Preview
FILED: KINGS COUNTY CLERK 04/10/2023 06:18 PM INDEX NO. 511490/2021
NYSCEF DOC. NO. 53 RECEIVED NYSCEF: 04/10/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
------------------------------------------------------------ X
LISA SIMMONS and KELLY PERTERSON-
SMALL, individually and on behalf of all others
similarly situated,
Index No.: 511490/2021
Plaintiff,
MEMORANDUM OF LAW IN
-against- SUPPORT OF PLAINTIFFS’
MOTION FOR AWARD OF
ASSISTCARE HOME HEALTH SERVICES, ATTORNEYS’ FEES,
LLC, d/b/a/ Preferred Home Care of New REIMBURSEMENT OF
York/Preferred Gold, EXPENSES, AND SERVICE
Defendant. AWARDS TO CLASS
REPRESENTATIVE
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ......................................................................................................... iv
INTRODUCTION .......................................................................................................................... 1
FACTUAL BACKGROUND ......................................................................................................... 3
A. PROCEDURAL HISTORY................................................................................................ 3
B. SUMMARY OF SETTLEMENT ....................................................................................... 5
1. Settlement Benefits .................................................................................................... 5
i. Monetary Relief .................................................................................................... 6
a. Claim A: Compensation for Ordinary Losses ................................................ 6
b. Claim B: Compensation for Extraordinary Losses ........................................ 7
ii. Credit Monitoring and Identity Theft Protection ................................................. 7
iii. Data Security Measures ....................................................................................... 8
iv. Release ................................................................................................................. 8
v. Claims Administration ......................................................................................... 8
ARGUMENT .................................................................................................................................. 8
A. THE FEE REQUEST IS FAIR AND REASONABLE
AND SHOULD BE APPROVED ...................................................................................... 8
B. THE FEES REQUESTED BY CLASS COUNSEL ARE WELL WITHIN
THE RANGE OF FEES APPROVED BY SECOND CIRCUIT COURTS. ................... 12
C. PLAINTIFF’S REQUEST FOR APPROVAL OF REIMBURSEMENT OF
LITIGATION EXPENSES AND ATTORNEYS’ FEES IS FAIR REASONABLE
AND SHOULD BE GRANTED. ..................................................................................... 14
1. The Risk of Litigation .............................................................................................. 14
2. Whether Counsel Had the Benefit of a Prior Judgement ......................................... 16
3. Standing at the Bar of Counsel for Plaintiffs and Defendant.................................... 16
4. The Magnitude and Complexity of Litigation. ......................................................... 17
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5. The Case History and the Responsibility Undertaken by Class Counsel ................ 17
6. The Amount Recovered ........................................................................................... 18
7. The Knowledge The Court Has Of The Case’s History And The Work
Done By Counsel Prior To Trial, And What Would Be Reasonable For
Counsel To Charge A Victorious Plaintiff............................................................... 18
D. THE REQUESTED ATTORNEYS’ FEES ARE ALSO REASONABLE
UNDER A LODESTAR CROSS-CHECK ...................................................................... 20
E. CLASS COUNSEL’S REQUESTED COSTS ARE REASONABLE,
INCIDENTAL TO LITIGATION AND SHOULD BE APPROVED. ............................ 21
F. PLAINTIFFS’ REQUESTED SERVICE AWARDS ARE JUSTIFIED
AND SHOULD BE APPROVED. ................................................................................... 22
CONCLUSION ............................................................................................................................. 22
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TABLE OF AUTHORITIES
CASES PAGE(S)
Bear Stearns Cos. v. Jardine Strategic Holding, Ltd.,
N.Y.L.J., Aug. 7, 1991, at 22, col. 3 (Sup. Ct., New York County) ........................................... 9
Beckman v. KeyBank, N.A.,
293 F.R.D. 467 (S.D.N.Y. 2013) ............................................................................ 14, 17, 21, 22
Carson v. Am. Brands, Inc.,
450 U.S. 79 (1981) .................................................................................................................... 15
Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C.,
