Full opinion text
MEMORANDUM AND ORDER GLASSER, Senior District Judge: Proposed class representatives Andrew Parker and Eric DeBrauwere (the “Representative Plaintiffs”) filed an amended class action complaint on October 30, 1998 (the “Complaint”) against defendants Time Warner Entertainment Company, L.P. and its subsidiary, Time Warner Cable (collectively, “Time Warner” or the “defendant”). The Complaint alleges, inter alia, that the defendant violated certain provisions of the Cable Communications Policy Act of 1984, 47 U.S.C. § 551 et seq. (the “Cable Act”). The Representative Plaintiffs and the defendant move jointly for approval of a class action settlement agreement. The attorneys for the Representative Plaintiffs, Hagens Berman Sobol Shapiro LLP (the “Hagens Firm”), Kirby Mclnerney LLP (the “Kirby Firm”), Cuneo Gilbert & LaDuca LLP (the “Cuneo Firm”) and the Law Offices of James M. Beaulaurier (the “Beaulaurier Firm” and collectively, “Class Counsel”) move for attorneys’ fees and expenses. The attorneys for objeetor-intervenors Rick and Sharon Lobur, Forizs & Dogali, P.L. and The Anderson Law Firm (together, the “Loburs’ Counsel”), and the attorneys for objector-intervenors Lydia Townsend and Rosalie Vitrano (together with the Loburs, the “Objectors”), the Law Offices of Steven B. Witman (the “Witman Firm”) each move for attorneys’ fees and expenses. For the reasons stated below, the parties’ motion for approval of the settlement agreement is granted. Class Counsel’s motion for attorneys’ fees, expenses and plaintiff incentive awards is granted in part and denied in part. The Loburs’ Counsel’s motion for attorneys’ fees and expenses is granted in part and denied in part. The Witman Firm’s motion for attorneys’ fees and expenses is denied. The Objectors’ respective motions for incentive awards are denied. I. Background This order brings to a close a case that has raised compelling questions of law arising at the intersection of consumer protection statutes that provide for minimum statutory damages and the class action mechanism. Each of these tools is intended to encourage the prosecution of cases that would otherwise be too costly for an individual plaintiff to pursue. The combination of the two threatens defendants with the multiplication of statutory damages, possibly beyond the contemplation of Congress and the limits of due process. The settlement of this case reserves for another day the question of whether a class seeking statutory damages for each of its members, far in excess of the actual harm and ruinous to the defendant, should be certified for trial. However, the preposed settlement itself raises interesting questions about the valuation of settlements involving large numbers of class members and benefits that are difficult to value. The settlement, while fair, adequate and reasonable — in that it makes a minimal sum available to the purported victims of a minimal harm — is nonetheless unsatisfying because so much time and labor was expended to achieve so little. A. Prior Decisions This case has already been the subject of several orders. See No. 98 Civ. 4265(ERK), 1999 WL 1132463 (E.D.N.Y. Nov. 8, 1999) (Korman, J.) (the “1999 Order”) (denying defendant’s motion to dismiss the Complaint); 198 F.R.D. 374 (E.D.N.Y.2001) (the “2001 Order”) (adopting the report and recommendation of Magistrate Azrack certifying a class for injunctive and declaratory relief but denying certification of a class for damages); 331 F.3d 13 (2d Cir.2003) (the “2003 2d Cir. Decision”) (vacating the decision of this Court on the question of class certification and remanding for further proceedings); 239 F.R.D. 318 (E.D.N.Y.2007) (the “2007 Order”) (denying settlement class certification under Fed.R.Civ.P. 23(b)(2) because monetary damages predominated over injunctive relief and under 23(b)(3) because of inadequate notice and procedural and substantive unfairness). This Memorandum and Order incorporates and assumes familiarity with these decisions. B. Facts The Complaint alleges that Time Warner collected detailed personal information about cable television subscribers throughout its nationwide system. (Compl. ¶¶ 4, 43). Time Warner maintained this information in its list sales database (“LSDB”), which it offered for sale to third parties, including telemarketers, direct marketing services companies, and Time Warner affiliates and divisions. (Compl. ¶¶ 6, 9, 45-48, 60). The Complaint alleged that the database included subscribers’ names and addresses, premium subscriptions, such as HBO, Disney, and Playboy, credit card information, places of employment, whether subscribers lease or own their residence, and social security and drivers’ license numbers. (Compl. ¶¶ 11, 43). Time Warner enhanced the information that it collected directly from its subscribers with information