fee."). These factors include:
(1) the time and labor expended by counsel;
(2) the magnitude and complexities of the litigation;
(3) the risk of the litigation. . . .;
(4) the quality of representation;
(5) the requested fee in relation to the settlement; and
(6) public policy considerations.Id. (citing Goldberger, 209 F.3d at 50).
In my view, the first, second, fourth and sixth Goldberger factors — the time and labor expended by counsel, the magnitude and complexity of the litigation, the quality of the representation, and public policy considerations — weigh in favor of a significant award. Lead Counsel, a skilled and reputable law firm, devoted a significant number of hours to representing the class' interests during this time period. In addition, the tasks that Lead Counsel undertook were clearly complex. Finally, there is, in my opinion, "commendable sentiment in favor of providing lawyers with sufficient incentive" to zealously advocate for the interests of class members even after the class action has settled. See Goldberger, 209 F.3d at 51.
However, the remaining two Goldberger factors — the risk of litigation and the relationship of the fee to the settlement — weigh in favor of ordering a reduction to Lead Counsel's fee request. I do not believe that there is or was a significant risk that Lead Counsel might not be compensated for its efforts on behalf of the Class. In addition, although the results that Lead Counsel has obtained on behalf of the Class have been significant, so, too, was Lead Counsel's initial fee award.
For the reasons described above, I respectfully recommend that this Court award Lead Counsel $450,654.06 in legal fees, an amount that is the equivalent of 85% of the fee award Lead Counsel has requested for the October 2008 through April 2009 time period.
Brown Rudnick
Lead Counsel also seeks payment of $686,771.12 for legal fees and expenses of the law firm of Brown Rudnick for work that firm performed and expenses that firm incurred in connection with this litigation from July through December 2008 (April 1, 2009 Shinder Declaration ¶¶ 43, 49), and $335,104.96 for work that firm performed and expenses that firm incurred in connection with this litigation from January through April 2009 (June 3, 2009 Shinder Declaration ¶¶ 42, 47). During these time periods, Brown Rudnick acted as "Issuer's Counsel" in the intended securitization of the payments to be made by Visa and MasterCard. See April 1, 2009 Shinder Declaration ¶ 45 (describing Brown Rudnick's efforts on behalf of the class during July through December 2008); June 3, 2009 Shinder Declaration ¶ 44 (same for January through April 2009).
Brown Rudnick expended a total of 2021.20 hours from July 2008 through April 2009. See April 1, 2009 Shinder Declaration ¶ 47 (1,395.70 hours for period July through December 2008); June 3, 2009 Shinder Declaration ¶ 45 (625.50 hours for January through April 2009 time period). Its hourly rates ranged from $198 to $792, with the majority of work performed at a rate of $553.50/hour. See April 1, 2009 Shinder Declaration ¶ 47; June 3, 2009 Shinder Declaration ¶ 45. The total fees reflect "the tenpercent discount that Lead Counsel previously negotiated with Brown Rudnick, and that Brown Rudnick has continued to apply to its legal fees in this representation." See April 1, 2009 Shinder Declaration ¶ 47; June 3, 2009 Shinder Declaration ¶ 45. Brown Rudnick also seeks reimbursement of costs in the amount of $21,789.13. See April 1, 2009 Shinder Declaration ¶ 48 ($15,622.02 in costs for period July through December 2008); June 3, 2009 Shinder Declaration ¶ 46 ($6,167.11 in costs for January through April 2009 time period).
According to Mr. Shinder, the bulk of the transaction documents were drafted during the July through September 2008 time period. "The drafting also necessitated the involvement of Brown Rudnick tax law and structured finance specialists. Further, the resignation and replacement of the lead underwriter, JP Morgan, and corresponding change in the structure of the transaction during this period also contributed to the breadth of work required by Brown Rudnick." Lead Counsel asserts that "[t]hese factors combined to increase Brown Rudnick's fees and expenses" for the period July through December 2008. April 1, 2009 Shinder Declaration ¶ 46. "After review and discussion, Lead Counsel and Brown Rudnick agreed that the total fees and expenses to be recommended to the Special Master and the Court for approval for the July-December 2009 period would be reduced by $70,000." Id. ¶ 43 (noting that, during July 2009 through December 2009 period, "Lead Counsel was billed a total of $765,771.12 by Brown Rudnick for work performed on behalf of the Class and expenses billed in connection with that work," but that, upon review and discussion, Lead Counsel and Brown Rudnick agreed to seek payment of $686,771.12 for that time period); see also ¶ 49.
Clearly, Brown Rudnick's efforts provided a significant benefit to the Class. I therefore respectfully recommend that this Court find that Lead Counsel is entitled to reimbursement of the fees it paid to Brown Rudnick for work that firm did on behalf of the Class from July 2008 through April 2009. See Olick v. Parker Parsley Petroleum Co., 145 F.3d 513, 516 (2d Cir. 1998) (district court did not abuse its discretion by granting class counsel's supplemental fee request for time spent defending settlement); In re Sterling Foster Co., Inc., Sec. Litig., 238 F. Supp. 2d 480, 490 (E.D.N.Y. 2002) ("Class Counsel are entitled to reimbursement for reasonable litigation expenses.").
