Stanikzy v. Progressive Direct Auto Insurance Company

District Court, W.D. Washington·Decided June 2, 2022·No. 2:20-cv-00118·Unknown

Opinion

Honorable Barbara J. Rothstein AT SEATTLE AMEENJOHN STANIKZY; Plaintiff, No.: 2:20-cv-118 BJR v. ORDER GRANTING IN PART PROGRESSIVE DIRECT INSURANCE AWARD OF ATTORNEYS’ FEES COMPANY, Defendant. This matter comes before the Court on a Motion for Award of Attorneys’ Fees (“Motion”) brought by Plaintiffs through their attorneys, Stephen Hansen and Scott Nealey. The fees are associated with a class action lawsuit and its settlement, which the Court approved in a separate order. See Final Order Approving Settlement and Judgment of Dismissal (“Final Order”), Dkt. No. 77. Having reviewed the Motion, the Declarations and Exhibits submitted therewith, and the relevant authorities, the Court finds and rules as follows. Plaintiffs filed their class action complaint on January 24, 2020, asserting breach of contract and Washington Consumer Protection Act violations. Dkt. No. 1. In relevant part, Plaintiffs defined the putative class (and later, the settlement class) as: All Progressive insureds with Washington first party personal line policies issued in Washington State, who received compensation for the total loss of their own vehicles under their First Party (Comprehensive, Collision, and UIM) coverages, and who received a total loss valuation from Mitchell based upon the value of comparable vehicles which took a deduction for a “Projected Sold Adjustment.”

See Pls.’ Mot. for Class Cert. at 1-2, Dkt No. 37; Final Order ¶ 2. Plaintiffs claimed that “in breach of its insuring agreements with Plaintiffs and members of the settlement Class, Defendant improperly failed to compensate the Plaintiffs and Settlement Class Members . . . for the full value of their total loss claims” by applying an allegedly impermissible downward “projected sold adjustment” on such claims. Final Order, ¶ 1. In the year that followed, the parties conducted class discovery and engaged in some motions practice, including the filing of a Motion for Class Certification. Before the Court had the chance to rule on that certification motion, however, the parties advised the Court that they were engaged in settlement negotiations. They requested that the Court strike the pending certification motion, and the putative class was never certified.1 Instead, the settlement proposed certification of a class for settlement purposes; appointment of a claims administrator; and a process for notification and payment to eligible class members who submitted valid claims. See Settlement Agreement, Ex. 1 to Unopposed

1 In its Order Granting “Plaintiff’s Preliminary Motion for Approval of Class Action Settlement,” Dkt. No. 67, the Court certified a settlement class for settlement purposes only. Generally, references in this order to the “class” and “class members” are to this settlement class. Mot. for Prelim. Approval, Dkt. No. 65-1. After the Court reviewed and gave preliminary approval of the settlement, and the parties notified the settlement class members (none of whom filed objections), the Court held a hearing and concluded the settlement was reasonable. The Court gave final approval of that settlement in open court on March 30, 2022, and issued a written order of approval on May 23, 2022. Plaintiffs filed this Motion for Award of Attorneys’ Fees on March 1, 2022. Plaintiffs claim that class counsel is entitled to an award of $4,999,460.96 (hereinafter “$5 million”) in fees, and an additional $24,366.00 in costs. See Dkt. No. 68. The Settlement Agreement proposed a percentage-of-recovery method for calculating the fees request, and the $5 million figure represents 26% of the “Settlement Fund,” defined in the agreement as a $19,228,696.06 (hereinafter “$19.2 million”) “virtual common fund.” See Settlement Agreement, ¶¶ 32, 51. This $19.2 million amount was calculated to “reflect[] a reasonable estimate of the amounts not paid by Progressive due to the use of a “projected sold adjustment” in valuing total loss vehicles.” Unopposed Mot. for Prelim. Approval at 3. The claims deadline has now passed, and apparently 5,579 claimants—nearly 20% of the 28,447 identified class members—filed a claim. According to class counsel, the average claim is approximately $740. Thus, the Court estimates Defendant’s gross payment to the class (i.e., before a deduction for attorneys’ fees) will be approximately $4,128,460 (5,579 x $740) plus $30,000 to the three lead plaintiffs ($10,000 each); plus an estimated $100,000 in claims administration costs, for a total benefit conferred on the class of $4,258,460. During the hearing on final approval of the settlement, for reasons more fully set forth below, the Court questioned Plaintiffs’ method of calculating their fees request of $5 million, and ordered additional briefing. On April 22, 2022, Plaintiffs filed the Supplemental Submission on their fees request. Dkt. No. 76. Neither Defendant, nor any member of the class, has filed an objection to Plaintiffs’ fees request. On May 27, 2022, the Court held a hearing on Plaintiffs’ Motion for Award of Fees, at which the Court heard from Plaintiffs’ counsel in support of their request for the $5 million attorneys’ fees award. A. Standard for Reviewing Attorneys’ Fees Request Courts have an obligation to evaluate the reasonableness of a class action attorneys’ fees request. See Fed. R. Civ. P. 23(e); In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011) (“In awarding attorneys’ fees under Federal Rule of Civil Procedure 23(h), courts have an independent obligation to ensure that the award, like the settlement itself, is reasonable.”). A court must be particularly vigilant concerning the reasonableness of a fees award where, as here, a settlement agreement is negotiated prior to formal class certification. See id., 654 F.3d at 946–47 (“Prior to formal class certification, there is an even greater potential for a breach of fiduciary duty owed the class during settlement.”). Such scrutiny is required even where—indeed, especially where—no objections are lodged by the opposing party. Where parties have agreed to a fees award, courts must be alert to “subtle signs that class counsel have allowed pursuit of their own self-interests . . . to infect the negotiations.” See Staton v. Boeing Co., 327 F.3d 938, 960 (9th Cir. 2003). Reasonable fees need not be calculated with mathematical precision or rote application of formulae. See Washington Public Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1294 n. 2 (9th Cir.1994.) (“Because a reasonable fee award is the hallmark of common fund cases, and because arbitrary, and thus unreasonable, fee awards are to be avoided, neither [the lodestar nor the percentage] method should be applied in a formulaic or mechanical fashion.”). The law requires “only that fee awards be reasonable in the circumstances.” Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 967 (9th Cir. 2009) (citing In re Wash. Pub. Power Supply, 19 F.3d at 1294 n. 2). B. Whether Percentage-of-Recovery Is the Appropriate Method for Calculating Fees In a diversity action such as this, “[b]ecause Washington law governed the claim[s], it also governs the award of fees.” Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). In Washington, the percentage-of-recovery approach is used in calculating fees under the common fund doctrine. Bowles v. Washingto

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Stanikzy v. Progressive Direct Auto Insurance Company, (W.D. Wash. 2022).

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