it had obtained from third parties, including Time Warner affiliates and divisions. (Compl. ¶¶ 4, 7, 44, 68). The Complaint alleges that Time Warner violated the Cable Act’s substantive privacy provisions by collecting and disclosing its customers’ personally identifiable information (“PII”) and failing to give proper notice of its practices. Under the Cable Act, cable providers must give notice to their customers of the nature of the PII that they collect, how it is used, the nature, frequency and purpose of any PII disclosures and their retention of such information, all as provided for by 47 U.S.C. § 551(a)(1). The Complaint alleges that Time Warner violated the notice provisions of § 551(a) by failing to adequately notify subscribers of its use and disclosure of their PII, including the nature of the PII collected from subscribers and third party sources, the nature and frequency of the uses and disclosures of such information, and the period during which Time Warner maintained such information. (Compl. ¶¶ 62-71, 80). Subsection § 551(c) of the Cable Act prohibits the disclosure of PII without the prior consent of a subscriber with the exceptions provided for in subdivision (c)(2). This subdivision allows for the disclosure of the names and addresses of subscribers to any cable service or other service, provided that customers are given the opportunity to opt out of such disclosure and so long as the disclosure does not give additional detail pertaining to customer viewing habits. The Complaint alleges that Time Warner violated the disclosure provisions of § 551(c) by disclosing information other than subscribers’ names and addresses without their consent. (Compl. ¶¶ 8, 55-60, 72-74). The Complaint sought minimum statutory damages of at least $1,000 per violation for every subscriber, as provided for by § 551(f), claiming injury by the class “which is, at a minimum, hundreds of millions of dollars.” (Compl. ¶¶ 77, 82.) C. Procedural History 1. The Settlement Agreement The parties first reached a proposed settlement in June 2005 (the “Prior Agreement”). The Prior Agreement gave class members whose names appeared in the LSDB the opportunity to claim free Time Warner cable services for their own use, or to transfer that benefit to a third party. After a hearing on May 19, 2006, at which the parties and the Objectors were heard, the Prior Agreement was ultimately rejected by the Court for reasons set forth in the 2007 Order. Chief among the reasons for its rejection was distributional unfairness to class members who were identified as being in the LSDB, but did not at the time of the settlement live in areas of the country where cable television service is provided by Time Warner. 2007 Order, 239 F.R.D. at 340. Those class members could not personally use the free cable services and could only transfer the benefit to those who did live in such areas. The Prior Agreement was also rejected because the notice provisions failed to provide “the best notice that is practicable under the circumstances,” Fed.R.Civ.P. 23(c)(2)(B), to persons then identified as being in the LSDB who were no longer Time Warner Cable subscribers. 2007 Order, 239 F.R.D. at 333-36. The Representative Plaintiffs and the defendant filed a new settlement agreement on April 2, 2008 (the “Settlement Agreement”). This Court granted preliminary approval of the Settlement Agreement, provisionally certified the class and directed dissemination of notice to the class in an order dated May 8, 2008 (the “Preliminary Approval Order”). The provisionally certified class (the “Class”) consisted of: “All persons throughout the United States who were Time Warner Cable subscribers at any point in time between January 1, 1994, and December 31, 1998, [herein, the “Relevant Period”] except for current Time Warner Cable officers, directors, employees and counsel.” (the “Class Members”). (Prelim. Approval Order 2.) In the 2007 Order, ■ the Court identified four categories of class members to which the Prior Agreement provided disparate benefits: (1) those Class Members who are listed on the Time Warner List Sales Database dated January 1, 1999, (“LSDB”), and who currently subscribe to Time Warner Cable services ... (hereinafter “Category I” Class Members); (2) those Class Members who are listed on the LSDB and who no longer subscribe to Time Warner Cable services, but live in an area served by Time Warner Cable (hereinafter “Category II” Class Members); (3) those Class Members who are listed on the LSDB and who no longer subscribe to Time Warner Cable services, and who do not live in an area served by Time Warner Cable (hereinafter “Category III” Class Members); and, (4) those Class Members who are not listed on the LSDB (hereinafter “Category TV” Class Members). 