IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

GERARDO ARANDA, GRANT )

BIRCHMEIER, STEPHEN PARKES, and )

REGINA STONE, on behalf of themselves )

and classes of others similarly situated, )

)

Plaintiffs, )

)

v. ) Case No. 12 C 4069

)

CARIBBEAN CRUISE LINE, INC., )

ECONOMIC STRATEGY GROUP, )

ECONOMIC STRATEGY GROUP, INC., )

ECONOMIC STRATEGY, LLC, THE )

BERKLEY GROUP, INC., and VACATION )

OWNERSHIP MARKETING TOURS, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER (CORRECTED)

MATTHEW F. KENNELLY, District Judge:

In this class action, plaintiffs allege that defendants—Caribbean Cruise Line, Inc. 

(CCL), Vacation Ownership Marketing Tours, Inc. (VOMT), The Berkley Group Inc., and 

Economic Strategy Group and its affiliated entities (collectively ESG)—violated the 

Telephone Consumer Protection Act, 47 U.S.C. § 227, by placing millions of automated 

telephone calls to consumers without their consent. After roughly four years of hotly 

contested litigation, the parties settled the case days before trial. A little over a month 

ago, the Court entered an order of final approval of the settlement agreement. See

Aranda v. Caribbean Cruise Line, Inc., No. 12 C 4069, 2017 WL 818854, at *1 (N.D. Ill. 

Mar. 2, 2017). The agreement provides that defendants will establish a common fund,

in an amount no lower than $56 million and no higher than $76 million, from which class 

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members with approved claims will be paid. Individual class members will be paid $500 

per call received, unless the $76 million cap is reached, in which case they will receive a 

pro rata share of the fund. Plaintiffs' counsel, lawyers from Edelson PC (Edelson) and 

Loevy & Loevy (Loevy), have petitioned for an award of attorney's fees in an amount 

equal to one-third of the final common fund total, minus the costs of administering the 

fund and providing notice to the class. Defendants and one of the class members, 

Freedom Home Care, Inc., object to the size and structure of the requested fee award. 

For the reasons stated below, the Court grants plaintiffs' motion for attorney's fees, 

costs, and incentive awards but makes a fee award lower than plaintiffs have requested.

Discussion

The Court assumes familiarity with the background facts of the case, which the 

Court has discussed in a number of prior opinions. See, e.g., Aranda v. Caribbean

Cruise Line, Inc., 179 F. Supp. 3d 817, 820–22 (N.D. Ill. 2016). No party has objected 

to plaintiffs' request that each of the four plaintiffs acting as class representatives 

receive a $10,000 incentive award, and nobody has disputed plaintiffs' assertion that the 

class representatives actively engaged in the litigation by reviewing the complaint and 

other documents, responding to requests for information, and sitting for depositions. 

The Court concludes that $10,000 is a reasonable award for the time and effort those 

plaintiffs expended on behalf of the class. See Cook v. Niedert, 142 F.3d 1004, 1016 

(7th Cir. 1998). 

As mentioned above, in addition to incentive awards for the class 

representatives, plaintiffs have requested attorney's fees in an amount equal to onethird of the common fund, minus notice and administrative costs. Defendants and 

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Freedom Home Care object to the size and structure of the requested award. They 

argue that attorney's fees in similar cases usually comprise a smaller percentage of the 

common fund and that plaintiffs have failed to justify the award of a higher percentage in 

this case. In addition, defendants and Freedom Home Care contend that the flatpercentage structure of the requested award deviates from the "sliding scale" model 

courts in the Seventh Circuit often use to award attorney's fees for class action 

settlements, a model outlined by the Seventh Circuit in In re Synthroid Marketing 

Litigation, 264 F.3d 712, 721 (7th Cir. 2001) (Synthroid 1). 

Courts overseeing certified class actions "may award reasonable attorney's 

fees . . . that are authorized by law or by the parties' agreements." Fed. R. Civ. P. 

23(h). Defendants in this case have agreed to pay a reasonable fee award out of the 

settlement's common fund, up to a maximum of $24.5 million. In "common fund" cases

like this, plaintiffs' attorneys petition the Court to recover their fees out of the fund, and 

the Court determines the appropriate portion of the fund that plaintiffs' counsel may 

recover. Nationsbank of Georgia, N.A., 34 F.3d 560, 563 (7th Cir. 1994). To determine 

the reasonableness of counsel's fee requests in such cases, a court "must balance the 

competing goals of fairly compensating attorneys for their services rendered on behalf 

of the class and of protecting the interests of the class members in the fund." Skelton v. 