The next inquiry regards amount. In my opinion, 2021.20 is not an unreasonable amount of time to devote to the tasks that Brown Rudnick undertook during this time. Given Brown Rudnick's specialty practice, the hourly rates (described above) that Brown Rudnick has charged also appear reasonable to me. Nevertheless, given the downturn in the legal market (described above), I respectfully recommend that Brown Rudnick's fees be reduced an additional 5% for the period January through April 2009. Given Lead Counsel's assertion that the bulk of the fees for July through December 2008 were billed during the July through September 2008 time period (which preceded the economic downturn described above), and given that Brown Rudnick has already reduced its fee request with respect to that time period by $70,000, I do not believe that the additional 5% discount is necessary for the July through December 2008 time period.
In my opinion, the six Goldberger factors support such a result. I believe that the second, fourth and sixth Goldberger factors — the magnitude and complexity of the litigation, the quality of the representation, and public policy considerations — weigh in favor of a significant award. There is, in my opinion, "commendable sentiment in favor of providing lawyers with sufficient incentive" to undertake the complex task of competently representing the financial interests of class members once settlement has resulted in the creation of a significant common fund. See Goldberger, 209 F.3d at 51.
The remaining three Goldberger factors do not, in my opinion, weigh in favor of a significant award. Nevertheless, I believe that the percentage reductions discussed above adequately account for these factors. I therefore respectfully recommend that this Court authorize payment in the amount of $1,005,429.10 for Brown Rudnick's fees and expenses for the time period July 2008 through April 2009. I do so notwithstanding the fact that this amount exceeds the $500,000 to $900,000 estimate set forth in Lead Counsel's June 30, 2008 budget submission for Brown Rudnick for the period July 2008 through June 2009.
Orrick
In May 2006, Lead Counsel "entered into engagement agreements . . . with underwriters Bear Stearns (later JP Morgan Securities Inc. as successor to Bear Stearns, now terminated . . .) and Deutsche Bank (now terminated), pursuant to Section 11 of the Plan of Allocation, to assess whether it is in the best interests of the Class to securitize the Settlement Fund payments to be made by Visa and MasterCard." This Court approved the engagement of these firms on August 29, 2006. Shinder April 1, 2009 Declaration ¶ 49 n. 4. Orrick was thereafter retained as Underwriters' Counsel, "as is customary in connection with securitizations." Id. "Pursuant to the engagement agreements with the underwriters, Lead Counsel on behalf of the Class is responsible for all reasonable legal fees and expenses incurred by counsel in connection with the preparation, execution and delivery of the engagement agreements; the evaluation of the possible consummation of the securitization; and the negotiation and preparation of documentation with respect to the securitization." Id.
With respect to the termination of Bear Stearns, Shinder explains (Shinder April 1, 2009 Declaration ¶ 50 n. 4; see also Shinder June 3, 2009 Declaration ¶ 49 n. 5):
JP Morgan has since informed Lead Counsel that as part of its realignment after acquiring Bear Stearns, JP Morgan was no longer interested in pursuing the securitization unless Lead Counsel agreed to substantially increase JP Morgan's potential fees from the amount originally agreed upon in the engagement letter with Bear Stearns. Lead Counsel declined JP Morgan's request after determining that it was not in the best interests of the Class, and the engagement with JP Morgan was thereafter terminated.
Lead Counsel and Cannonade interviewed three potential banks and selected Barclays Capital Inc. and Citigroup Global Markets Inc. as the replacement underwriters for the securitization of the remaining MasterCard Settlement Fund payments. Subject to the Court's approval, Lead Counsel agreed with Barclays and Citigroup regarding fees and terms that are substantially similar to those in the Bear Stearns engagement letter that was previously approved by the Court, and Barclays and Citigroup have retained Orrick on the same terms as Bear Stearns. The Court approved the Barclays and Citigroup engagement on March 10, 2009.
Pursuant to the engagement agreements with the underwriters, Lead Counsel on behalf of the Class is responsible for all reasonable legal fees and expenses incurred by counsel in connection with the preparation, execution, and delivery of the engagement agreements; the evaluation of the possible consummation of the securitization; and the negotiation and preparation of documentation with respect to the securitization.
Orrick billed Lead Counsel $277,595.05 in counsel expenses during the July through December 2008 time period (Shinder April 1, 2008 Declaration ¶ 50) and $167,825.70 in counsel expenses during the January through April 2009 period (Shinder June 3, 2009 Declaration ¶ 48), "reflect[ing] the total amount billed by Orrick for work performed on behalf of the Class as Underwriters' Counsel during the[se] period[s]," id.; Shinder April 1, 2008 Declaration ¶ 50. In total, Orrick expended 816.60 hours at billing rates ranging from $200/hour to $945/hour. See Shinder April 1, 2009 Declaration ¶ 52 (529.40 hours for the July through December 2008 time period at billing rates ranging from $270/hour to $940/hour); Shinder June 3, 2009 Declaration ¶ 50 (287.20 for the January through April 2009 time period at hourly rates ranging from $200 to $945). These fees "reflect a ten-percent discount that Orrick has agreed to apply to its legal fees in this representation." Shinder June 3, 2009 Declaration ¶ 50;see also Shinder April 1, 2009 Declaration ¶ 52.