2007 Order, 239 F.R.D. at 326. The categories recognized by the Court in the 2007 Order remain applicable to the current Settlement Agreement. The benefits available to each category of Class Member are provided for as follows: (Settlement Agreement ¶ 4(a)-(b).) The benefits made available by the Settlement Agreement differ from those in the Prior Agreement in that all three categories of Class Members eligible to receive benefits may now opt to receive a $5 check rather than service benefits. All class members who select as their benefit a free month of service may either contact Time Warner to cancel the service at the end of the month or do nothing and be billed for the service at Time Warner’s usual rate until such a time as they cancel it. (Settlement Agreement ¶ 4(e).) In addition to the direct benefits to the Category I, II and III Class Members, the Settlement Agreement also provides for what is termed “Remedial Relief’. (Settlement Agreement ¶ 12.) This includes revisions to Time Warner’s privacy notice and additional revisions to the privacy notice should Time Warner reenter the business of selling customer information that has been enhanced with publicly available data. (Settlement Agreement ¶ 12.) Furthermore, Time Warner will provide Class Counsel with its privacy notices for a period of three years from the date the Settlement Agreement is approved. (Settlement Agreement ¶ 12.) Finally, Time Warner will employ a Chief Privacy Officer for an unspecified period of time and will give as cy pres relief $250,000 to each of the Samuelson Law, Technology & Public Policy Clinic at Boalt Hall Law School and the Center for Democracy and Technology’s Ronald Plesser Fellowship. (Settlement Agreement ¶ 14.) Once the settlement becomes effective, Class Members release “all claims which have been alleged in the Action, and claims which could have been alleged in the Action relating to Time Warner’s privacy notices and list sales practices between 1994 and 1998 under 47 U.S.C. § 551 and/or any similar federal or state consumer protection law, privacy law and/or common law.” (Settlement Agreement, Definitions, ¶ 0.) The Settlement Agreement also provides that, subject to Court approval, Time Warner will pay Class Counsel’s fees and costs in the total amount of $5 million. Class Counsel will pay any objector’s counsel’s fees or costs, as awarded by the Court or otherwise. (Settlement Agreement ¶ 26.) 2. Notification and Submitted Claims Notice by mail, directed to more than 7.2 million current and former subscribers whose names appeared in the LSDB, was sent June 6-9, 2008. (Affidavit of Jeanne C. Finegan dated Nov. 26, 2008 (“Finegan Aff.”), ¶¶ 9-10.) Of these, 286,505 were postcards mailed to Former Claimants; 1,518,526 were long form notices (“Notice”) mailed to current subscribers and former subscribers whose addresses had been verified and had not previously claimed a benefit; and 5,453,436, approximately 75% of the total, were postcards mailed to the last known address of former subscribers whose address information could not be updated with Time Warner’s current subscriber database or the National Change of Address registry (“NCOA”). (Finegan Aff. ¶¶ 6-9.) In addition, the claims administrator established a settlement website (vnuw.twcsettlement.com) where English and Spanish versions of the Notice and claim form were available. (Finegan Aff. ¶ 18.) A summary form of the Notice was published in several national publications. (Finegan Aff. ¶ 14.) As of November 23, 2008, the claims administrator had received 172,602 claim forms in response to the Settlement Agreement to add to the 286,503 claim forms received in connection with the Prior Agreement, for a total of 459,105. (Finegan Aff. ¶ 20.) 3. Fairness Hearing On December 9, 2008, the Court held a settlement hearing pursuant to Fed. R.Civ.P. 23(e)(2) (the “Fairness Hearing”). Arguments were heard on the motion for approval of the Settlement Agreement, motions for approval of attorneys’ fees and expenses for Class Counsel and Objectors’ counsel, and motions for incentive awards for the Representative Plaintiffs and Objectors. In addition, objections from class members Bob Lamb and Franklin Conde were also heard. See § II.C(2) infra. II. Discussion A. Certification of the Settlement Class The parties “[f]or settlement purposes only ... stipulate^] that the Class will be certified under Fed.R.Civ.P. 23(b)(2) and/or 23(b)(3).” (Settlement Agreement ¶ 2.) Notwithstanding the parties’ willingness to stipulate to the certification of the class for settlement purposes, the Court bears an independent responsibility to make a determination that every Rule 23 requirement is met before certifying a class. Karvaly v. eBay, Inc., 245 F.R.D. 71, 78 (E.D.N.Y.2007) (Glasser, J.). “Because the terms and structure of the Settlement Agreement differ only in relatively small details from the version rejected by the Court in the 2007 Order, much of the Court’s analysis of the previous settlement proposal applies with equal force to this one.” (Prelim. Approval Order 1-2.) Therefore, the Court relies upon its prior analysis which led to the conclusion that the Fed.R.Civ.P. 23(a) factors of numerosity, commonality, typicality and adequacy were satisfied by the Class. 