Gen. Motors Corp., 860 F.2d 250, 258 (7th Cir. 1988). 

In the Seventh Circuit, when determining the appropriate fee levels in commonfund cases, a court "must do [its] best to award counsel the market price for legal 

services, in light of the risk of nonpayment and the normal rate of compensation in the 

market at the time." Synthroid 1, 264 F.3d at 718. In the absence of a negotiated 

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agreement between the plaintiffs and their attorneys, the Seventh Circuit's marketbased approach requires the Court to "set a fee by approximating the terms that would 

have been agreed to ex ante, had negotiations occurred." Id. at 719. In addition to 

considering the risk of nonpayment and data about normal compensation rates, a court 

attempts to determine the market rate by looking to factors such as the quality of 

counsel's performance, the amount of work necessary to resolve the litigation, and the 

stakes of the case. Id. at 721.

A. General size and structure of the fee award

Plaintiffs argue that an award amounting to one-third of the net common fund 

accurately reflects the result of a hypothetical ex ante negotiation. Plaintiffs' counsel 

represent that Edelson, one of the two firms representing plaintiffs, regularly charges a 

contingency fee of at least one-third of the recovery, plus expenses, when it brings 

TCPA cases on behalf of individual plaintiffs. Professor Todd Henderson, one of 

plaintiffs' experts, reports that other attorneys charge between 40 and 45 percent of the 

recovery in such cases. According to plaintiffs, counsel's request of one-third of the 

common fund, without an accompanying request for payment of costs and expenses, is 

thus less than a standard rate for individual TCPA cases. This lower rate is 

unsurprising, they explain, because class actions allow for more efficient resolution of 

claims. Professor William Rubenstein, another of plaintiffs' experts, notes that counsel's 

requested rate of one-third would be higher than the average rate approved in 

consumer class actions in the Seventh Circuit, but plaintiffs contend that the aboveaverage rate is justified (and would be agreed to ex ante) because of the high value 

plaintiffs' lawyers generated in the case.

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Plaintiffs rely in large part on Professor's Henderson's expert report to establish 

that plaintiffs' attorneys generated better-than-average value for the class and should be

paid accordingly. Professor Henderson distinguishes between cases with high and low 

inherent values. In a case with high inherent value, the defendant or defendants are

solvent, their potential exposure is high, and liability is relatively obvious and easy to 

establish. Imagine, for example, a large multinational corporation whose widely sold 

product turns out to have a clear defect that injured millions of consumers. In such a 

case, the defendant likely would be willing to settle the case for a large amount soon 

after the filing of the complaint. For cases like that, plaintiffs argue that class members 

and their attorneys would agree to a lower fee in an ex ante negotiation because there 

is "no need to pay counsel to 'produce' a recovery that is there for the asking." 

Synthroid 1, 264 F.3d at 721. But in a case where there are apparent obstacles to 

recovering a significant sum (or any sum at all), plaintiffs argue, potential class 

members would be willing to pay a higher rate to a law firm that would produce a large 

recovery. In such cases, Professor Henderson explains, to the extent the class can 

obtain a high-value recovery, that value is generated by the work of the lawyers.

Professor Henderson identifies a number of characteristics of this case that 

indicate it is a "lawyer-generated-value" case. First, he notes that although the conduct 

giving rise to this case allegedly involved over 50 million calls placed to individuals 

across the country, only five TCPA cases were brought against defendants, three of 

which were consolidated into this case. Thus the relatively low level of interest from the 

plaintiffs' bar "suggests that most members of the . . . bar saw this litigation as too risky 

for their practices." Silverman v. Motorola Sols., Inc., 739 F.3d 956, 958 (7th Cir. 2013). 

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Similarly, only two firms served as class counsel, and the expertise of each firm 

(Edelson's expertise in TCPA cases and Loevy's expertise in conducting class action 

trials) appeared to complement the other's. According to Professor Henderson, this 

complementary collaboration between only two firms contrasts with cases in which a 

large number of firms with overlapping skill sets bring a case together, hoping to extract 

and share a significant portion of the case's inherent value. Unlike those cases, he 

says, this case is one in which the two firms worked together efficiently to generate 

value for the class. 