During the July through December 2008 time period,
Orrick focused its efforts on preparing and revising the preliminary Offering Memorandum; reviewing MasterCard public filings in relation to risk factors and disclosures to be made by Lead Counsel on behalf of the Class; reviewing the Settlement Agreement, Amended Plan of Allocation, and related court documents in relation to disclosures to be made by Lead Counsel on behalf of the Class; reviewing and commenting on multiple drafts of the Indenture, Sale and Contribution Agreement, Administration Agreement, Trust Agreement, and other transaction documents; providing advice regarding the deal structure reflected in these drafts (including with regard to securities law, commercial law, ERISA, and tax advice); conferencing and teleconferencing with the Underwriter, Lead Counsel, Brown Rudnick, and Cannonade; and reviewing draft closing documents and legal opinions related to the above.
Shinder April 1, 2009 Declaration ¶ 51.
During the January through April 2009 time period,
Orrick focused its efforts primarily on (a) reviewing and commenting on the proposed court order and supporting memorandum regarding the MasterCard securitization; (b) reviewing and commenting on numerous revised drafts of the transactions documents including, but not limited to, the Indenture, Offering Memorandum, Private Placement Memorandum, Control and Sweep Agreement, Sale and Contribution Agreement, Administration Agreement, Escrow Account Agreement, and ancillary documents; (c) drafting and revising several drafts of the disclosure documents relating to the trust securities; (d) reviewing and commenting on drafts of legal opinions relating to the offering; (e) providing advice regarding tax, commercial law, and other legal issues; and (f) participating in conferences and teleconferences with the Underwriters, Brown Rudnick, Lead Counsel, Cannonade, and Co-Lead Counsel Hagens Berman.
Shinder June 3, 2009 Declaration ¶ 49.
In my opinion, Orrick's efforts provided a significant benefit to the Class. I therefore respectfully recommend that this Court authorize the payment of fees for work that Orrick performed on behalf of the Class during this time period. See Olick v. Parker Parsley Petroleum Co., 145 F.3d 513, 516 (2d Cir. 1998) (district court did not abuse its discretion by granting class counsel's supplemental fee request for time spent defending settlement); In re Sterling Foster Co., Inc., Sec. Litig., 238 F. Supp. 2d 480, 490 (E.D.N.Y. 2002) ("Class Counsel are entitled to reimbursement for reasonable litigation expenses.").
The next inquiry regards amount. In my opinion, 816.60 is a reasonable amount of time to devote to the complex tasks that Orrick undertook during this time period, Orrick's hourly rates are on the high side. As stated, Orrick has already applied a 10% reductions to its fees. I believe that, if this Court were to apply an additional 5% discount to take into account the downturn in the legal market during the relevant time period, the resulting fee request would be a reasonable one.
I believe that the second, fourth and sixth Goldberger factors — the magnitude and complexity of the litigation, the quality of the representation, and public policy considerations — weigh in favor of an award in this amount. As I state above, there is "commendable sentiment" in favor of providing competent counsel with "sufficient incentive" to undertake the complex task of competently representing the financial interests of class members once settlement has resulted in the creation of a significant common fund. See Goldberger, 209 F.3d at 51.
I do not believe that the remaining three Goldberger factors favor a significant award. Nevertheless, I believe that the 10% reduction that already has been applied to Orrick's fees, plus the additional 5% discount I recommend above, would adequately account for these factors. I therefore respectfully recommend that this Court authorize payment to Orrick in the amount of $423,149.71 for fees and expenses. I do so even though this amount exceeds the $175,000 to $300,000 estimate set forth in Lead Counsel's June 30, 2008 budget submission for the period July 2008 through June 2009.
Richards Layton Finger
Lead Counsel asserts that it has been advised by Brown Rudnick "that local Delaware counsel is necessary to complete the transaction documents required in connection with the formation of the Trust, which is being created for the purpose of securitizing the remaining Settlement Fund payments from MasterCard." April 1, 2009 Shinder Declaration ¶ 55. In accordance with this advice, Lead Counsel retained RLF. "Pursuant to the engagement agreement approved by the Court on March 16, 2009, Lead Counsel on behalf of the Class is responsible for all reasonable legal fees and expenses incurred by counsel in connection with the preparation of the Trust and with reviewing and providing comments with respect to the documents necessary for the formation of the Trust." Id. ¶ 58. Lead Counsel therefore seeks reimbursement for RLF's fees and expenses during the June through December 2008 and January through April 2009 time period.
Lead Counsel continues (April 1, 2009 Shinder Declaration ¶¶ 55-56):
Specifically, MasterCard's future payment obligations and related rights are placed in the Trust, which will then issue notes to be sold to investors. The proceeds from that sale will then be distributed to the Class. RLF will act as Special Delaware Counsel in connection with the formation of the Trust and the related issuance of the Trust's notes.
As Special Delaware Counsel to the Trust RLF will, among other things, render an opinion as to (i) the due formation of the Trust under the Delaware Statutory Trust Act; (ii) the power, authorization, and enforceability of certain Trust documents; (iii) the perfection of security interests under Delaware law; and (iv) various other issues of Delaware law. In addition, RLF will represent the Owner Trustee in its capacity as a trustee of the Trust, and that representation will involve reviewing documents for the purpose of furnishing advice regarding the Owner Trustee's duties and liabilities.
Lead Counsel's first invoice from RLF sought payment for fees and expenses from June 17 through December 31, 2008. April 1, 2009 Shinder Declaration ¶ 54.