2007 Order, 239 F.R.D. at 328-30. 1. Rule 23(b)(3) Factors When each of the Rule 23(a) factors are met, “parties seeking class certification must show that the action is maintainable under Rule 23(b)(1), (2), or (3).” Amchem Products, Inc. v. Windsor, 521 U.S. 591, 614, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). As set forth in detail in the 2007 Order, the Class is not maintainable under Rule 23(b)(2) because the damages component of the settlement predominates over the equitable relief component. 2007 Order, 239 F.R.D. at 332. (See Prelim. Approval Order 2.) Therefore, only the Rule 23(b)(3) factors will be reviewed. Rule 23(b)(3) applies to the certification of class actions for damages. The rule requires that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Fed.R.Civ.P. 23(b)(3). a. Notice Required for (b)(3) Classes Pursuant to Rule 23(c)(2)(B) In the 2007 Order, the Court did not reach the question of whether the Rule 23(b)(3) factors of “predominance” and “superiority” were satisfied because the notice requirements for 23(b)(3) classes, found in Rule 23(c)(2)(B), had not been satisfied. Rule 23(c)(2)(B) calls for “the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Pursuant to the Prior Agreement, the Class Members entitled to receive direct settlement benefits were identified from a list of the 4.7 million customers comprising the LSDB as of January 1999 (the “1999 LSDB”). 2007 Order, 239 F.R.D. at 320, 325. Of those customers in the 1999 LSDB, the parties undertook to individually notify only those 1.37 million persons who were Time Warner Cable subscribers at the time of the Prior Agreement — the Category I Class Members. (Joint Memorandum in Support of Final Approval of Settlement dated May 12, 2006 (“2006 Joint Mem.”), 24.) Accordingly, individual notice was not provided to the approximately 3.4 million other persons whose names appeared in the 1999 LSDB who were no longer Time Warner Cable subscribers — the Category II and Category III Class Members. Individual notice was also not provided to the approximately 10.8 million Class Members whose names did not appear in the 1999 LSDB — the Category IV Members. 2007 Order, 239 F.R.D. at 325. Testimony was offered by objectors Rick and Sharon Lobur that the addresses from a database of 16 million persons created in January 1999 could be updated to provide current addresses for those persons with 90% accuracy at a cost of $22,400 using existing software. 2007 Order, 239 F.R.D. at 335. The Court held that if the addresses of a large number of additional Class Members could be determined at such a minimal cost, that limiting notice only to those 1.37 million Category I Class Members could not constitute the “best notice practicable” required by Rule 23(c)(2)(B). Id. at 336. Pursuant to the Settlement Agreement, Time Warner first reviewed all available LSDB backup tapes to identify as many Category I, II and III Class Members as possible. See n. 6 supra. This process yielded the names of approximately 7.2 million former subscribers, including those 4.7 million subscribers identified from the 1999 LSDB. Time Warner then took those subscriber names and attempted to update their addresses using their own current subscriber lists and the NCOA database. As a result, notice was mailed to 286,505 Former Claimants and approximately 1.52 million verified and 5.45 million unverified addresses of persons in Categories I, II and III, in addition to notice provided through the publication program. See § I.B.2 supra. Although efforts to improve the accuracy of the Class Members’ mailing addresses fell far short of the 90% accuracy figure urged by the Loburs, the procedures nonetheless appear to have facilitated the “best notice practicable” and have satisfied the Court’s concerns about compliance with Rule 23(c)(2)(B). b. Predominance of Common Issues of Law and Fact “The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem, 521 U.S. at 623, 117 S.Ct. 2231. “That inquiry trains on the legal or factual questions that qualify each class member’s case as a genuine controversy.” Id. at 623 n. 18, 117 S.Ct. 2231. Here, the questions common to Class Members that predominate are whether Time Warner’s privacy notice satisfied its statutory notice obligations pursuant to 47 U.S.C. § 551(a) and whether Time Warner satisfied its statutory obligation pursuant to § 551(c) not to disclose a subscriber’s PII without first obtaining