504 F.3d 229 (2d Cir. 2007)...................................................................................................... 13
Contreras v. Dania Marina, Inc. d/b/a Marina Del Rey Caterers,
Index No. 54536/2018, NYSCEF No. 54 (Sup. Ct. Westchester Cnty. Oct. 3, 2019) ............. 13
Cox v. Microsoft Corp.,
26 Misc. 3d 1220(A) (Sup. Ct. N.Y. Cnty. 2007) .................................................................... 22
Dornberger v. Metropolitan Life Ins. Co.,
203 F.R.D. 118 (S.D.N.Y. 2001) .............................................................................................. 22
Faican v. Rapid Park Holding Corp.,
No. 10-cv-1118, 2010 WL 2679903 (E.D.N.Y. July 1, 2010).................................................. 12
Fernandez v. Legends Hospitality, LLC,
2015 WL 3932897 (Sup. Ct. N.Y. Cnty. June 22, 2015) .......................................................... 13
Fiala v. Metro. Life Ins. Co.,
899 N.Y.S.2d 531 (Sup. Ct. N.Y. Cnty. 2010) ......................................................................... 14
Fleisher v. Phoenix Life Ins. Co.,
2015 WL 10847814 (S.D.N.Y. Sept 9, 2015)........................................................................... 19
Fox v. Iowa Health Sys.,
2021 WL 826741 (W.D. Wis. Mar. 4, 2021) ............................................................................ 15
Frank v. Eastman Kodak Co.,
228 F.R.D. 174 (W.D.N.Y. 2005)......................................................................................... 9, 19
Friar v. Vanguard Holding Corp.,
125 A.D.2d 444 N.Y.S. 2d 374 [1986]) ...................................................................................... 9
Gevaerts v. TD Bank,
2015 WL 6751061 (S.D. Fla., Nov. 5, 2015)............................................................................ 14
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Goldberger v. Integrated Res. Inc., 209 F.3d 43 (2d Cir. 2000)......................................... 9, 10, 11
Gordon v. Chipotle Mexican Grill, Inc.,
No. 17-cv-01415-CMA-SKC, 2019 WL 6972701 (D. Colo. Dec. 16, 2019) ........................... 16
Hammond v. The Bank of N.Y. Mellon Corp.,
2010 WL 2643307 (S.D.N.Y. June 25, 2010) .......................................................................... 15
Hayes v .Harmony Gold Mining Co.,,
2011 WL 6019219 (S.D.N.Y. 2011), aff'd 509 F. App'x 21 (2d Cir. 2013) ............................. 13
In re Dime Sav. Bank,
MDL 846, CV 89-2189, 1994 WL 60884 (E.D.N.Y. Feb. 23, 1994) ....................................... 13
In re Dreyfus Aggressive Growth Mut. Fund Litig.,
2001 WL 709262 (S.D.N.Y. June 22, 2001) ............................................................................ 14
In re EVCI Career Colls. Holding Corp. Sec. Litig.,
No. 05-cv-10240, 2007 WL 2230177 (S.D.N.Y. July 27, 2007) .............................................. 11
In re Gilat Satellite Networks, Ltd.,
CV-02-1510 (CPS)(SMG), 2007 WL 2743675 (E.D.N.Y. Sept. 18, 2007) ............................. 13
In re Global Crossing Sec. & ERISA Litig.,
225 F.R.D. 436 (S.D.N.Y. 2004) .............................................................................................. 11
In re Hannaford Bros. Co. Customer Data Sec. Breach Litig.,
293 F.R.D. 21 (D. Me. 2013) .................................................................................................... 16
In re Hudson’s Bay Co. Data Sec. Incident Consumer Litig.,
18-cv-8472-PKC, 2022 WL 2063864 (S.D.N.Y. June 6, 2022) ......................................... 12, 14
In re Indep. Energy Holdings PLC Sec. Litig.,
302 F. Supp. 2d 180 (S.D.N.Y.2003)........................................................................................ 21
In re Interpublic Sec. Litig.,
Nos. 02-cv-6527, 03-cv-1194, 2004 WL 2397190 (S.D.N.Y. Oct. 26, 2004) .......................... 10
In re Lloyd's Am. Trust Fund Litig,
No. 96 Civ. 1262, 2002 WL 31663577 (S.D.N.Y. Nov. 26, 2002) .......................................... 21
In re Metlife Demutualization Litig.,
689 F. Supp. 2d 297 (E.D.N.Y. 2010) ...................................................................................... 17
In re Nasdaq Market-Makers Antitrust Litig.,
187 F.R.D. 465 (S.D.N.Y. 1998) .............................................................................................. 17
In re Prudential Sec. Inc. Ltd. P'ship Litig.,
912 F. Supp. 97 (S.D.N.Y.1996) .............................................................................................. 17
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In re Sumitomo Copper Litig.,
74 F. Supp. 2d 393 (S.D.N.Y. 1999)................................................................................... 10, 13
In re Union Carbide Corp., Consumer Prods. Bus. Sec. Litig.,
724 F. Supp. 160 (S.D.N.Y. 1989) ..................................................................................... 10, 11
James v. China Grill Mgmt., Inc.,
No. 18 Civ. 455, 2019 WL 1915298 (S.D.N.Y. Apr. 30, 2019) ............................................... 21
Josephs v. United Hebrew of New Rochelle Certified Home Health Agency, Inc.