Professor Henderson also points to circumstantial evidence indicating that 

defendants, themselves, placed a low value on the case at the outset and in its early 

stages. Specifically, Professor Henderson notes that defendants were unwilling to offer 

any significant cash value to settle the case early on and only became willing to settle 

for a significant amount after a class had been certified and plaintiffs had survived 

motions to dismiss and two motions for summary judgment. This course of dealing 

suggests, according to Professor Henderson, that the case's value was not inherent but 

was generated over time through counsel's efforts. Finally, Professor Henderson 

argues, the quality of the settlement for individual class members—specifically, the fact 

that each approved claimant stands to gain hundreds of dollars from the settlement—

shows that the high settlement total is not simply the result of the size of the class, but 

reflects the value that counsel generated for the class by litigating the case until the eve 

of trial. Thus, according to Professor Henderson, plaintiffs in an ex ante bargaining 

situation would gladly agree to pay a high percentage for a large recovery in this lowinherent-value case. Professor Rubenstein reaches the same conclusion by 

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considering similar factors. See Rubenstein Decl. [dkt. no. 533-4] at 36–37 (discussing, 

among other factors, uncertainty of liability and settlement at outset of litigation, 

significance of monetary relief obtained for class, and length and contested nature of 

litigation).

Plaintiffs concede that "several courts in this District considering fee requests in 

TCPA cases have applied different [fee] structures, such as the declining marginal 

percentage scale used in In re Capital One Telephone Consumer Protection Act 

Litigation, 80 F. Supp. 3d 781, 803–06 (N.D. Ill. 2015) [(Holderman, J.)]." Pls.' Mot. for 

Attorneys' Fees at 17. The district court in Capital One, a TCPA class action that 

resulted in a $75.5 million settlement, modeled its award after the award made in In re 

Synthroid Marketing Litigation, 325 F.3d 974, 980 (7th Cir. 2003) (Synthroid 2). In 

Synthroid 2, the Seventh Circuit broke a class-action settlement fund into tiers or bands 

and awarded class counsel a decreasing percentage of each band: 30% of the fund's 

first $10 million, 25% of the next $10 million, 22% of the band from $20 million to $46 

million, and 15% of everything about $46 million. Synthroid 2, 325 F.3d at 980. The 

Seventh Circuit has explained the rationale behind this so-called "sliding scale" award 

structure as follows:

Many costs of litigation do not depend on the outcome; it is almost as 

expensive to conduct discovery in a $100 million case as in a $200 million 

case. Much of the expense must be devoted to determining liability, which 

does not depend on the amount of damages; in securities litigation 

damages often can be calculated mechanically from movements in stock 

prices. There may be some marginal costs of bumping the recovery from 

$100 million to $200 million, but as a percentage of the incremental 

recovery these costs are bound to be low. It is accordingly hard to justify 

awarding counsel as much of the second hundred million as of the first. 

The justification for diminishing marginal rates applies to $50 million and 

$500 million cases too, not just to $200 million cases.

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Awarding counsel a decreasing percentage of the higher tiers of recovery 

enables them to recover the principal costs of litigation from the first bands 

of the award, while allowing the clients to reap more of the benefit at the 

margin (yet still preserving some incentive for lawyers to strive for these 

higher awards).

Silverman, 739 F.3d at 959. And, as the court in Capital One added, the rationale the 

court in Silverman, a securities fraud case, "applies equally, if not more, to TCPA cases 

because nearly all of counsel's efforts are devoted to determining liability. Damages are 

fixed by statute." Capital One, 80 F. Supp. 3d at 803.

Plaintiffs argue that the sliding-scale approach is inappropriate in this case, 

pointing out that although the Seventh Circuit approved a sliding-scale award in 

Synthroid 1, the court recognized that "systems with declining marginal percentages are 

[not] always best." Synthroid 1, 264 F.3d at 721. A sliding-scale approach is not best, 

according to plaintiffs, for cases that have a low inherent value. Rather, they argue, the 

sliding-scale approach from cases like Capital One is the standard approach only for 

cases where plaintiffs' lawyers perform a relatively light amount of legal work and settle 

the case at an early stage for a relatively small percentage of the possible recovery on a 

per-person basis. In Capital One, for example, the case settled prior to a contested 

motion for class certification or summary judgment and after only limited discovery, and 

class members with approved claims received $34.60, Capital One, 80 F. Supp. 3d at 

789, well below the hundreds-of-dollars recovery that approved claimants are set to 

receive in this case. 

Plaintiffs contend that class members would prefer to pay a flat one-third rate for 

the high recovery in this case than to pay a lower, sliding-scale rate to receive a low 

recovery like that in Capital One. Plaintiffs point to an empirical studying conducted by 

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one of their experts, Professor Larry Chiagouris, as evidence that real people actually 

prefer such an arrangement. Plaintiffs also point to Judge Posner's remark in Synthroid 

1 that a sliding-scale approach can "create declining marginal returns to legal work, 

ensuring that at some point attorneys' opportunity cost will exceed the benefits of 

pushing for a larger recovery, even though extra work could benefit the client." 