During these months, "RLF primarily provided advice relating to questions arising under the Delaware Statutory Trust Act, the Delaware Uniform Commercial Code, and Delaware law; performed legal research; reviewed, analyzed, and provided comments with respect to written materials, including the Offering Memorandum, trust organizational document, and the documents relating to the proposed transaction (including the Amended and Restated Trust Agreement, Sale and Contribution Agreement, Administration Agreement, Control and Sweep Agreement, Indenture, and related documents); and engaged in telephonic communications and intra-office conferences and prepared memoranda and correspondence regarding the above." Id. ¶ 59 (describing RLF's efforts during June through December 2008 time period); see also June 3, 2009 Shinder Declaration ¶ 55 (describing similar efforts during January through April 2009 time period).
In connection with these efforts, RLF seeks payment for $48,162.50 in fees for a total of 118.10 hours billed at hourly rates ranging from $160 to $610. See April 1, 2009 Shinder Declaration ¶¶ 54, 60 (for the time period June 17 through December 31, 2008, RLF expended $26,266.50 in fees, comprising a total of 66.10 hours at hourly rates ranging from $220 to $610); June 3, 2009 Shinder Declaration ¶ 56 (for the time period January through April 2009, RLF expended $21,896.00 in fees, comprising a total of 52 hours, at hourly rates ranging from $160 to $610). RLF also seeks reimbursement of $914.84 in costs. See April 1, 2009 Shinder Declaration ¶ 61 ("RLF also billed $324.90 in expenses, including for photocopying and printing costs and telephone charges."); June 3, 2009 Shinder Declaration ¶ 57 ("RLF also billed $589.94 in expenses, including for photocopying and printing costs, telephone charges, and a Delaware Secretary of State charge.").
In my view, RLF's efforts clearly benefitted the Class. I therefore respectfully recommend that this Court authorize the payment of fees for work that RLF performed on behalf of the Class during this time period. See Olick v. Parker Parsley Petroleum Co., 145 F.3d 513, 516 (2d Cir. 1998) (district court did not abuse its discretion by granting class counsel's supplemental fee request for time spent defending settlement); In re Sterling Foster Co., Inc., Sec. Litig., 238 F. Supp. 2d 480, 490 (E.D.N.Y. 2002) ("Class Counsel are entitled to reimbursement for reasonable litigation expenses.").
The next inquiry regards amount. In my opinion, 118.10 is a reasonable amount of time to devote to the complex tasks that RLF undertook during this time period. However, because RLF's hourly rates are on the high side, and given the downturn in the legal market described above, I respectfully recommend that this Court authorize payment of $44,261.09, which represents a 10% discount to the requested fees for the June 7, 2008 through April 2009 time period. In my opinion, the Goldberger factors, discussed above, support this result.
Lead Counsel asserts that "[a]lthough RLF did not agree to Lead Counsel's request for a 10% discount on its legal fees, it did agree to waive the fees that RLF has represented that it typically receives in excess of its hourly rates when rendering legal opinion letters." April 1, 2009 Shinder Declaration ¶ 60 n. 6.
Miller Nash LLP
Lead Counsel retained Miller Nash LLP because "Brown Rudnick has advised Lead Counsel that because Co-Lead Counsel Hagens Berman is a limited partnership under Washington State law, local Washington counsel is necessary to complete the transaction documents required in connection with the securitization of the remaining Settlement Fund payments from MasterCard." June 3, 2009 Shinder Declaration ¶ 60. "Pursuant to the engagement agreement approved by the Court on May 5, 2009, Lead Counsel on behalf of the Class is responsible for all reasonable legal fees and expenses incurred by counsel in connection with rendering the opinions described above." Id. ¶ 62. Lead Counsel therefore seeks reimbursement for RLF's fees and expenses for the April through May 2009 time period.
Lead Counsel continues (June 3, 2009 Shinder Declaration ¶¶ 60-61): "Specifically, the transaction requires that a security interest in MasterCard's four remaining payments be granted under a Sale and Contribution Agreement, which Hagens Berman will sign (as will Lead Counsel) as a binding representative and agent of the Class pursuant to the Court's April 24, 2009 Order approving the securitization. As Special Washington Counsel, Miller Nash will be rendering opinions as to (a) the perfection of a security interest under Washington law to be granted by Hagens Berman on behalf of the Class and (b) the existence of Hagens Berman and its due authorization and execution of the MasterCard securitization transaction documents."
During that time, "Miller Nash primarily reviewed the motion and supporting documents for the approval of the securitization of MasterCard's future payments to the Settlement Fund; reviewed the draft transaction documents; drafted the opinion letter regarding the authority of Hagens Berman and supporting certificate; and drafted the opinion letter regarding the UCC financing statement to be filed in Washington State." Id. ¶ 63. In connection with these efforts, Miller Nash seeks payment for $9,922.50 in fees, comprising a total of 26.70 hours at hourly rates ranging from $150 to $375. Id. ¶ 64. "Miller Nash also billed $79.00 in expenses for copies of corporate documents and payment of a corporate statutory fee." Id. ¶ 65.
Miller Nash's efforts clearly benefitted the Class. I therefore respectfully recommend that this Court authorize the payment of fees for work that RLF performed on behalf of the Class during this time period. See Olick v. Parker Parsley Petroleum Co., 145 F.3d 513, 516 (2d Cir. 1998) (district court did not abuse its discretion by granting class counsel's supplemental fee request for time spent defending settlement); In re Sterling Foster Co., Inc., Sec. Litig., 238 F. Supp. 2d 480, 490 (E.D.N.Y. 2002) ("Class Counsel are entitled to reimbursement for reasonable litigation expenses.").