d/b/a United Hebrew Geriatric Center,
Index No. 50926/2019, NYSCEF No. 28 (Sup. Ct. Westchester Cnty. June 9, 2020) ............ 13
Lopez v. The Dinex Group, LLC,
2015 WL 5882842 (Sup. Ct. N.Y. Cnty. Oct. 06, 2015) .............................................. 10, 13, 20
Maley v. Del Glob. Techs. Corp.,
186 F. Supp. 2d 358 (S.D.N.Y. 2002)....................................................................................... 19
Mancia v. HSBC Securities (USA) Inc.,
2016 WL 833232 (Sup. Ct. N.Y. Cnty. Feb. 19, 2016) ............................................................ 13
Massiah v. MetroPlus Health Plan, Inc.,
2012 WL 5874655 (E.D.N.Y. Nov. 20, 2012) .................................................................... 12, 22
Matter of Karp,
145 A.D.2d 208 (1st Dep’t 1989) ............................................................................................. 10
Matter of Rahmey,
95 A.D.2d 294, 466 N.Y.S.2d 350 (1983) .................................................................................. 9
Michels v. Phoenix Home Life Mut. Ins.,
1997 WL 1161145 (Sup. Ct. N.Y. Cnty. Jan 7, 1997) ................................................................ 9
Milton v. Bells Nurses Registry & Emp't Agency, Inc.,
2015 WL 9271692 (Sup. Ct., Kings County, Dec. 21, 2015) ............................................. 20, 22
Perez v. Rash Curtis & Associates,
2020 WL 1904533 (N.D. Cal. Apr. 17, 2020) .......................................................................... 20
Phillips Petroleum Co. v. Shutts,
472 U.S. 797 (1985) .................................................................................................................. 19
Rodriquez v. It's Just Lunch Int'l,
No. 07-cv-09227, 2020 WL 1030983 (S.D.N.Y. Mar. 2, 2020) ............................................... 18
Ryan v. Volume Services America, Inc.,
2013 WL 12147011 (Sup. Ct. N.Y. Cnty. Mar. 07, 2013) ....................................................... 13
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Savoie v. Merchants Bank,
166 F.3d 456 (2d Cir. 1999)................................................................................................ 10, 11
Sewell v. Bovis Lend Lease, Inc,
2012 WL 1320124 (S.D.N.Y. April 16, 2012) ................................................................... 10, 21
Sheppard v. Consolidated Edison Co. of N.Y.,
2002 WL 2003206 (E.D.N.Y.2002)............................................................................................ 9
Silberblatt v. Morgan Stanley,
524 F.Supp.2d 425 (S.D.N.Y.2007)............................................................................................ 9
Strougo ex rel. Brazilian Equity Fund, Inc. v. Bassini,
258 F. Supp. 2d 254 (S.D.N.Y. 2003)....................................................................................... 10
Taft v. Ackermans,
No. 02-cv-7951, 2007 WL 414493 (S.D.N.Y. Jan. 31, 2007) .................................................. 16
Third Circuit Task Force,
108 F.R.D. 237, 258 .................................................................................................................. 11
Varljen v. H.J. Meyers & Co.,
No. 97-cv-6742, 2000 WL 1683656 (S.D.N.Y. Nov. 8, 2000)................................................. 11
Wal-Mart Stores, Inc. v. Visa U.S.A., Inc.,
396 F.3d at 122 (2d Cir. 2005) .................................................................................................... 9
Warren v. Xerox Corp.,
01-CV-2909 (JG), 2008 WL 4371367 (E.D.N.Y. Sept. 19, 2008) ........................................... 13
Yuzary v. HSBC Bank USA, NA,
2013 WL 5492998 (S.D.N.Y. Oct. 2, 2013) ............................................................................. 20
Zink v. First Niagra Bank, N.A.,
13-cv-01076, 2016 WL 7473278 (W.D.N.Y. Dec. 29, 2016) .................................................. 12
RULES
CPLR 909................................................................................................................................ 14, 18
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Plaintiffs Lisa Simmons and Kelly Peterson-Small (“Plaintiffs”) submit this Memorandum
of Law in Support of Plaintiffs’ Motion for Award of Attorneys’ Fees, Reimbursement of
Expenses, and Service Awards to Class Representative.