their consent. The privacy notice issue applies to all Class Members insofar as all subscribers are entitled to be informed of “the nature, frequency, and purpose of any disclosure which may be made of [any PII collected or to be collected], including an identification of the types of persons to whom the disclosure may be made.” 47 U.S.C. § 551(a)(1)(B). The nondisclosure issue applies to any Class Member whose PII was sold without their consent, a group which includes some or all of the subscribers appearing in the LSDB during the class period. Therefore, the Court finds that common questions of law or fact predominate. c. Superiority of Class Action In evaluating whether “a class action is superior to other available methods for the fair and efficient adjudication of the controversy,” the Court may consider any relevant factor, including, but not limited to, the factors listed in Rule 23(b)(3). i. Statutory Factors The Court will first address those factors listed in Rule 23(b)(3): (A) the interest of the members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating litigation in the particular forum; and (D) the difficulties likely to be encountered in the management of a class action. Rule 23(b)(3). In the 2001 Order, this Court noted that “the interest in pursuing individual relief is typically lower in actions, such as this one, to enforce compliance with consumer protection laws, since damage awards in such cases are generally too small to permit a single consumer to bring suit.” 198 F.R.D. at 385. However, the Court also observed that the availability of statutory damages and attorneys’ fees provided for in the Cable Act’s enforcement provisions makes individual enforcement feasible, if not probable. As a practical matter, neither the parties nor the Court know of any such individual actions either currently being prosecuted or reduced to judgments in the past. The reasons for this may include the cost of bringing a suit, the negligible harm or general compliance by cable operators. Therefore, while the prospect of statutory damages could theoretically tempt some individual plaintiffs, the difficulty in litigating and proving a Cable Act violation is such that the interest of individual plaintiffs in controlling an action is insignificant, particularly considering that individual Class Members may opt out of the Settlement Agreement to pursue their own claims. The parties have represented that no other litigation addressing the claims raised in the Complaint has been filed. (Memorandum of Law in Support of Preliminary Approval of Revised Settlement dated April 2, 2008 (“Joint Prelim. Mem.”), 18.) Although the absence of other cases may show a lack of interest in the action by other class members, it may also show that the incentives to pursue an individual action are insufficient. The many letters reviewed by the Court from Class Members who are offended by Time Warner’s alleged practices sufficiently demonstrate that other Class Members are interested in the action. See § II.C(2) infra. There is no apparent reason why concentrating the plaintiffs’ claims in this forum would be undesirable. As New York City constitutes a major market for Time Warner Cable, there are likely hundreds of thousands, if not millions, of Class Members residing in the Eastern District. In any case, this action has been prosecuted here for more than a decade and the time for any suggestion of changing venue has long passed. As to the difficulties in managing a class action, the Supreme Court has held that in evaluating a settlement “a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” Amchem, 521 U.S. at 620, 117 S.Ct. 2231. Considering only the matters pertinent to the superiority determination listed in Rule 23(b)(3), a Class Action appears to be the superior method for the adjudication of this action because the incentives to bring individual actions are insufficient. ii. Disproportionate Liability In its 2001 Order, this Court denied class certification under Rule 23(b)(3), holding that “a class action is not the superior manner of proceeding where the liability defendant stands to incur is grossly disproportionate to any actual harm sustained by an aggrieved individual.” 2001 Order, 198 F.R.D. at 383. The disproportionate liability the Court was referring to was the availability of minimum statutory damages in the amount of $1,000 per violation of the Cable Act pursuant to 47 U.S.C. § 551(f). The Court feared “a misuse of the procedural mechanism provided by a class action suit to turn what is fundamentally a consumer protection scheme for cable subscribers into a vehicle for the financial demise of a cable service provider that failed to comply with technical aspects of that scheme.” 