Synthroid 1, 264 F.3d at 721. The sliding-scale arrangement thus leads to results like 

that in Capital One, plaintiffs suggest, where attorneys accept settlement offers for

relatively low recovery amounts per class member rather than proceeding toward trial in 

order to generate greater value. Potential class members who wish to incentivize 

aggressive litigation that would result in high recoveries would agree to a flat rate ex 

ante, plaintiffs argue.

As discussed in greater depth below, the Court agrees with plaintiffs and their 

experts that the unique circumstances of this case—in particular, the relatively low level 

of interest from the plaintiffs' bar and the late stage at which settlement occurred—

warrant a higher fee award than those granted in other TCPA class actions that resulted 

in settlement, such as Capital One. The Court disagrees, however, that the award 

should be as high as the one plaintiffs request or that there is a sufficient basis to depart 

from the sliding-scale structure, which appears to have become become the standard 

model for cases like this in the Seventh Circuit. Plaintiffs provide only one example of a 

recent, large class action settlement in this circuit where an award was not structured as 

a sliding scale: Silverman. In contrast, defendants and Freedom Home Care point to a 

number of examples of sliding-scale awards for cases in this district involving TCPA 

class-action settlements. See, e.g., Gehrich v. Chase Bank USA, N.A., 316 F.R.D. 215, 

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239 (N.D. Ill. 2016) (Feinerman, J.); Craftwood Lumber Co. v. Interline Brands, Inc., No. 

11-CV-4462, 2015 WL 2147679, at *1 (N.D. Ill. May 6, 2015) (St. Eve, J.); Wilkins v. 

HSBC Bank Nevada, N.A., No. 14 C 190, 2015 WL 890566, at *10 (N.D. Ill. Feb. 27, 

2015) (Holderman, J.); Capital One, 80 F. Supp. 3d at 804–05. 

In addition, in Silverman, the Seventh Circuit approved a flat-rate award only 

after providing the defense of the sliding-scale approach that the Court quoted above. 

The court noted, however, that no objector had raised the prospect of a sliding-scale 

structure in the district court. Silverman, 739 F.3d at 959. The court in Silverman also 

mentioned that no objector had presented the data showing that the 27.5% rate 

awarded "substantially exceeds the norm for large settlements." Id. Despite the strong 

policy rationale supporting the sliding-scale approach and the fact that the 27.5% flatrate award was "at the outer limit of reasonableness," the court approved the award 

"given the way the subject was litigated in the district court." Id. Thus, in a case like 

this one in which an objector and defendants have raised concerns about the size and 

structure of the award, Silverman does not appear to support plaintiffs' argument. 

Rather, the reasonableness of both the size and structure of plaintiffs' requested award 

is undermined by the Seventh Circuit's concern that fee awards should "allow[] the 

clients to reap more of the benefit at the margin" and Judge Easterbrook's comment that 

a 27.5% award represents the "outer limit of reasonableness." Id.; see also Capital 

One, 80 F. Supp. 3d at 803–04 ("[T]he data available on past awards in TCPA cases 

and other class actions show that the mean and median recovery for a $75.5 million 

TCPA case are between 20% and 24% of the settlement fund.").

The Court is also not persuaded that this case fits into the category of cases the 

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Seventh Circuit identified as those in which "declining marginal percentages are [not] 

always best." Synthroid 1, 264 F.3d at 721. In discussing such cases, Judge Posner 

described the possibility that declining marginal returns would lead attorneys to forego

engaging in the extra work needed to increase their clients' recovery because the 

opportunity costs of doing so would exceed the benefit to the lawyers of the larger 

recovery. Id. But based on plaintiffs' own representations, that concern was not 

present in this case. According to plaintiffs, "[u]p until the very end, Class Counsel were 

fighting to get anything more than $0 for the class." Pls.' Reply in Supp. of Attorneys' 

Fees at 11. Thus counsel would have had the same or virtually the same incentive to 

fight for that award whether they were receiving a flat rate or a sliding-scale rate. For 

this reason, the concern identified in Synthroid would not provide a reason for potential 

class members to deviate from the sliding-scale structure in an ex ante negotiation in 

this case. 