INTRODUCTION
From January 8, 2021 through January 10, 2021, Defendant Assistcare Home Health
Services, LLC, d/b/a Preferred home Health Care of New York/Preferred Gold (“Preferred home”
or “Defendant”) was the victim of a data incident through which unauthorized parties gained access
to the files of approximately 92,283 current and former patients and employees, including
Plaintiffs, potentially compromising their personally identifiable information (“PII”) and protected
health information (“PHI”). This class action arises out of Defendant’s alleged failure to safeguard
the PII that it collected and maintained from and for Plaintiff and class members. Defendant denies
all liability and wrongdoing.
After extensive arms’ length negotiations, the parties reached a settlement that is fair,
adequate, and reasonable. The Settlement Agreement, if approved, will provide Class Members
with substantial potential relief, including: (a) reimbursement of up to $400 of out-of-pocket
expenses per class member, including payment for up to four hours of attested lost time,
compensable at the rate of $20 per hour if at least one full hour was spent dealing with the Data
Breach; (b) reimbursement of up to $3,500 for extraordinary losses not covered by one of the out-
of-pocket reimbursement categories; and (c) one-year of credit monitoring and identity theft
protection services for all members of the Settlement Class, and an additional one year of credit
monitoring (for a total of two years offered) for Settlement Subclass Members. 1 Plaintiffs strongly
The Settlement Agreement (“Agreement”) in its entirety is attached as Exhibit A to Plaintiff’s Memorandum of
1
Law in Support of Plaintiff’s Unopposed Motion for Preliminary Approval of Class Action Settlement. (NYSCEF
No. 46-2). Capitalized terms shall have the same meaning as assigned to them in the Settlement Agreement.
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believe the settlement is favorable to the Settlement Class. 2 Defendant’s and/or its insurer’s
maximum payment for categories (a) and (b), out-of-pocket losses and extraordinary losses, will
be $1,000,000, and payments to Settlement Class Members who make Valid Claims shall be
reduced on a pro rata basis according to the number of claims made if the total exceeds the overall
$1,000,000 cap. Payment for category (c), credit monitoring, will be paid by defendant separate
and apart from these funds.
Pursuant to the Settlement Agreement and the Court’s inherent authority, Gary Klinger
(“Class Counsel”) respectfully submits this Motion for Award of Attorneys’ Fees, Reimbursement
of Expenses, and Service Awards for Class Representative (“Fee Application”). First, Class
Counsel request that the Court award $235,000.00 for payment of attorneys’ fees and expenses
(“Fee Request”). This represents just 23.5% of just the $1,000,000 cap reimbursement of lost time
and expenses available to the class, and less than one percent of the total benefits available to the
class when you factor in the value of the credit monitoring services Defendant will make available
to each Settlement Class Member, the value of the security enhancements, the cost of settlement
administration, and the attorneys’ fees (all of which will be paid by Defendant separate and apart
from the other monetary relief). As detailed more fully herein, the factual and legal complexity of
these claims required extensive investment of labor and advancement of costs by counsel. The
work performed advancing the claims of Class Members – on a fully contingent basis – carried
significant risk, and counsel performing that work, including Class Counsel, forwent other
opportunities and dedicated themselves to this case for much of the past year.
See the Declaration of Gary M. Klinger in Support of Plaintiff’s Unopposed Motion for Preliminary Approval of
2
Class Action Settlement, attached as Exhibit 2 to Plaintiff’s Unopposed Motion for Preliminary Approval of Class
Action Settlement. (the “Klinger MPA Dec.) (NYSECF No. 46-2). at ¶ 82.
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In addition, Class Counsel request that the Court approve a service award for each Class
Representative, Plaintiff Simmons and Plaintiff Peterson-Small, in the amount of $1,500 each.