2001 Order, 198 F.R.D. at 384. Judge Newman, in his opinion concurring in the 2003 2d Cir. Decision, observed that the district court is seemingly forced to choose between granting class certification and exposing the defendant to damages at trial out of all proportion to the alleged harm — potentially running afoul of the Due Process Clause and legislative intent — or denying class certification and “rewarding some law violators with liability for only a slight amount of total damages if, as seems more likely, few suits are filed.” 2003 2d Cir. Decision, 331 F.3d at 26. Weighing these choices, Judge Newman suggests a third alternative of “determining that a class will be certified only up to some reasonable aggregate amount of damages,” stating his view that “statutes are not to be applied according to their literal terms when doing so achieves a result manifestly not intended by the legislature.” Id. at 28 (citing inter alia Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982)). The unintended result here being the exposure of a company to billions of dollars in liability for technical violations of a statute resulting in little or no harm. “Even if possible due process concerns or statutory construction to avoid a bizarre result not intended by Congress might not independently require limiting an aggregate statutory damages award, such considerations would seem appropriate to inform the customarily broad discretion of a district judge in the context of class certification.” 2003 2d Cir. Decision, 331 F.3d at 28. Here, the certification of a settlement class effectively implements Judge Newman’s recommendation of setting a limit on damages. However, rather than attempting to set a damages ceiling based on congressional intent, the limits of due process or the Court’s own conception of a proper level of damages, the Court here accepts the parties’ settlement as being within such limits as these various considerations might impose. Although the threat of class certification for trial — characterized by the defendant as a “very narrow band of very grave risk [] that informed the decision to settle the case”— hung over the settlement negotiations, it can nonetheless be fairly said that in a motion for class certification based upon a negotiated settlement, concerns about the disproportionate impact of the class action form are answered so long as the settlement is not unduly punitive and plainly within the defendant’s ability to pay. The Court’s concerns pertaining to the disproportionate impact of statutory damages in a class action having been addressed, and the enumerated Rule 23(b)(3) factors having been weighed, the Court finds that the superiority prong is satisfied. For the foregoing reasons, the Class is certified pursuant to Rule 23(b)(3). B. Procedural Fairness: The Negotiation Process “The District Court determines a settlement’s fairness by examining the negotiating process leading up to the settlement as well as the settlement’s substantive terms.” D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir.2001). The parties state that this Settlement Agreement “is the product of extensive, supplemental arm’s-length negotiations in addition to the negotiations that led to the Prior Settlement.” (Joint Prelim. Mem. 23.) The Court accepts this characterization, given that, like the Prior Agreement, the Settlement Agreement here, “was a product of a long legal battle between Plaintiffs and Time Warner and was only arrived at after a committed litigation of the class claims, spanning, to date, eight years.” 239 F.R.D. at 337. Today, of course, the litigation has gone on for more than ten years. Elsewhere in this order, the Court discusses the incentives inherent in class action settlements for class counsel to maximize their fees and for defendants to minimize their costs. This combination creates the risk that class counsel will collude with defendants to provide the class with a small settlement in exchange for inflated fees. Indeed, the Court believes that the $5,000,000 in attorneys’ fees and expenses negotiated by the parties exceeds the value of the direct benefits provided to Class Members. See § II.E infra. Although such circumstantial evidence of a collusive negotiation process should put the Court on its guard, it is insufficient to undermine the Court’s conclusion that Class Counsel and the defendants did not act in bad faith. C. Substantive Fairness: The Settlement Terms The Court may only approve the terms of a class settlement “on finding that it is fair, reasonable, and adequate.” Fed.R.Civ.P. 23(e). In making such a determination, courts in this Circuit consider the following factors: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; [and] (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 117 (2d Cir.2005) (citing City of Detroit v. Grinnell, 495 F.2d 448, 463 (2d Cir.1974)). In its consideration of these factors, “[t]he