The Court also disagrees with plaintiffs that class members necessarily would 

accept a flat rate in this case because of its low inherent value or because of the 

possibility that counsel could generate a high recovery through aggressive litigation. It 

appears to be true that the plaintiffs' bar's interest in suing the defendants was limited, 

such that counsel would have been well positioned to bargain for a favorable fee 

structure. That said, the record does not suggest that counsel would have been 

negotiating in a completely non-competitive market. Plaintiffs and Professor Chiagouris

may be correct that class members would be willing to pay a higher, flat-rate percentage 

of a settlement fund in order to gain a larger absolute recovery. But in a hypothetical 

bargaining situation, well-informed class members would also be aware that the slidingCase: 1:12-cv-04069 Document #: 629 Filed: 04/10/17 Page 11 of 22 PageID #:14102
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scale structure is, as Professor Rubenstein says, "often used in Seventh Circuit cases," 

Rubenstein Decl. at 3, and likely would shop around to see if any other firm would be 

willing to take their case and pursue a large recovery for a sliding-scale fee. It is not 

clear that the hypothetical class members in this case would be faced with the binary 

choice between a high-percentage fee with a large recovery, on the one hand, and a 

sliding-scale fee for a small recovery, on the other. Just as hypothetical plaintiffs may 

be willing to accept a higher fee percentage for a larger absolute recovery, it is also 

likely, all else being equal, that they would prefer the sliding-scale approach to a higher 

flat rate if both hypothetical law firms were willing and able to pursue a large recovery. 

In short, although it is possible that a hypothetical bargain would result in an agreement 

for a flat rate, it seems no more probable than an agreement for a sliding-scale rate, and 

thus the Court sees no reason to depart from the sliding-scale approach that, as noted, 

appears to have become the standard model in this circuit for cases of this type.

B. Specific structure and size of the award

Given that the Court has determined that a sliding-scale structure is appropriate 

in this case, the question becomes how the recovery should be split into bands and 

what percentage of each band should go toward the fee award. Determining what 

numbers class members and attorneys would agree to for a hypothetical downward 

scaling fee arrangement is necessarily "more art than science." Capital One, 80 F. 

Supp. 3d at 804. As a starting place, however, the cases have established 30% as the 

benchmark percentage for the first band of recovery in sliding-scale arrangements. See 

Synthroid II, 325 F.3d at 980; Gehrich, 316 F.R.D. at 239; Craftwood, 2015 WL 

2147679, at *4; Wilkins, 2015 WL 890566, at *10; Capital One, 80 F. Supp. 3d at 804–

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05. As this Court has noted before, "attorney's fee awards in analogous class action 

settlements shed light on the market rate for legal services in similar cases." Kolinek v. 

Walgreen Co., 311 F.R.D. 483, 501 (N.D. Ill. 2015) (Kennelly, J.).

The parties disagree about whether, if a sliding-scale arrangement is used, the 

benchmark percentages should be adjusted upward to account for the high risk (or, to 

use Professor's Henderson's term, the low inherent value) of the case. In Capital One, 

for example, Judge Holderman applied a six-percentage-point risk premium because 

empirical evidence presented to the court in that case showed that "high risk" consumer 

class actions usually result in a percentage fee premium of six percentage points over 

"low and medium risk" cases. He determined that potential legal impediments to class 

certification and to establishing liability made the case a risky one. Capital One, 80 F. 

Supp. 3d at 806. Thus, the court in Capital One took the fee structure from Synthroid 2 

(30% for the first $10 million, 25% for the second $10 million, 22% for the band from 

$20 million to $46 million, and 15% for the remainder) and added six points to the

percentage applied to the first band of recovery while rounding down to an even 20% for 

the third band (36% for the first $10 million, 25% for the second $10 million, 20% for the 

band from $20 million to $45 million, and 15% for the remainder). The court declined to 

add the risk premium to bands other than the first one. It reasoned that sophisticated 

class members would have balked at doing so "because the risk factors present in [that] 

case related only to establishing liability and would not have affected Class Counsel's 

ability to achieve the additional damages recovery reflected in the second, third and 

fourth tiers." Id. at 807. This Court has also applied a six-point risk premium to the 30% 

benchmark in a TCPA case with a smaller total settlement ($11 million) where the risks 

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involved in establishing liability were "real and significant." Kolinek, 311 F.R.D. at 502.

Defendants and Freedom Home Care maintain that this case does not warrant a 

risk premium and that if a risk premium is applied, it should be confined to the first band, 

as in Capital One. They note that risk premiums were not applied, for example, in 

Gehrich, Craftwood, or Wilkins, and they contend that the risks the plaintiffs faced in 

Capital One and Kolinek are not present in this case. Defendants say that, unlike 

plaintiffs in this case, the plaintiffs in Capital One faced manageability concerns that 

posed a potential obstacle to class certification and that plaintiffs risked losing on 

summary judgment or at trial if they failed to rebut the defendant's defense that the 

plaintiffs' consented to the calls or if forthcoming FCC orders barred their claims. See 

Capital One, 80 F. Supp. 3d at 790–91. And defendants argue that this case is unlike 

Kolinek because the plaintiffs did not face "significant risks" associated with undertaking 

class representation. Kolinek, 311 F.R.D. at 502. 