As for the amount of these fees, in my opinion, 26.70 is a reasonable amount of time to devote to the complex tasks that RLF undertook during this time period. Lead Counsel asserts that, although "Miller Nash did not agree to Lead Counsel's request for a 10% discount on its legal fees," Lead Counsel "evaluated the firm's ability to deliver the required opinion, the quoted hourly rate of $375 for the partner primarily responsible for preparing the opinion, and the total estimate for the project (approximately $30,000, but likely closer to $15,000), and determined that engaging Miller Nash, even without the requested discount, would be in the best interest of the Class." June 3, 2009 Shinder Declaration ¶ 64 n. 9.
I agree that Miller Nash's hourly rate is relatively low. Nevertheless, given the downturn in the legal market, I respectfully recommend that this Court authorize payment of $9,505.38, which represents a 5% discount to the requested amounts for the April through May 2009 time period. In my opinion, the Goldberger factors, discussed above, support this result.
CRA International, Inc.
Lead Counsel requests payment of $43,033.50 for work performed and expenses incurred by CRA International on behalf of the Class from September 27 through December 26, 2008, see April 1, 2009 Shinder Declaration ¶¶ 16, 22, and payment of $14,492.00 for CRA's fees and expenses for the period December 27, 2008, through May 4, 2009, see June 3, 2009 Shinder Declaration ¶¶ 15, 21.
According to Lead Counsel, CRA "has provided the expert economic analysis for the Class during this litigation, and Lead Counsel has continued to utilize that expertise since the Settlement Agreements were reached." April 1, 2009 Shinder Declaration ¶ 17; see also June 3, 2009 Shinder Declaration ¶ 16. Lead Counsel asserts that "CRA has continued to work closely with Lead Counsel regarding implementation of the Plan of Allocation and the distribution of the Settlement Funds to Class Members, and to perform multiple functions in connection with the Plan of Allocation and the distribution." April 1, 2009 Shinder Declaration ¶ 17; see also June 3, 2009 Shinder Declaration ¶ 16. During the October through December 2008 time period:
CRA continued to work closely with Lead Counsel and the Claims Administrator to assist with the distribution process, primarily by assisting with final preparations for the mailing of PIN debit award notifications; conducting research regarding the size of the expected Settlement Fund residual and regarding the costs and benefits associated with securitizing the future Visa and MasterCard payment streams; consulting with Lead Counsel, the Claims Administrator, and N A Consulting LLC in resolving Class Member challenges (in particular, challenges to estimated PIN debit cash payments; but also challenges to signature debit and credit cash payments); responding to Class Member questions; and working directly with Class Members regarding PIN debit challenges. Each of these tasks has been engaged in for the benefit of the Class, and we anticipate that CRA will continue to play an important role in the distribution.
April 1, 2009 Shinder Declaration ¶ 18. CRA performed similar services between December 27, 2008 and May 2009. See June 3, 2009 Shinder Declaration ¶ 17.
Lead Counsel was billed $43,291.50 in fees and expenses by CRA for the time period from September 27 through December 26, 2008. April 1, 2009 Shinder Declaration ¶ 16. During that time, "CRA expended a total of 112.80 hours (constituting a deduction of 2.20 hours from the 115.00 hours that CRA set forth in its invoices . . .) in this representation." Id. ¶ 20. After reviewing CRA's invoices for that time period, Lead Counsel reduced its request for expenses by $258.00, "representing a deduction in fees (constituting 1.20 hours at a rate of $115/hour and 1.00 hour at a rate of $120/hour) for work done in connection with preparing invoices and expense reports."Id. ¶ 22. With this deduction, Lead Counsel seeks reimbursement for $43,033.50. Id.
For the time period from December 28, 2008 through May 4, 2009, Lead Counsel was billed $14,552.00 in fees and expenses by CRA.See June 3, 2009 Shinder Declaration ¶ 19. During that time, "CRA expended a total of 36.00 hours (constituting a deduction of .50 hours from the 36.50 hours that CRA set forth in its invoices . . .)." Id. The .50 deduction was also for work done in connection with preparing an invoice. Id. ¶ 21. With the .50 hour deduction, Lead Counsel seeks reimbursement for $14,492.00. Id.
CRA's billing rates for the period September 27, 2008 through May 4, 2009 ranged from an hourly rate of $115 and $120 for support staff to $420/hour for the work of Stephen Kletter, a Principal at CRA. The majority of the work during this period was performed by Mr. Kletter, at a rate of $420/hour. See April 1, 2009 Shinder Declaration ¶ 20; see also June 3, 2009 Shinder Declaration ¶ 19. Lead Counsel asserts that, "[w]hile CRA's billing rates are consistent with the rates charged by other economic firms of this caliber, CRA has discounted the hourly rate for Mr. Kletter for work performed on behalf of the Class," and that "[t]his rate ($420/hour) reflects a discount of $55/hour below Mr. Kletter's standard hourly rate (or more than eleven percent)." See April 1, 2009 Shinder Declaration ¶ 21; see also June 3, 2009 Shinder Declaration ¶ 20.