Court must eschew any rubber stamp approval in favor of an independent evaluation, yet, at the same time, it must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case.” Grinnell, 495 F.2d at 462 (abrogated on other grounds, Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 48 (2d Cir.2000)). In the Preliminary Approval Order, this Court noted that “the Court’s conclusion that the previous settlement agreement was proeedurally and substantively fair applies with equal force to the current agreement.” (Preliminary Approval Order 2.) See 2007 Order, 239 F.R.D. at 336-38. Accordingly, the Court will only briefly review the Grinnell factors, giving particular attention to the reaction of the class which was not known at the time preliminary approval was granted. (1) Complexity, Expense and Likely Duration of the Litigation The complexity of the litigation is evidenced by its long procedural history, which includes a motion to dismiss that was first granted and then denied upon reconsideration by Judge Korman in the 1999 Order, the denial of class certification by this Court in the 2001 Order and the Second Circuit’s decision to vacate and remand that decision in the 2003 2d Cir. Decision, the litigation of a subsequent motion for class certification that was overtaken by the submission of the Prior Agreement, and the rejection of the Prior Agreement in the 2007 Order which led to the current Settlement Agreement. The expense of the litigation has almost certainly exceeded the benefit to the class members when one compares the requests for millions of dollars in fees by Class Counsel and counsel for the Objectors to the minimal benefits available to approximately half a million claimants. As for the duration of the litigation, it has entered its eleventh year. Were it to go to trial and subsequently be appealed, several more years of litigation would be likely. This factor weighs in favor of settlement. (2) Reaction of the Class As of November 23, 2008, the claims administrator, the Garden City Group, received 459,105 claim forms, see § I.B.2, supra. The deadline for filing claim forms was March 10, 2009, three months after the Fairness Hearing, so it is possible that thousands of additional claim forms were received after the hearing date. The parties tout the number of claim forms as evidence of the positive reaction of the Class, describing them as “figures in support” of the settlement that compare favorably to the 113 objections filed by the November 24, 2008, deadline and the 1,076 exclusions filed by the November 10, 2008, deadline. (Joint Memorandum in Support of Final Approval of Revised Settlement dated December 3, 2008 (“Joint Mem.”), 12.) While the number of objections and exclusions constitutes only a small fraction of the Class, the Court does not attribute a great deal of significance to the number given the low stakes of a $5 settlement and the burden on each objector to provide their written objections in triplicate, buy three stamps and mail copies to the Court, Class Counsel and defense counsel. The 459,105 responses, when compared to the number of Notices and postcards mailed to Category I, II, and III Class Members (7.2 million, of which 1.8 million were sent to persons with confirmed addresses), constitutes about 6.4% of the Class Members eligible for a direct benefit. Even if the number of responses rose to 550,000 prior to the March 10, 2009 deadline, a mere 7.6% of the Category I, II and III Class Members would be claiming a benefit. The 113 written objections cover a range of topics. A majority of the objections included complaints about the sufficiency of the settlement amount. A substantial minority of the complaints related to the proposed $5,000,000 fee for Class Counsel. The contrast of the $5,000,000 proposed attorneys’ fee to the $5 cash compensation offer was not lost on many objectors. As one letter pithily stated: “Congratulations, for this we needed you? 5,000,000 for the lawyers 5 for me. Great.” (Docket No. 204). Many objections expressed outrage at the practice of marketing private information and the attendant frustration of receiving unsolicited calls and mail pieces. One such objection stated simply, “I object to the settlement ... on the grounds that none of the listed compensations are sufficient to assuage my anger for Time Warner selling my personal information to others so that I may be solicited.” (Docket No. 287.) Fourteen careful readers of the Notice objected specifically to the requirement that Class Members must shoulder the burden of cutting off any monthly service benefit to avoid being charged for its automatic continuation. One of them characterized this benefit as a “promotional campaign, which resembles other promotions the company has offered for strictly profitable purposes, and which costs the