Brown v. Rita's Water Ice Franchise Co.

242 F. Supp. 3d 356, 2017 U.S. Dist. LEXIS 37676, 2017 WL 1021025
CourtDistrict Court, E.D. Pennsylvania
DecidedMarch 16, 2017
DocketCIVIL ACTION NO. 15-3509
StatusPublished
Cited by6 cases

This text of 242 F. Supp. 3d 356 (Brown v. Rita's Water Ice Franchise Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brown v. Rita's Water Ice Franchise Co., 242 F. Supp. 3d 356, 2017 U.S. Dist. LEXIS 37676, 2017 WL 1021025 (E.D. Pa. 2017).

Opinion

MEMORANDUM OPINION

Savage, Judge.

When counsel agree to the amount of an attorney fee award in a class action, it is tempting to sign off without conducting a thorough and comprehensive review of the request. Yet, the dynamics of the settlement process demand we resist the temptation. Defense counsel, eager to settle a case for a bottom-line figure, has no real interest in how that final payment is distributed among the class members and the attorneys. Class counsel’s interest in max[358]*358imizing compensation may collide with the interest of the class members who will receive insignificant or nominal sums. Thus, a court is obliged to conduct a full review of the fee request to ensure that the class is treated fairly and that the outcome of the case .will achieve the goals of the statutory remedies without putting the interests of the attorneys over the interests of the class members.

In this. Telephone Consumer. Protection Act class action, class counsel request one million dollars for attorney fees and expenses, one-third of the settlement fund, the maximum allowed under the Settlement Agreement. They also seek $5,000 to each of the two class representatives.

We shall grant the motion in part and deny it in part. We shall approve the requested expenses and class representative incentive awards. After conducting a rigorous assessment of the settlement and requested fees in light of the particular facts of this case, we shall reduce the proposed fee award and increase the size of the net fund available to the class members.

Background

On June 22, 2015, Sherry Brown filed a class action against Rita’s Water Ice .Franchise Company. The complaint alleged that Rita’s knowingly or willfully sent her unauthorized, automated text messages in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227.1 The text messages, known as “Cool Alerts,” announced when certain flavors of products such as water ice, custard,- and ice cream became available in the recipient’s local store. Brown alleged that the messages were generated using a list or database of telephone numbers which included numbers of persons who had not provided them to Rita’s.2 Brown claimed that she continued to receive Cool Alerts after she had repeatedly texted “STOP” in response to the texts’ instructions and had emailed Rita’s to stop.3

Three weeks after Brown filed her action, Ericka Newby filed a similar class action against Rita’s.4 Like Brown, Newby claimed that she continued to receive Cool Alerts after she repeatedly texted “STOP” in.response to the texts’ instructions and contacted Rita’s to.stop.5 Unlike Brown, Newby alleged that she had signed up to receive Cool Alerts on Rita’s’ website.6

Rita’s filed a motion to dismiss Brown’s complaint or, in the alternative, to strike Brown’s class claims.7 Before we ruled on the motion, Newby voluntarily dismissed her complaint.8 The next day, Brown amended her complaint to add Newby as plaintiff and the allegation that Rita’s gave allegedly deficient online disclosures when signing up for Cool Alerts.9

Following the pretrial conference, the parties agreed to mediate with a former magistrate judge.10 At a second mediation session held on December 28, 2015, the [359]*359parties reached a settlement framework.11 They signed the Settlement Agreement on March 14, 2016.12

On March 23, 2016, after a hearing, we granted preliminary approval of the settlement. We appointed Brown and Newby class representatives. Sergei Lemberg and Stephen F. Taylor, who represented Brown, and Steven L. Woodrow and Patrick H. Peluso, who represented Newby, were appointed class counsel.13

The Settlement Agreement, which requires Rita’s to fund a three-million-dollar settlement, allows class counsel to seek attorney fees and expenses up to one million dollars, one-third of the settlement fund.14 It provides maximum class representative incentive awards of $5,000 each for Brown and Newby.15 The remainder of the fund “less Settlement Administration Costs” will be distributed to the class.16 The net remainder will be divided into “Award Units.”17 Class members will receive either one or eleven Award Units depending on whether they received another Cool Alert after responding “STOP” to a previous text. “Settlement Class Members who were sent a ‘Cool Alerts’ text message. and who file a Valid Claim Form,” regardless whether they instructed Rita’s to stop, will each receive one Award Unit.18 “Settlement Class Members who received at least one ‘Cool Alerts’ text message after texting stop in response to. a previously ‘Cool Alerts’ text message and who file a Valid Claim Form” will each receive ten additional Award Units, for a total of eleven Award Units.19 The Settlement Agreement requires Rita’s to pay out the entire three-million-dollar fund. Only uncashed checks will revert to Rita’s.20 The Agreement also requires Rita’s to enhance disclosures by providing specific language on its Cool Alerts website.21

The settlement fund administrator identified 110,328 individual names and addresses of class members. Notices were mailed successfully to 106,493 persons.22-In response to the notices, 28,523 class members filed valid claims, representing a claims rate of 25.9%,23 almost double coun[360]*360sel’s projected 13.8% claims rate.24 Given this response, if counsel is awarded the full one million dollars, the 28,137 claimants in the first group will each receive $56.81 and the 386 claimants in the second group will each receive $625.01.25 When they negotiated the settlement figure, counsel anticipated the value of the individual claims at $90 and $1,000, respectively.26

From the three-million-dollar settlement fund, class counsel seeks one million dollars in attorney fees and expenses, and $10,000 in class representative incentive awards, the máximums allowed under the Settlement Agreement. If counsel’s request were approved, there would remain $1.84 million available for distribution to 28,523 claimants.27

At the final approval hearing, we requested counsel to submit detailed billing records for the purpose of conducting the lodestar cross-check. Brown and Newby filed a supplemental brief addressing attorney fees, expenses and incentive awards, which included the law firms’ billing records.28 We now consider the request for attorney fees.

Attorney Fees

Attorneys who create a settlement fund for class members are entitled to reasonable compensation from that fund. Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980).

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Bluebook (online)
242 F. Supp. 3d 356, 2017 U.S. Dist. LEXIS 37676, 2017 WL 1021025, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-ritas-water-ice-franchise-co-paed-2017.