Clearly, CRA's efforts provided a significant benefit to the Class. Neither the number of hours billed nor CRA's hourly rates seem unreasonable to me. I therefore respectfully recommend that this Court authorize payment of $57,525.50, the entire amount requested for the time period September 27, 2008 through May 4, 2009.
N A Consulting LLC and Palma Advisors LLC
Lead Counsel seeks payment of the amount of $31,084.77 for work done and expenses incurred by Michael McCormack of N A Consulting LLC on behalf of the Class from October through December 2008. See April 1, 2009 Shinder Declaration ¶¶ 23-24, 28. "Effective January 1, 2009, [Mr.] McCormack (formerly of N A Consulting (or `Noblett Associates')), has been consulting with Lead Counsel and performing work on behalf of the Class through the consulting firm Palma Advisors LLC." June 3, 2009 Shinder Declaration n. 1. Lead Counsel accordingly seeks payment of the amount of $2,739.88 for the expenses of Palma Advisors LLC for work done by Mr. McCormack during the January through April 2009 time period. Id. ¶ 22.
Lead Counsel retained Mr. McCormack "to provide consulting services in support of the Plan of Allocation." April 1, 2009 Shinder Declaration ¶ 24. Before joining N A Consulting, "Mr. McCormack worked in merchant acquiring for the Wells Fargo bank."Id. At Wells Fargo, Mr. McCormack "developed an expertise concerning the various ways that acquirers and Visa capture and maintain merchant data" — an expertise that, according to Lead Counsel, "has proven critical to the execution of the Plan of Allocation and continues to provide a tremendous benefit to the Class." Id. Mr. Shinder explains (id. ¶ 25):
During the October-December 2008 time frame, Mr. McCormack worked extensively with Lead Counsel, the Claims Administrator, and CRA with final preparations for the mailing of PIN debit award notifications and preparing the case website for Class Member access to data for the PIN debit phase of the settlement distribution He also worked with the team and with Class Members in analyzing and resolving Class Member appeals and challenges (in particular, PIN debit distribution-related challenges, but also residual signature debit and credit distribution-related challenges), and responding to Class Member questions regarding PIN debit distributions, securitization, residual payments from the Settlement Funds, and offers by third parties to purchase Class Members' future distributions. He continued to (a) interface directly with Class Members that have submitted consolidated claim forms to ensure that their consolidation captures all of their store locations and divisions; (b) undertake necessary research when presented by Class Members with disputed or complicated claims (particularly when resolution of the issues related to those claims would benefit from his expertise and knowledge regarding how acquirers capture merchant information; (c) work directly with Lead Counsel and the Claims Administrator to ensure that each Class Member receives its optimal amount through the distribution process; and (d) work with the Visa Transactional Database in order to facilitate the ongoing distribution process.
During the January through April 2009 period:
Mr. McCormack worked with Lead Counsel, the Claims Administrator, and Class Members in analyzing and resolving Class Member appeals and challenges (in. particular, PIN debit distribution-related challenges), and responding to Class Member questions regarding PIN debit distributions, securitization, residual payments from the Settlement Funds, and the general claims administration process.
June 3, 2009 Shinder Declaration ¶ 24.
Lead Counsel asserts that "[e]ach of these tasks has been for the benefit of the Class" and that it "continue[s] to anticipate that . . . Mr. McCormack's efforts[] will remain an important part of the distribution team for the foreseeable future." April 1, 2009 Shinder Declaration ¶ 25; June 3, 2009 Shinder Declaration ¶ 24.
During the October through December 2008 time frame, Mr. McCormack expended a total of 108.33 hours in this representation, at an hourly rate of $286. N A Consulting "also incurred $102.39 in telephone expenses," constituting a deduction of $4.20 for telephone charges for which there was "insufficient backup." April 1, 2009 Shinder Declaration ¶¶ 27-28. Lead Counsel was accordingly billed $31,088.97 in fees and expenses by N A, and — with the $4.20 reduction — seeks payment of $31,084.77. Id. ¶¶ 23, 28. For January through April 2009, Palma billed Lead Counsel for 9.58 hours of Mr. McCormack's time, also at the hourly rate of $286, for a total of $2,739.88. See June 3, 2009 Shinder Declaration ¶¶ 26-27.
Based upon Lead Counsel's description, there is, in my opinion, no question but that Mr. McCormack's efforts benefited the Class. As in prior billing cycles, given the complicated tasks for which Lead Counsel sought Mr. McCormack's assistance, and given his prior experience, the number of hours he billed and his hourly rate seem reasonable to me. Accordingly, I respectfully recommend that this Court authorize payment of $31,084.77 to N A Consulting and $2,739.99 to Palma, the entire amounts requested by Lead Counsel on behalf of these entities. See Sterling Foster Co., 238 F. Supp. 2d at 490 ("Class Counsel are entitled to reimbursement for reasonable litigation expenses." (citingMiltland Raleigh-Durham, 840 F. Supp. at 239)).
Cannonade Capital LLC
Lead Counsel seeks payment of the amount of $443,100 for work done by Cannonade on behalf of the Class from October 2008 through April 2009. See April 1, 2009 Shinder Declaration ¶ 29 (seeking payment of $138,660 for Cannonade period October through December 2008); June 3, 2009 Shinder Declaration ¶ 28 (seeking payment of $304,440 for Cannonade for period January through April 2009).