This request is modest and is fully justified by the law and the work performed by Plaintiffs.
This Memorandum is supported by the cited and attached evidence, including: the
declaration from Class Counsel attached as Exhibit 1 (Declaration of Gary Klinger in support of
Plaintiffs’ Motion for Approval of Attorneys’ Fees Award, Expense Reimbursement, and Service
Awards to Representative Plaintiffs) (“Klinger Fee Decl.”).
FACTUAL BACKGROUND
A. PROCEDURAL HISTORY
On May 14, 2021, Plaintiffs filed a Class Action Complaint (“Complaint” or “Comp.”)
against Preferred Home. (NYSCEF Doc. No. 1.) Plaintiffs alleged causes of action for: (1)
Negligence; (2) Breach of Implied Contract; (3) Violation of the New York General Business Law,
§ 349; (4) Invasion of Privacy; and (5) Breach of Confidence. (NYSCEF Doc. No. 1.) On June 30,
2021, Preferred Home filed a Motion to Compel Arbitration, to Stay Action or to Dismiss
Complaint, arguing that Plaintiff Peterson-Small’s claims were subject to binding arbitration and
that the entire action should be stayed pending the final outcome of that arbitration. (NYSCEF
Doc. No. 17.) In the alternative, Preferred Home argued that, to the extent any claims in the
Complaint were not compelled to arbitration or stayed, such claims were legally insufficient and
should be dismissed. Id. On February 9, 2022, the Court issued an Order denying Preferred Home’s
motion to compel arbitration and to stay the action pending arbitration. (NYSCEF Doc. No. 36.)
The Court also dismissed Plaintiffs’ causes of action for Violation of the New York General
Business Law, § 349 and Breach of Confidence, but denied Preferred Home’s motion in all other
respects (the “Lawsuit”). See id. After the Court’s ruling on Preferred Homes’ motion, the Parties
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agreed to mediate the Lawsuit. On March 14, 2022, the Court stayed all proceedings in the matter
pending the outcome of the mediation. (NYSCEF Doc. No. 38.)
This Settlement came about as the result of protracted, arms’ length negotiations after a
day-long mediation with a preeminent data breach mediator, Bennett G. Picker of the firm,
Stradley Ronon Stevens & Young, LLP, which took place on August 4, 2022. (NYSCEF Doc. No.
42.) See Klinger MPA Dec., ¶ 36. The Parties were able to reach an agreement on all the principal
terms of settlement for this matter at the mediation, subject to final mutual agreement on all
necessary documentation. See Klinger MPA Dec., ¶ 37. After the mediation, the Parties negotiated
and executed a Term Sheet. See id. ¶ 38. Since then, the Parties continued to negotiate in good
faith and at arms’ length, the finer points of the settlement and drafted the Settlement Agreement
and accompanying Notice documents and other exhibits. See id. ¶ 38. While negotiations were
always collegial and professional between the Parties, there is no doubt that the negotiations were
also adversarial in nature, with both Parties strongly advocating their respective client’s positions.
See id. ¶ 37. The Settlement Agreement and the various exhibits thereto were ultimately finalized
and signed on October 31, 2022. See id. ¶ 38. Preliminary approval was granted on January 23,
2023. NYSCEF Doc. No. 51.
Class Counsel’s work is not over and will continue throughout the claims period. Based
on experience, each Class Counsel will spend substantial additional hours seeking final approval,
defending the Settlement from potential objections (of which there are none to date), and
supervising claims administration and the distribution of proceeds. Klinger Fee Decl, ¶ 24.
In the Preliminary Approval Order the Court set the final fairness hearing for June 27, 2023
at 2:30 p.m. NYSCEF Doc. No. 51.
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B. SUMMARY OF SETTLEMENT
1. Settlement Benefits
The Settlement Class is defined as:
“All persons Preferred Home identified as being among those individuals impacted
by the Data Breach, including all who were sent a notice of the Data Breach.”
See S.A. ¶ 1.31(a). The Settlement Class is comprised of approximately 92,283 individuals (each,
a “Settlement Class Member”). See Klinger MPA Decl. ¶ 39. The Settlement Subclass is defined
as:
“All persons Preferred Home identified as being among those individuals impacted
by the Data Breach, who were further identified as being among those whose Social
Security Numbers were potentially compromised, and who were sent a notice of
the Data Breach.”