According to defendants, plaintiffs overstate the level of risk in the case and 

understate its inherent value. They note that Edelson and Loevy filed separate cases in 

this district within days of each other, with a third group of firms filing suit a few months 

later in the Southern District of Florida (the Vigus case), and they argue that, once the 

cases were consolidated in this Court, the efforts by Edelson and Loevy to prevent the 

lawyers in Vigus from acting as class counsel demonstrate that the case had significant 

inherent value and was not as high-risk as plaintiffs assert. Defendants also contend 

that the risk in this case was reduced because the attorneys general in Washington and 

Maine, whose statements plaintiffs quote in the complaint, had already investigated the 

conduct at issue, and the Federal Trade Commission had already launched an

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investigation that would eventually result in a lawsuit and a consent judgment. Finally, 

defendants argue that the "type of potentially bankruptcy-level of exposure" defendants 

faced from the claims of willful TCPA violations increased the possibility of an "in 

terrorem settlement . . . that reduces Class Counsel's risk of non-payment." Capital 

One, 80 F. Supp. 3d at 805.

The Court agrees with defendants that plaintiffs are incorrect when they assert 

that "the inherent value of this case was effectively zero." Pls.' Mot. for Attorneys' Fees 

at 15. But the Court is convinced that the risks of non-recovery in this case were 

greater than those faced by the plaintiffs and their counsel in Capital One and Kolinek. 

To be sure, plaintiffs in this case did not face the identical risks present in Capital One

and Kolinek. But although the issue of plaintiffs' consent to the calls was not at issue in 

this case, as it was in Capital One, other difficult legal and factual issues did pose 

potential obstacles to plaintiffs' success at the case's outset. The difficulty in identifying 

class members, for example, especially given the absence of retained records regarding 

who was called, raised serious questions about the likelihood of class certification.1

Plaintiffs' success also depended critically on the difficult legal and factual question of 

defendants' vicarious liability, because success by the plaintiffs on that point was the 

only way they could impose liability on a defendant that had the financial wherewithal to 

satisfy an eight-figure judgment. 

As the Court has discussed, the fact that the case proceeded to the eve of trial 

 1 The Court notes that although defendants attempt to distinguish Capital 

One on the basis of the manageability issues in that case, defendants themselves 

argued at the class certification stage in this case that the "[m]anageability challenges . .

. would be enormous." Defs.' Mem. in Supp. of Mot. to Decertify at 13.

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and that defendants offered significant value in settlement only at that late stage 

indicates that defendants believed their prospects for escaping liability without settling 

were good. And as the Court has also discussed, defendants and Freedom Home Care 

have not rebutted plaintiffs' assertion that the plaintiffs' bar was relatively uninterested in 

this case, suggesting a belief that it was saddled with risk. Once they had already filed 

their cases, the fact that Edelson and Loevy sought to be the sole firms to act as class 

counsel in this case does not change the assessment of the case's risk, as that decision 

may have reflected a good-faith belief that their exclusive collaboration was the most 

efficient way to litigate the case. 

Regarding defendants' assertion that government involvement prior to the lawsuit 

reduced plaintiffs' risks, it simply does not appear that government activity had much 

effect on this case. The only government action brought with regard to the conduct in 

this case was filed after this lawsuit, did not name Berkley or VOMT as defendants, and 

resulted in a small consent judgment of $500,000. Finally, although the Court agrees 

that there was likely an in terrorem component to defendants' ultimate decision to settle 

the case for the amount they did, this is not a case where plaintiffs' "leverage . . . 

derives primarily from the magnitude of [the defendant's] liability." Wilkins, 2015 WL 

890566, at *11. The magnitude of potential liability provided plaintiffs with significant 

leverage, to be sure. But the settlement negotiation history2 reveals that this was 

insufficient to secure a significant offer from defendants at the litigation's early stages. 

 2 In this regard, the Court relies on the discussion of the settlement history 

contained in plaintiffs' brief. See Pls.' Mot. for Attorneys' Fees at 15. Defendants 

interposed no objection to plaintiffs' discussion of the settlement negotiations, nor do 

they dispute the details. 

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When plaintiffs did settle this case, their leverage derived in large part from their pre-trial 

success and the fact that they had advanced to the eve of trial.