According to Lead Counsel, "Joshua Slovik is the sole individual from Cannonade who has performed work on behalf of the Class." April 1, 2009 Shinder Declaration ¶ 30; June 3, 2009 Shinder Declaration ¶ 29. The total number of hours expended by Mr. Slovik in this representation during the October 2008 through April 2009 time period was 738.50 at a rate of $600/hour throughout. See April 1, 2009 Shinder Declaration ¶ 33 (231.10 hours billed, at hourly rate of $600, for October-December 2008 time period); June 3, 2009 Shinder Declaration ¶ 32 (507.40 hours billed, at hourly rate of $600, for January through April 2009 time period).
Lead Counsel describes Mr. Slovik's efforts during the October through December 2008 time period as follows (April 1, 2009 Shinder Declaration ¶ 31):
Mr. Slovik continued to focus his efforts in two areas: (a) managing the Settlement Funds (including reviewing and recommending investment alternatives; monitoring account performance and market conditions; assisting in the preparation of and reviewing the quarterly tax returns; monitoring and processing account disbursements; and reviewing invoices from firms working on the securitization); and (b) attempting to advance the securitization of the payments to the Class, including (i) reviewing and editing securitization documentation (consisting of the Offering Memorandum, Indenture, and Sale and Contribution Agreement); drafting and editing the motion to the Court regarding approval of the securitization with regard to MasterCard; (iii) working with the independent expert to update him on the process to date and on major issues relating to the securitization and to review and prepare analyses of Class Member positions on securitizing the remaining settlement payments; (iv) developing and coordinating the timeline and document preparation and review, and managing the responsibilities of Lead Counsel and Underwriter's Counsel; (v) managing the resignation of JP Morgan as Underwriter; (vi) managing the retention of Barclays and Citigroup as Underwriters and negotiating their engagement letter (including with regard to fees, indemnification, and conflict language, among other things); (vii) structuring the reserves to minimize requirement of funds; (viii) reviewing MasterCard's operating results and analyst reports and market conditions for the securitization; (ix) securing MasterCard's consent to Standard Poor's requirements; and (x) participating in resolving business issues related to the Amended and Restated Trust Agreement, Tax Opinion, Control and Sweep Agreement, Administration Agreement, and New York Enforceability Agreement.
According to Lead Counsel, Mr. Slovik engaged in similar efforts during the January through April 2009 time period (June 3, 2009 Shinder Declaration ¶ 30):
Mr. Slovik continued to focus his efforts in two areas: (a) managing the Settlement Funds (including reviewing and recommending investment alternatives; monitoring account performance and market conditions; assisting in the preparation of and reviewing the quarterly tax returns; monitoring and processing account disbursements; and reviewing invoices from firms working on the securitization); and (b) attempting to advance the securitization of the payments to the Class, including (i) reviewing and editing securitization documentation (consisting of the Offering Memorandum, Indenture, and Sale and Contribution Agreement); (ii) drafting and editing the motion to the Court regarding approval of the securitization with regard to MasterCard, as well as a proposed court order and declaration with supporting materials to accompany same; (iii) working with the independent expert to update him on the process to date and on major issues relating to the securitization and to review and prepare analyses regarding Class Members' cost of capital; (iv) developing and coordinating the timeline and document preparation and review, and managing the responsibilities of Lead Counsel and Underwriters' Counsel; (v) managing the retention of Barclays and Citigroup as Underwriters; (vi) structuring the reserve accounts to minimize requirement of funds; (vii) reviewing MasterCard's operating results and analyst reports and market conditions for the securitization; (viii) securing MasterCard's and the Underwriters' consent to the proposed court order regarding securitization; (ix) participating in resolving business issues related to Granting Security Interest (UCC filing), Tax Reporting Obligations, Tax Opinion, Control and Sweep Agreement, Administration Agreement, and New York Enforceability Agreement; (x) beginning the securitization process with regard to Visa (including reviewing Visa operating results; interviewing attorneys to serve as Issuer's Counsel; initiating the ratings process with Moody's and Standard Poor's by preparing a presentation, conducting a teleconference, and contacting Visa regarding its cooperation); (xi) reviewing and responding to objections concerning the MasterCard securitization (including assisting in drafting responses to all objections received; preparing an analysis for and participating in teleconferences with Wal-Mart regarding its objection; and assisting in developing alternative wording in the proposed court order to address MasterCard's objection); (xii) communicating with Class Members regarding securitization; and (xiii) coordinating Special Delaware Counsel's and Special Washington Counsel's legal opinions regarding security interest and UCC filing.
Based upon Lead Counsel's descriptions, it is, in my opinion, clear that Mr. Slovik's efforts benefited the Class. Given the complicated tasks Lead Counsel has relied upon Mr. Slovik to perform, the number of hours he billed seem reasonable to me. Finally, for the reasons set forth in prior Reports and Recommendations, Mr. Slovik's $600 hourly rate — negotiated with Lead Counsel and previously adopted by this Court — also seems reasonable to me. I therefore respectfully recommend that this Court authorize payment of $443,100.00 for work done by Cannonade on behalf of the Class from April to September 2008.