See Agreement. ¶ 1.31(b). The Settlement Subclass is comprised of approximately 34,938
individuals (each, a “Settlement Subclass Member”), which are included in the 92,283 individuals
in the Settlement Class. See Klinger MPA Dec. ¶ 40. For avoidance of doubt, Settlement Subclass
Members are also Settlement Class Members, and references herein to the Settlement Class include
the Settlement Subclass. Agreement. ¶ 1.32(a)(iii). In addition, the Settlement Class and Settlement
Subclass are combined referred to as the “Settlement Classes.” Excluded from the Settlement Class
definition are:
(i) officers and directors of Preferred Home and/or the Related Entities; (ii) all
Settlement Class Members who timely and validly request exclusion from the
Settlement Class; (iii) the members of the judiciary who have presided or are
presiding over this matter and their families and staff; and (iv) any other Person
found by a court of competent jurisdiction to be guilty under criminal law of
initiating, causing, aiding, or abetting the criminal activity occurrence of the Data
Breach or who pleads nolo contendere to any such charge.
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See Agreement. ¶ 1.31(d).
i. Monetary Relief
Each Settlement Class Member will be eligible to receive reimbursement for documented
monetary losses incurred by him or her as a result of the Data Breach. See Agreement. ¶ 3.
Specifically, each eligible Settlement Class Member may choose from all applicable claim
categories below—Claim A (Compensation for Ordinary Losses) and Claim B (Compensation for
Extraordinary Losses). The overall compensation cap for any Settlement Class Member is $400.00
for all amounts claimed in Claim A, and $3,500.00 for all amounts claimed in Claim B. See
Agreement. ¶ 3.1.
a. Claim A: Compensation for Ordinary Losses.
Settlement Class Members who submit timely, valid claims, with supporting
documentation (other than claims for Lost Time (defined below), are eligible to receive
compensation for unreimbursed ordinary losses for up to a total of 400.00 per Settlement Class
Member. See Agreement. ¶ 3.1(a). Ordinary losses may include: (i) out-of-pocket expenses
incurred as a result of the Data Breach, including bank fees, long distance phone charges, cell
phone charges (only if charged by the minute), data charges (only if charged based on the amount
of data used), postage, or gasoline for local travel; (ii) fees for credit reports, credit monitoring, or
other identity theft insurance product purchased between January 8, 2021 and the Claim Deadline;
and (iii) up to four (4) hours of lost time (“Lost Time”), calculated at $20/hour, if at least one (1)
full hour was spent dealing with the Data Breach, provided that the Settlement Class Member
attests that the claimed lost time was spent responding to issues raised by the Data Breach. See
Agreement. ¶ 3.1(a). Claims for Lost Time are subject to the same $400.00 cap on ordinary losses.
See id.
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b. Claim B: Compensation for Extraordinary Losses.
Settlement Class Members who submit timely, valid claims, with supporting
documentation, are eligible to receive claim up to $3,500.00 per Settlement Class Member for
proven monetary losses if: (a) the loss is an actual, documented, and unreimbursed monetary loss;
(b) the loss was more likely than not caused by the Data Breach; (c) the loss occurred between
January 8, 2021 and the Claim Deadline; (d) the loss is not already covered by one or more of the
normal reimbursement categories; and (e) the Settlement Class Member made reasonable efforts
to avoid, or seek reimbursement for, the loss, including, but not limited to, exhaustion of all
available credit monitoring insurance and identity theft insurance. See Agreement ¶ 3.1(b). The
maximum amount any one Claimant may recover under Claim B is $3,500.00. See id.
ii. Credit Monitoring and Identity Theft Protection
Settlement Class Members will be offered a one (1)-year membership of three bureau (3B)
credit monitoring services without the need to file a Claim Form for monetary relief. See
Agreement. ¶ 3.1(c). Settlement Subclass Members will be offered an additional one (1)-year
membership of 3B credit monitoring (or a total of two (2) years offered). See id.
The value of this benefit to the Settlement Class is significant. The least expensive 3B
credit monitoring product available in the retail marketplace today costs $16.67 per month. 3 The
potential value of one (1) year of this benefit is as high as $200.04 per Settlement Class Member.