Because of the relative lack of interest from other plaintiffs' attorneys and the fact 

that the case progressed as far as it did, the Court is persuaded that plaintiffs and their 

counsel faced materially greater risks in this case than those faced in the other recent 

TCPA class actions the parties have discussed. Thus the Court believes that at least a 

6% premium should be added to the first band of recovery and that class members 

would have agreed to pay at least that risk premium in a hypothetical negotiation.

Professor Rubenstein contends that in this case, based on "the degree of effort 

the attorneys would need to put in, the likelihood of success, and the risks associated 

with undertaking class representation," Kolinek, 311 F.R.D. at 502–503, a six-point 

premium should be applied to the Synthroid 2 scale at each band of recovery (for 

example, 36% for the first $10 million, 31% for the second $10 million, 28% for the band 

between $20 million and $46 million, and 21% for the remainder of the fund). In the 

alternative, he suggests that the recovery bands should be expanded, citing as a model 

the Seventh Circuit's discussion of a hypothetical agreement that granted counsel 35% 

of the first $20 million, 25% of the next $20 million, and 10% of the remainder. See 

Synthroid 2, 325 F.3d at 978.

Defendants and Freedom Home Care argue that applying a risk premium at each 

band would be inappropriate for the same reasons the courts in Capital One and 

Gehrich declined to do so. In Capital One, Judge Holderman declined to apply a risk 

premium at each band because plaintiffs' "risk existed only with regard to liability, not 

damages." Capital One, 80 F. Supp. 3d at 806. Thus, once plaintiffs overcame the 

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obstacles to establishing liability, "Class Counsel's ability to obtain a large recovery was 

no longer materially affected by that risk." Id. Similarly, Judge Feinerman opined in 

Gehrich that the "issue is not how hard the lawyers did or did not work; rather, it is how 

hard they did or did not work for each dollar of recovery, and that does indeed differ 

between the first large chunk and the rest of the settlement." Gehrich, 316 F.R.D. at 

239. But this case differs from those two in an important respect: both Capital One and 

Gehrich settled at an early stage, prior even to a contested class certification motion. 

See id. at 230 ("[T]he parties have not engaged in substantial motion practice or 

discovery[.]"); Capital One, 80 F. Supp. 3d at 791 (discussing "serious obstacles to 

class certification" should the plaintiffs proceed to trial). It is thus not clear that there 

was a significant difference between the work class counsel in this case did "for the first 

large chunk and the rest of the settlement" or that the risk of a non-recovery 

substantially decreased once they had filed the complaint or survived a motion to 

dismiss. Rather, as indicated above, defendants do not dispute plaintiffs' representation 

that "up until the very end, Class Counsel were fighting to get anything more than $0 for 

the class." 

The Court concludes, therefore, that it would be reasonable for plaintiffs in an ex 

ante bargaining situation in a case like this to recognize that counsel's efforts can 

increase the size of the settlement beyond "the first large chunk." In such a negotiation, 

for example, plaintiffs and their potential attorneys might consider that at each 

successive, successful stage of the litigation (for example, the denial of a motion to 

dismiss stage to certification of a class to the denial of summary judgment), the size of 

the expected payout increases as defendants' bargaining power decreases. A 

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defendant may, for example, be unwilling to settle for any amount initially because it 

believes the case will be dismissed, and following the denial of a motion to dismiss, the 

defendant may be willing to pay $10 million, but not more, because it still believes the 

class is unlikely to be certified. The defendant would be likely to offer more following 

class certification, and plaintiffs' counsel could reasonably expect to be awarded a 

considerable portion of that increased fund, which only became available following 

counsel's work to certify the class. But at the same time that counsel's success at each 

stage of the litigation may increase the expected value for his clients, counsel's own risk 

of nonpayment also decreases as another obstacle to recovery is removed. Plaintiffs in 

a hypothetical negotiation might, therefore, agree to pay a risk premium at each band in 

a high-risk case like this but insist that the size of the premium decrease at each band, 

as the risk of non-recovery decreases. The Court will apply this logic by awarding a 

decreasing risk premium to the standard sliding-scale structure.