Apco Worldwide
Lead Counsel seeks payment of $3,663.75 for its media consultant, Apco, for work done and expenses incurred from January 2008 through March 2008. See April 1, 2009 Shinder Declaration ¶ 35 (seeking payment of $2,421.25 for Apco for period October through December 2008); June 3, 2009 Shinder Declaration ¶ 34 (seeking payment of $1,242.50 for Apco for period January through April 2009). Lead Counsel describes Apco as "a public relations firm that was hired by Lead Counsel to assist the class." Id. ¶ 35. "During the [October through December 2008] time period and at Lead Counsel's direction, Apco distributed two merchant advisories (in both Spanish and English) to inform the Class regarding (i) the mailing of notices of estimated cash payment awards for PIN debit damages and (ii) information pertaining to offers by third party entities that have contacted Class Members about purchasing their rights to future residual distributions from the Settlement Funds." April 1, 2009 Shinder Declaration ¶ 36. "During the [January through April 2009] time period and at Lead Counsel's direction, Apco distributed merchant advisories (in both Spanish and English) to inform the Class regarding the securitization of the remaining MasterCard payments to the Settlement Fund." June 3, 2009 Shinder Declaration ¶ 35. These efforts "facilitat[ed] Lead Counsel's efforts to keep the Class apprised of material events in the case" and thereby "benefited the Class." Id.; April 1, 2009 Shinder Declaration ¶ 36 (same).Lead Counsel asserts that, during the October 2008 through April 2009 time frame, Apco expended a total of 9.75 hours at hourly rates ranging from $75 to $425, and incurred total costs of $2,350. See April 1, 2009 Shinder Declaration ¶ 38 ("During the October-December 2008 period, Apco expended a total of 5.75 hours in this representation (including 0.50 hours at a professional assistant billing rate of $85/hour and 5.25 hours at a project assistant billing rate of $135/hour), and $1,670.00 in expenses in connection with preparing and releasing the merchant advisories over the news wires."); June 3, 2009 Shinder Declaration ¶ 37 ("During the January-April 2009 period, Apco expended a total of 4.00 hours in this representation (including 2.00 hours at an intern billing rate of $75/hour, 1.75 hours at a junior associate rate of $175/hour, and 0.25 hours at a rate of $425/hour for the work of Kent Jarrell, Senior Vice President), and $680.00 in expenses in connection with preparing and releasing the merchant advisories over the news wires.").
In my opinion, the foregoing services unquestionably benefited the Class. I therefore respectfully recommend that this Court order payment of the entire $3,663.75 requested. See Sterling Foster Co., 238 F. Supp. 2d at 490 ("Class Counsel are entitled to reimbursement for reasonable litigation expenses." (citingMiltland Raleigh-Durham, 840 F. Supp. at 239)).
Miscellaneous Costs and Expenses
For the period October through December 2008, Lead Counsel's miscellaneous costs and expenses — a combined total of $2,064.66 — fall into the following categories: ACTIVITY AMOUNT Court Filing Transcript Fees $25.00 Document Scanning $1.50 Facsimile $40.00 Federal Express $54.74 Messenger Service $50.88 Photocopies $15.60 Offsite Storage $338.70 PACER Research $63.92 Postage $0.42 Teleconference $272.50 Transportation Travel $1,120.30 Westlaw Research $81.10 For the period January through April 2009, Lead Counsel's miscellaneous costs and expenses — a combined total of $5,110.80 — fall into the following categories: ACTIVITY AMOUNT Document Scanning $18.42 Facsimile $221.25 Federal Express $144.68 Meals $45.37 Messenger Service $267.13 Photocopies $172.60 Offsite Storage $451.33 PACER Research $66.56 Postage $547.29 Teleconference $385.91 Travel Transportation $2,039.95 Westlaw Research $750.31 I respectfully recommend that this Court reimburse Lead Counsel for all of the foregoing expenses, for a total of $7,175.46. See In re Sterling Foster, 238 F. Supp. 2d at 490 ("Class Counsel are entitled to reimbursement for reasonable litigation expenses." (citing Miltland Raleigh-Durham, 840 F. Supp. at 239)).CONCLUSION
For the reasons set forth above, I respectfully recommend that this Court award Lead Counsel $450,654.06 in legal fees, an amount equal to 85% of the combined fee award Lead Counsel has requested for the period October 2008 through April 2009. I further respectfully recommend that this Court authorize the following additional payments: (1) $1,005,429.10 for the fees and expenses of the law firm of Brown Rudnick Berlack Israels LLP for the period July 2008 through April 2009; (2) $423,149.71 for the fees and expenses of the Orrick law firm for the period July 2008 through April 2009; (3) $44,261.09 for the fees and expenses of Richards, Layton Finger for the period June 2008 through April 2009; (4) $9,505.38 for the fees and expenses of Miller Nash LLP for the period April through May 2009; (5) $57,525.50 for the fees and expenses of CRA International, Inc. for the period October 2008 through April 2009; (6) $31,084.77 to N A Consulting LLC for the period October through December 2008; (7) $2,739.99 to Palma Advisors LLC for the period January through April 2009; (8) $443,100 for the fees and expenses of Cannonade Capital LLC for the period October 2008 through April 2009; (9) $3,663.75 for the fees and expenses of Apco Worldwide Inc. for the period October 2008 through April 2009; and (10) $7,175.46 for Lead Counsel's miscellaneous costs and expenses for the period October 2008 through April 2009.
Pursuant to Paragraph (g) of Judge Gleeson's February 17, 2004 Order, objections to the Special Master's report and recommendation must be filed within "ten business days, following service."