Preferred Home’s and/or its insurers’ maximum payment obligation under the Settlement
Agreement for any and all payments under ¶¶ 3.1(a)-(c) is $1,000,000, and payments to Settlement
Class Members who make Valid Claims shall be reduced on a pro rata basis according to the
number of claims made if the total exceeds the overall $1,000,000 cap. See Agreement. ¶ 3.2.
3
https://www.identityguard.com/plans (last visited Oct. 12, 2022).
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iii. Data Security Measures
Plaintiffs also negotiated for and received commitments from Preferred Home that it will
continue to provide security for current and former patient and employee PII and PHI going
forward. See Klinger MPA Decl. ¶ 48. Preferred Home has agreed to pay the costs of these
security-related measures separate and apart from other settlement benefits. See id.
iv. Release
The relief provided to Settlement Class Members in the Lawsuit is tailored to the claims
that have been pleaded or could have been pleaded that are related in any way to the activities
stemming from the Data Breach. See Klinger MPA Dec. ¶ 50. Settlement Class Members who do
not exclude themselves from the Settlement Agreement will release claims related to the Data
Breach. See Klinger MPA Dec. ¶ 51.
v. Claims Administration
Defendant has agreed to pay for the entire cost of Claims Administration and Notice
separately from any funds made available to the class, much like the Attorneys Fees, expenses,
and service award payments. Klinger Fee Decl., ¶ 3. The cost of the claims administration is
estimated to be $109,953, and is another benefit to the Class. Id.
ARGUMENT
A. THE FEE REQUEST IS FAIR AND REASONABLE AND SHOULD BE
APPROVED.
This case is complex, with the procedural issues of class action litigation combined with
the novelty of data breach class actions. In spite of this, Class Counsel was able to effectively
litigate Plaintiffs’ claims to reach a successful resolution for the Class.
While the “determination as to the proper amount of an award of [counsel] fees lies largely
within the discretion of the court, the discretion is not unlimited” Matter of Rahmey v. Blum, 95
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A.D.2d 294, 299–300, 466 N.Y.S.2d 350 (1983). When reviewing a fee application in
a class action, the court acts as a fiduciary and must protect the rights of absent class members.
See Silberblatt v. Morgan Stanley, 524 F.Supp.2d 425, 433 [S.D.N.Y.2007] ). Although no single
method of determining fees is mandated (see Bear Stearns Cos. v. Jardine Strategic Holding,
Ltd., N.Y.L.J., Aug. 7, 1991, at 22, col. 3 (Sup. Ct., New York County)), two acceptable options
are the percentage approach and the lodestar method, the latter having originated
in class action litigation. See Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 50 (2d
Cir.2000); Frank v. Eastman Kodak Co., 228 F.R.D. 174, 188 (W.D.N.Y. 2005); Sheppard v.
Consolidated Edison Co. of N.Y., 2002 WL 2003206, at *7 (E.D.N.Y.2002); Friar v. Vanguard
Holding Corp., 125 A.D.2d 444, 447, 509 N.Y.S. 2d 374 [1986]).
“In testing the reasonableness of the negotiated fee, [courts] first look[] to the percentage
of recovery approach.” Michels v. Phoenix Home Life Mut. Ins., 1997 WL 1161145, at *31 (Sup.
Ct. N.Y. Cnty. Jan 7, 1997). “Federal Courts around the country, including federal district courts
in New York, are turning away from the lodestar/multiplied approach and are returning to the
percentage of the recovery approach. Id. Courts have found numerous advantages to using the
percentage method of awarding fees. First, the percentage method “directly aligns the interests of
the class and its counsel” because it provides an incentive to attorneys to resolve a case efficiently
and to create the largest total value for the class. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396
F.3d at 122 (2d Cir. 2005).4
4
In addition to citing New York state case law authority, this Memorandum will cite to federal case law authority for
approval of attorneys’ fees, costs, and service awards to class representatives. “New York’s courts have recognized
that its class action statute is similar to the federal statute and have looked to federal case law for guidance.” Fiala,
899 N.Y.S.2d at 537 (citing cases); Colt Indus. Shareholder Litig. v. Colt Indus. Inc., 77 N.Y.2d 185, 194 (1991)
(“New York’s class action statute has much in common with Federal Rule 23.”).
