Hilton Owes $21M to Lawyers in ERISA Suit

(CN) - Class counsel for Hilton employees whose pension plans were illegally backloaded are entitled to 15 percent of a $140 million judgment, a federal judge ruled.

A backloaded pension plan means that employees accumulate benefits slowly at first, then at a faster rate the longer they work for the employer. Federal law requires employers to comply with certain anti-backloading provisions to prevent abuse.

In the late 1990s, Jamal Kifafi, a Hilton employee, noticed a problem with the retirement-benefits calculation on his statement and filed suit under the Employee Retirement Income Security Act (ERISA).

Almost 15 years later, a federal judge in Washington, D.C., determined that Hilton's retirement plan was improperly backloaded, and that the hotel chain failed to credit certain years of service when calculating the vesting credit of participants.

The D.C. Circuit affirmed the ruling last year, finding that the lower court's order properly held Hilton responsible for its ERISA violations.

On Monday, U.S. District Judge Colleen Kollar-Kotelly awarded 15 percent of the $140 million common fund as attorneys' fees for class counsel led by Stephen Bruce.

She also awarded $603,000 in expenses, and a $50,000 incentive award to lead plaintiff Kifafi, both of which will be paid out of the common fund.

"The skill and efficiency with which class counsel fought this case for more than thirteen years also greatly weighs in favor of the requested attorneys' fee," the judge said.

As of October 14, 2013, over 70 percent of the class affirmatively responded to the reward and attorneys' fee notice by completing address verification forms, and only 5 members of a 23,000 member class objected to the award.

"This thirteen-year legally and mathematically complex litigation, which resulted in a common fund worth over $100 million and benefiting nearly 23,000 individuals, was undertaken by only two attorneys with one additional attorney lending his assistance during the first part of the litigation and another during the latter part of the litigation," Kollar-Kotelly wrote. "In total, these four attorneys report a large, but ultimately lean number of hours working on this case given its complexity and duration."

While the attorneys' fees request of 15 percent of the common fund is several times greater than the amount counsel would have charged plaintiff at their billable rate, the D.C. Circuit does not require courts to conduct a lodestar cross-check.

"In light of the skill and dedication exhibited by class counsel, the substantial length and complexity of this litigation, the risks assumed by counsel, and the substantial benefits secured by counsel for the class, the court concludes that a fee of 15 percent of the common fund is fair and reasonable," the judge concluded.

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