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In re MI Windows and Doors INC. Products Liability Litigation

United States District Court, D. South Carolina, Charleston Division

July 23, 2015




This matter is before the court on two motions: a motion for Attorneys’ Fees and Costs by Homeowner Plaintiffs and a motion for Attorneys’ Fees and Costs by Contractor/Construction Plaintiff. The Parties also seek service fee awards for the Named Plaintiffs. The court awards Attorneys’ Fees and Costs and service fees as described below. Unless otherwise noted, capitalized terms in this order have the meanings set forth in the Stipulation of Class Action Settlement and Release (“Settlement” or “Settlement Agreement”). The court incorporates its discussion of the background of this Action and the Settlement contained in its Final Order and Judgment.


Federal Rule of Civil Procedure 23(h) provides that “[i]n a certified class action, the court may award reasonable attorney’s fees and nontaxable costs that are authorized by law or by the parties’ agreement.” “A class member, or a party from whom payment is sought, may object to the motion” for attorney’s fees. Fed.R.Civ.P. 23(h)(2). In the Settlement Agreement, the Parties agreed that Attorneys’ Fees and Costs for both the Homeowner Plaintiffs’ counsel and Contractor/Construction Plaintiff’s counsel would be determined by the court. The Parties further agreed that the compensation to the class members would not be reduced to pay the fees or costs of the attorneys. Homeowner Class Counsel agreed not to seek Attorneys’ Fees and Costs in excess of $8 million and Contractor/Construction Class Counsel agreed not to accept an Attorneys’ Fees and Costs award that would require defendant MI Windows and Doors, LLC (“MIWD”) to pay Contractor/Construction Plaintiff’s Class Counsel and Homeowner Plaintiffs’ Class Counsel a total aggregate award greater than $9, 045, 000.

“There are two general methods for assessing awards of attorney’s fees in settlements of class action cases: (1) the percentage-of-the-fund method and (2) the lodestar method.” DeWitt v. Darlington Cnty., S.C., No. 4:11-cv-00740, 2013 WL 6408371, at *6 (D.S.C. Dec. 6, 2013). The percentage-of-the-fund method allows attorney’s fees to be based on a percentage of the total recovery to the plaintiff class. Id. The lodestar method determines the appropriate amount of attorney’s fees by applying the factors from the seminal case of Barber v. Kimbrell’s, Inc., 577 F.2d 216 (4th Cir. 1978), to determine a “lodestar” figure by multiplying the number of hours expended by a reasonable hourly rate. DeWitt, 2013 WL 6408371, at *7. Even when the percentage of recovery method is used, courts often use the lodestar method to “cross-check” the award of attorney’s fees. In re Royal Ahold N.V. Sec. & ERISA Litig., 461 F.Supp.2d 383, 385 (D. Md. 2006).

The Settlement in this case does not create a common fund to be distributed among the Class Members but rather affords all Class Members who timely file a Claim the opportunity for recovery. See Weber v. Gov’t Employees Ins. Co., 262 F.R.D. 431, 449 (D.N.J. 2009). Attempting to value the Settlement before the Claims Period has expired would be speculative at best. When a settlement is difficult to value, courts often favor the lodestar method. See Johnston v. Comerica Mortg. Corp., 83 F.3d 241, 246 (8th Cir. 1996) (noting that district court did not abuse its discretion in using the lodestar method in part because the value of the settlements were speculative); In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995) (“[T]he lodestar rationale has appeal where as here, the nature of the settlement evades the precise evaluation needed for the percentage of recovery method.”); In re Vitamins Antitrust Litig., 2001 WL 34312839, at *3 (D.D.C. July 16, 2001) (“However, despite this and other circuits’ preference for the percentage of recovery method, courts have acknowledged the utility of the lodestar method in instances in which the amount of the common fund is difficult to ascertain . . . .”). Therefore, the court will utilize the lodestar method for determining attorney’s fees. See Weber, 262 F.R.D. at 449–50 (employing lodestar method where settlement did not create a common fund and was not easily valued); Deloach v. Philip Morris Cos., 2003 WL 23094907, at *3 (M.D. N.C. Dec. 19, 2003) (holding that trend towards using percentage method was “largely inapposite” since that case did not involve a common fund); see also Brzonkala v. Morrison, 272 F.3d 688, 691 n.* (4th Cir. 2001) (“The ‘common-fund’ doctrine . . . applies, as its name suggests, in cases where an actual common fund has been created as a consequence of the litigation.” (emphasis added)); Cerrato v. Alliance Material Handling, Inc., 2014 WL 7190687, at *4 (D. Md. Dec. 16, 2014) (“Here, the percentage of recovery method is inappropriate because the attorneys’ fees are not being deducted from the Plaintiffs’ recovery.”); Teague v. Bakker, 213 F.Supp.2d 571, 583 (W.D. N.C. 2002) (collecting cases and noting that except for the D.C. and Eleventh Circuits, all other circuits to have address the issue have held that a trial court may use, in its discretion, either the percentage or lodestar method).

The lodestar amount is defined as a “reasonable hourly rate multiplied by hours reasonably expended.” Grissom v. Mills Corp., 549 F.3d 313, 320–21 (4th Cir. 2008).

To determine the reasonable number of hours and reasonable rate to use in calculating the lodestar, the court is guided by twelve non-exclusive factors, often known as the Barber factors:

(1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney’s opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney’s expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys’ fees awards in similar cases.

Grissom v. The Mills Corp., 549 F.3d 313, 321 (4th Cir. 2008) (quoting Spell v. McDaniel, 824 F.2d 1380, 1402 n.18 (4th Cir. 1987)). As the Fourth Circuit has noted, “the most critical factor in determining the reasonableness of a fee award is the degree of success obtained.” Doe v. Chao, 435 F.3d 492, 506 (4th Cir. 2006) (quoting Farrar v. Hobby, 506 U.S. 103, 114 (1992)). Although courts should consider all of the Barber factors, they need not be strictly applied in every case inasmuch as all of the factors are not always applicable. See EEOC v. Serv. News, Co., 898 F.2d 958, 965 (4th Cir. 1990).

The court has considered all the Barber factors as they relate to both the Homeowner Class Counsel and Contractor/Construction Class Counsel and considers the following factors particularly applicable to the current Action.

A. Homeowner Class Counsel

1. Time and Labor Expended

Homeowner Plaintiffs’ counsel and paralegals have expended almost 21, 000 hours on this case, Bryson Decl. ¶ 48, and the court has reviewed billing records which were submitted directly to chambers. This litigation has been pending in this court for more than three years and Homeowner Plaintiffs’ counsel have responded to and argued numerous motions to dismiss, briefed and resolved many discovery disputes, defended and taken depositions, conducted written discovery, developed expert and inspection protocols, and participated in multiple mediation sessions and countless telephone conferences. Homeowner Plaintiffs’ counsel will continue to work beyond the Final Order and Judgment to ensure the terms of the Settlement are properly carried out going forward, as certain claims submission deadlines are not until late October and December 2015. This ongoing work-including the potential for appeals-will require many additional hours of work without the possibility of further fees.

2. Novelty and Difficulty of Questions/Skill Required

These are complex cases, which have required multiple hotly-contested motions to dismiss and involved the laws of many states. These cases presented causation defenses, economic loss doctrine arguments, and limitations of remedies and warranties. MIWD mounted a vigorous defense including arguments regarding causation, class certification, and application of the economic loss rule. Moreover, the nature of these cases ...

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