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The percentage of recovery method is aligned with market practices, as it “mimics the
compensation system actually used by individual clients to compensate their attorneys.” In re
Sumitomo Copper Litig., 74 F. Supp. 2d 393, 397 (S.D.N.Y. 1999); see also Sewell v. Bovis Lend
Lease, Inc, 2012 WL 1320124 at *10 (S.D.N.Y. April 16, 2012) (opining “[the percentage] method
is similar to private practice where counsel operates on a contingency fee, negotiating a reasonable
percentage of any fee ultimately awarded.”); Strougo ex rel. Brazilian Equity Fund, Inc. v. Bassini,
258 F. Supp. 2d 254, 262 (S.D.N.Y. 2003) (noting the percentage method “is consistent with and,
indeed, is intended to mirror, practice in the private marketplace where contingent fee attorneys
typically negotiate percentage fee arrangements with their clients.”).
The percentage method also promotes efficiency and early resolution, as it eliminates any
incentive plaintiffs’ lawyers may have to run up billable hours—one of the most significant
downsides to using the lodestar approach. Savoie v. Merchants Bank, 166 F.3d 456, 460-61 (2d
Cir. 1999) (“It has been noted that once the fee is set as a percentage of the fund, the plaintiffs’
lawyers have no incentive to run up the number of billable hours for which they would be
compensated under the lodestar method”); Goldberger v. Integrated Res. Inc., 209 F.3d 43, 48-49
(2d Cir. 2000) citing In re Union Carbide Corp., Consumer Prods. Bus. Sec. Litig., 724 F. Supp.
160, 167-168 (S.D.N.Y. 1989); see also In re Interpublic Sec. Litig., Nos. 02-cv-6527, 03-cv-1194,
2004 WL 2397190, at *11 (S.D.N.Y. Oct. 26, 2004). “The Lodestar method has the potential to
lead to inefficiency and resistance to expeditious settlement because it gives attorneys an incentive
to raise their fees by billing more hours.” Lopez v. The Dinex Group, LLC, 2015 WL 5882842, at
*5 (Sup. Ct. N.Y. Cnty. Oct. 06, 2015); see also Matter of Karp, 145 A.D.2d 208, 216 (1st Dep’t
1989) (“To base a fee solely on hours worked is to penalize the experienced and skillful lawyer
who can perform the services in substantially less time than the inexperienced one.”.
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Finally, the percentage method preserves judicial resources because it relieves the
“cumbersome, enervating, and often surrealistic process of evaluating fee petitions.” Savoie v.
Merchants Bank, 166 F.3d at 461 n.4, quoting Third Circuit Task Force, 108 F.R.D. 237, 258. The
“primary source of dissatisfaction [with the lodestar method] was that it resurrected the ghost of
Ebenezer Scrooge, compelling district courts to engage in a gimlet-eyed review of line-item fee
audits.” Goldberger v. Integrated Res. Inc., 209 F.3d at 48-49; In re EVCI Career Colls. Holding
Corp. Sec. Litig., No. 05-cv-10240, 2007 WL 2230177, at *16 (S.D.N.Y. July 27, 2007). As one
New York court stated:
The percentage method is bereft of the largely judgmental and time-wasting computations
of lodestars and multipliers. These latter computations, no matter how conscientious, often
seem to take on the character of so much Mumbo Jumbo. They do not guarantee a more
fair result or a more expeditious litigation.
In re Union Carbide Corp., Consumer Prods. Bus. Sec. Litig., 724 F. Supp. 160, 170 (S.D.N.Y.
1989). While courts still use the lodestar method as a “cross check” when applying the percentage
of the fund method, courts are not required to scrutinize the fee records as rigorously. Goldberger
v. Integrated Res. Inc., 209 F.3d at 50; see In re Global Crossing Sec. & ERISA Litig., 225 F.R.D.
436, 468 (S.D.N.Y. 2004) (using an “implied lodestar” for the lodestar cross check, and noting
that when used as a cross-check, the reasonableness of the claimed lodestar can be tested by the
court’s familiarity with the case); Varljen v. H.J. Meyers & Co., No. 97-cv-6742, 2000 WL
1683656, at *5 (S.D.N.Y. Nov. 8, 2000) (using an “unexamined lodestar figure” for the lodestar
cross check). In the instant matter the “lodestar” fully justifies the fees requested by counsel,
particularly considering the inherent reasonableness of counsel seeking $235,000 in combined fees
and expenses compared to a settlement that brings benefits estimated to be worth over $20,000,000
in potential value to the Class, in addition to significant non-monetary benefits in the form of the
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