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From Antitrust Law Daily, September 3, 2015

$415M settlement in anti-poaching suit approved, but class counsel's fee request halved

By Jeffrey May, J.D.

Tech workers who claimed that their employers conspired to suppress employee compensation and to restrict employee mobility through "anti-poaching" agreements may soon be sharing a $415 million settlement. The federal district court in San Jose, California, has given final approval to the settlement, which would resolve class action claims against Adobe Systems, Inc., Apple Inc., Google Inc., and Intel Corporation. However, the court reduced class counsel’s attorney fees request by more than half, from over $81 million to $40 million (In re High-Tech Employee Antitrust Litigation, September 2, 2015, Koh, L.).

The current $415 million settlement, which follows approval of earlier settlements providing $20 million from Intuit, Inc., Lucasfilm Ltd., and Pixar, was fair, adequate, and reasonable, according to the court. Thus, the total settlements achieved in the action would exceed 14 percent of the plaintiffs’ proposed single damages estimate of approximately $3 billion. The money will be allocated based upon each class member’s total base salary received during the alleged conspiracy period. It is estimated that the average class member will receive approximately $5,770.

The current settlement is significantly higher than a $324.5 million settlement with Adobe, Apple, Google, and Intel that was denied preliminary approval in August 2014. The earlier settlement amount was found to fall below the range of reasonableness and the class members would have recovered proportionally less from the remaining defendants than from the earlier settlement with Pixar, Lucasfilm, and Intuit. The defendants had filed a mandamus petition with the Ninth Circuit seeking an order vacating the denial of preliminary approval. That petition was dismissed in light of the current settlement.

Positive reaction of the class. The positive reaction to the current settlement from class members supported approval, in the court's view. While there were objectors to the $415 million settlement, these individuals numbered only 11 out of 64,466 class members. Further, the six objectors who questioned the size of the settlement did not adequately take into account the risks and delays involved in proceeding to trial, according to the court. Objectors failed to convince the court that the settlement was not enough to punish the defendants for their wrongdoing. Another objector's contention that the case should proceed to trial, regardless of any settlement amount or potential recovery at trial, was rejected as "arguably adverse to the interests of the Class."

Attorney fees, costs. Class counsel sought $81,125,000 in attorney fees, which was about 19.5% of the settlement fund, as well as nearly $1.2 million in unreimbursed expenses and $160,000 in service awards for each of the class representatives. In a separate order, the court reduced the attorney fee award to $40,043,932.50 for class counsel. It also granted a $778,379.25 award for counsel for Michael Devine, one of the class representatives who had objected to the preliminary settlement. Thus, the total attorney fee award amounted to $40,822,311.75, which was 9.8 percent of the $415 million settlement or 10.5 percent of the $435 million combined settlements. The request for $1.2 million in unreimbursed expenses was approved as reasonable.

Class counsel and Devine's counsel advocated for application of the percentage-of-recovery method for determining the fee award. Although class counsel’s proposed percentage recovery of 19.5 percent was below the Ninth Circuit’s 25 percent benchmark for a reasonable fee award, the court found that justice would be best served by applying the lodestar method. Thus, the court tied the fee awards for class counsel and Devine's counsel to the actual hours they reasonably expended on this litigation and then selected a reasonable "multiplier."

Class counsel's requested attorney fees would yield a lodestar multiplier of 4.46 and even higher when an earlier fee award of $5 million from the Intuit, Lucasfilm, and Pixar settlements was factored in, based on an average hourly rate of just over $500 and 36,215 hours spent on the litigation. The lodestar multiplier for Devine's attorneys was 8.7 with an average hourly rate around $566 and 916.20 hours spent on the litigation. The court accepted as "presumptively reasonable" the lodestar figures of $18,201,787.50 for class counsel and $518,919.50 for Devine's attorneys. Noting that allowing a multiplier of 4.46 would be unusual for a $415 million settlement, the court decided that a positive multiplier of 2.2 was appropriate for class counsel based on the facts and circumstances of the case. In addition, a positive multiplier of 1.5 was deemed appropriate for Devine's counsel, who joined the case after discovery concluded a class was certified. The court also noted that Devine's counsel, unlike class counsel, did not advance millions of dollars in expenses and did not assume the same risk of nonpayment. A percentage-of-recovery cross-check was conducted, and the awards were found to be reasonable.

Service awards for class representatives. The requested $160,000 service awards for class representatives were deemed excessive. While Devine's counsel has sought $160,000 for Devine from the beginning, class counsel increased the amount sought from an original request of $80,000 per class representative when moving for preliminary approval of the settlement. The court concluded that a $120,000 service award was reasonable for Devine and the remaining representatives were entitled to $80,000.

The case is No. 11-CV-02509-LHK.

Attorneys: Christina H Sharp (Girard Gibbs LLP) for Michael Devine. Andrew Michael Purdy (Joseph Saveri Law Firm), Anne Brackett Shaver (Lieff, Cabraser, Heimann & Bernstein LLP), Eric L. Cramer (Berger & Montague, P.C.), and Robert G. Eisler (Grant & Eisenhofer P.A.) for Mark Fichtner, Siddharth Hariharan, and Daniel Stover. Robert Addy Van Nest (Keker & Van Nest LLP) for Adobe Systems Inc. George A. Riley (O'Melveny & Myers LLP) for Apple Inc. Anne M. Selin (Mayer Brown LLP) for Google Inc. Gregory P. Stone (Munger Tolles & Olson LLP) for Intel Corp.

Companies: Adobe Systems Inc.; Apple Inc.; Google Inc.; Intel Corp.; Pixar Animation Studios; Intuit Inc.; Lucasfilm Ltd.

MainStory: TopStory Antitrust CaliforniaNews

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