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Beaver County Employees' Retirement Fund v. Tile Shop Holdings, Inc.

United States District Court, D. Minnesota

June 14, 2017

BEAVER COUNTY EMPLOYEES' RETIREMENT FUND; ERIE COUNTY EMPLOYEES' RETIREMENT SYSTEM; and LUC DE WULF, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,
v.
TILE SHOP HOLDINGS, INC.; ROBERT A. RUCKER; THE TILE SHOP, INC.; TIMOTHY C. CLAYTON; PETER J. JACULLO III; JWTS, INC.; PETER H. KAMIN; TODD KRASNOW; ADAM L. SUTTIN; WILLIAM E. WATTS; ROBERT W. BAIRD & CO. INCORPORATED; CITIGROUP GLOBAL MARKETS INC.; CJS SECURITIES, INC.; HOULIHAN LOKEY CAPITAL, INC.; PIPER JAFFRAY & CO.; SIDOTI & COMPANY, LLC; TELSEY ADVISORY GROUP LLC; and WEDBUSH SECURITIES, INC., Defendants.

          ORDER AWARDING ATTORNEYS' FEES AND EXPENSES

          ANN D. MONTGOMERY U.S. DISTRICT JUDGE

         This matter is before the Court on Class Counsel's Motion for Attorneys' Fees and Expenses and Reimbursement of Class Representatives' Costs and Expenses, filed on March 20, 2017 [Docket No. 389]. All capitalized terms used herein have the meanings set forth in the Stipulation of Settlement [Docket No. 381], dated January 13, 2017, and filed the same day. The Court having considered all papers filed and proceedings had herein and otherwise being fully informed of the matters hereto and good cause appearing therefore;

         THE COURT HEREBY FINDS AND CONCLUDES that:

         1. The Court has jurisdiction to enter this Order awarding attorneys' fees and expenses and over the subject matter of the Action and all parties to the Action, including all Class Members.

         2. Pursuant to and in compliance with Rule 23 of the Federal Rules of Civil Procedure and the Court's Order Preliminarily Approving Settlement and Providing for Notice and Settlement Hearing dated January 19, 2017 [Docket No. 384] (the “Preliminary Approval Order”), due and adequate notice was directed to all Class Members, including individual notice to those Class Members who could be identified through reasonable effort, advising them of Class Counsel's requests for attorneys' fees and expenses and reimbursement of costs and expenses to Class Representatives in connection with their representation of the Class, and of their right to object thereto, and a full and fair opportunity was accorded to Class Members to be heard with respect to the requests for attorneys' fees and expenses, and there were no objections to the requests for attorneys' fees and expenses.

         3. Plaintiffs' counsel request an attorney fee award of 24% of the Settlement Fund plus expenses in the amount of $913, 028.91, in addition to the interest earned thereon at the same rate and for the same period as that earned on that portion of the Settlement Fund until paid. When a district court has certified a class action, “the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement.” Fed.R.Civ.P. 23(h).

         4. An award of attorney fees is committed to the sound discretion of the district court. Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1990). In the Eighth Circuit, use of a percentage method of awarding fees is “well established.” Id. Although “[t]he Eighth Circuit has not expressly laid out factors that a district court must consider when determining whether a percentage of the common fund is reasonable, . . . this District has relied on factors set forth by other Circuits, including the following:

5. (1) the benefit conferred on the class; (2) the risk to which plaintiffs' counsel was exposed; (3) the difficulty and novelty of the legal and factual issues of the case; (4) the skill of the lawyers, both plaintiffs' and defendants'; (5) the time and labor involved; (6) the reaction of the class; and (7) the comparison between the requested attorney fee percentage and percentages awarded in similar cases.
6.
7. Khoday v. Symantec Corp., No. 2016 WL 1637039, at *9 (D. Minn. April 5, 2016) (quoting Yarrington v. Solvay Pharm., Inc., 697 F.Supp.2d 1057, 1062 (D.Minn. 2010).

         8. A. The Benefit to the Class

         9. The benefit to the Class is of significant importance in assessing the reasonableness of the attorneys' fee request. Hensley v. Eckerhart, 461 U.S. 424, 436 (1983). In this case, the parties were represented by skilled and experienced attorneys, the claims were pursued with the assistance of respected experts, and the Settlement was achieved through multiple mediation sessions with specialized mediators. The $9.5 million Settlement Fund represents a significant percentage of the Class' estimated damages, exceeding the median recovery of estimated damages in similar securities class actions settled in 2016. This factor supports the reasonableness of the percentage award.

         10. B. The Risk to Which Plaintiffs' Counsel was Exposed

         11. Plaintiffs' counsel, in taking this case on a contingent fee basis, was exposed to significant risk, including floating the cost of litigation to a trial-ready posture without any guarantee of eventually prevailing. See In re Xcel Energy, Inc., Sec., Derivative & “ERISA” Litig., 364 F.Supp.2d 980, 994 (D. Minn. 2005) (“Courts have recognized that the risk of receiving little or no recovery is a major factor in awarding attorney fees.”). Class Counsel have expended nearly $12 million in lodestar attorney fees as well as incurring more than $900, 000 in expenses. Securities cases are complex and difficult to prosecute, and the threat of litigating a case for years and recovering nothing is a very real possibility. See id. (“The risk of no recovery in complex cases of this sort is not merely ...


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