Taking the award structure in Gehrich, Wilkins, Craftwood, and Capital One as a 

guide (30% for the first band, 25% for the second band, 20% for the third band, 15% for 

the fourth band), the Court applies a six-point premium to the first band, a five-point 

premium to the second band, a four-point premium to the third band, and a three-point 

premium to the fourth band. Thus, the Court awards class counsel 36% of the first $10 

million ($3.6 million), 30% of the second $10 million ($3 million), 24% of the band from 

$20 million to $56 million ($8.64 million), and 18% of the remainder. Although the 

"standard" third band spans from $20 million to $45 million (Capital One) or $46 million 

(Synthroid 2), the Court expands it to $56 million in this case, because that number 

represents the amount defendants have agreed to pay regardless of the number of 

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approved claims. This provides a rough guide to the portion of the recovery whose 

value is most clearly attributable to the work of the lawyers, as opposed to the size of 

the class. Cf. Synthroid 2, 325 F.3d at 980 (defining the boundaries of the third band 

($22 million to $46 million) by using aspects of the settlement the parties had agreed to 

ex post as benchmarks). That said, the Court also applies a risk premium of three 

points (from 15% to 18%) to the portion of the recovery from $56 million up to $74 

million (the settlement fund total less the $2 million estimated cost for notice and 

administration). Although that band may appear to be more analogous to the bands 

discussed in Capital One and Gehrich, where the material risks have been reduced and 

the counsel need not work as hard for each dollar of recovery, the Court concludes that 

a premium is still appropriate. Plaintiffs' ability to recover an amount above $56 million 

is at least partly attributable to the aforementioned establishment of vicarious liability, as 

well as the lawyers' efforts to identify claimants and assist them in substantiating their 

claims.

3

Thus, should the fund reach the $76 million cap, the Court intends to award 

counsel 18% of the remaining $18 million ($3.24 million). In sum, therefore, if the total 

settlement fund is at the $56 million floor, and $2 million goes toward notice and 

administration, the Court will award counsel $14.76 million ($3.6 million plus $3 million 

 3 The Court declines plaintiffs' suggestion to adopt a structure that pays 

34% of the first $56 million and 30% of the remainder. Using only two bands, with the 

first going up to $56 million, would conflict with the Seventh Circuit's suggestion to 

divide a large settlement into multiple tiers to "allow[] the clients to reap more of the 

benefit at the margin." Silverman, 739 F.3d at 959. In addition, plaintiffs do not explain 

where they derived the 34% and 30% numbers, and their proposal appears to be an 

attempt to arrive at a final figure close to their original request.

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plus 24% of $34 million, or $8.16 million), which amounts to 27.3% of the common fund, 

net of notice and administration costs. If the fund reaches the $76 million ceiling, the 

Court will award counsel $18.48 million ($3.6 million plus $3 million plus $8.64 million 

plus $3.24 million), which amounts to roughly 25% of the common fund, net of notice 

and administration costs. That final percentage is slightly higher than the 20% to 24% 

range that Judge Holderman considered to be the mean and median recoveries for 

TCPA cases of this value, but the Court has explained above why an above-average 

fee award is reasonable and appropriate in this case.4

The Court notes that it did not engage in a lodestar analysis in determining a 

reasonable fee award in this case. None of the parties advocated for the lodestar 

approach, and the Court does not think the lodestar analysis would be particularly 

helpful in this case. As Professor Henderson explains, the lodestar approach may be 

useful "where the quality of the output or the assessment of the lawyers' work is 

unclear, [in which case] the district court might want to focus on inputs instead of 

outputs." Expert Report of M. Todd Henderson [dkt. no. 533-3] at 14. In this case, 

however, it is clear that counsel provided exceptional representation for the class and 

produced high-value output, securing the "largest and strongest TCPA settlement in 

history." Id. at 27. Thus, although plaintiffs provided a lodestar analysis as a "cross 

check" on its percentage request, and despite the parties' disagreements about the 

appropriateness of plaintiffs' selected lodestar multiplier, the Court bases its analysis of 

 4 The Court also notes that plaintiffs have not requested reimbursement for 

expenses, which they represent to be over $400,000 at the time of their motion. The 

fact that the Court's award does not include expenses gives the Court even greater 

confidence that the slightly-above-average award is justified in this case. 

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the fee award in this case largely on factors other than the hours counsel worked, the 

reasonableness of their billing hours, and the appropriate multiplier rate.

Conclusion

For the reasons stated above, plaintiffs' motion for attorney's fees, costs, and 

incentive awards [dkt. no. 533] is granted in part and denied in part. The Court awards 

$10,000 to each of the class representatives. Because the process for approving 

claims is still ongoing, the Court awards at this time only those attorney's fees 

corresponding to the minimum amount defendants will be required to pay into the 

common fund. As discussed above, that fee amount is $14.76 million. Class counsel 

may petition the Court for the remainder of the fee award upon conclusion of the claimsapproval process.

________________________________

MATTHEW F. KENNELLY

 United States District Judge

Date: April 10, 2017

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