company little while enticing increased business, [the plan] is the inverse of a penalty; and ... hardly discourages misbehavior nor compensates the victims....” (Docket No. 213.) Another objector speculated that if the proposed settlement required that the monthly service benefit cut off automatically that “Time Warner would run away from this so quickly the vortex created by their departure would suck the entire court house into it!” (Docket No. 230.) Indeed, the Court is most troubled by this aspect of the Settlement Agreement, but two factors counsel against rejecting the settlement on this basis. First, the Relevant Period ended more than ten years ago and the Court does not want to postpone relief any more than would be necessary to achieve an acceptable result. Second, the Court has clearly articulated to Time Warner (and does so again here) the importance it places upon the clear and frequent notification of Class Members of their obligation to take an affirmative step to discontinue a monthly service benefit, and the Court’s expectation that cancellation of the benefit will be simple and straightforward, eschewing lengthy wait times or intervening sales pitches. One way to alleviate the Court’s concerns would be the use of automated reminder calls to Class Members who selected a monthly service benefit that would give customers the option of ending the additional service with the touch of a button (as Time Warner’s cable customers in this judicial district may in like manner confirm or cancel service calls). Another approach would be to email Class Members selecting a monthly service benefit with a link to a page that would enable them to effect the cancellation of the monthly service benefit online. Finally, two objectors voiced their concerns at the Fairness Hearing. Objector Bob Lamm suggested that Class Counsel should have its proposed $5,000,000 cash compensation substantially reduced and replaced with Time Warner Movies on Demand. In addition, Lamm asked that the cash option be raised from $5 to $15. Objector Franklin Conde complained about the settlement consideration and the proposed fees, voiced general dissatisfaction with service he has received from Time Warner and expressed his indignation that they may have sold his personal information, causing him to receive junk mail. The objections to the settlement consideration and Class Counsel’s fees voiced by Messrs. Lamm and Conde, together with the 113 objections submitted in writing, generally address two grievances that are familiar to judges presiding over class actions and to class action counsel, namely, the benefit to members of the class is too little and the fees awarded to counsel are too much. Those grievances are inherent in the class action which is a policy device to “overcome the problems that small recoveries do not provide the incentive for any individual bring a sole action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually the attorney’s) labor.” Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (citing Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir.1997)). The concerns raised as to attorneys’ fees and the amount of the settlement benefits are dealt with in greater detail in below. In summary, the Court finds that the small amount of consideration is commensurate with the minimal harm to each Class Member, see § II.C(8-9), and the Court has reduced attorneys’ fees to a reasonable level, see § II.E.l, infra. Taking into consideration the small number of objections and the careful consideration of them in this order, the Court finds that the response of the class does not weigh against approval of the settlement. (3) Stage of Proceedings and Amount of Discovery This factor relates to whether the plaintiffs had sufficient information on the merits of the case to enter into a settlement, Cinelli v. MCS Claim Servs., Inc., 236 F.R.D. 118, 121 (E.D.N.Y.2006), and whether the Court has sufficient information to evaluate such a settlement. Wal-Mart, 396 F.3d at 118. Here, the parties have engaged in discovery and have become apprised of the strengths and weaknesses of their cases through extensive motion practice and successive judicial decisions. The settlement agreements were the product of protracted negotiation. Likewise, having given attention to this matter for nearly a decade, this Court has ample information to evaluate the merits of the settlement. This factor also weighs in favor of approval. (4-6) Risks of Establishing Liability, Damages and Maintaining the Class Action Through Trial “In assessing the Settlement, the Court should balance the benefits afforded to the Class, including the immediacy and certainty of a recovery, against the continuing risks of litigation.” In re Top Tankers, Inc. Sec. Litig., No. 06 Civ. 13761(CM), 2008 WL 2944620, at *4 (S.D.N.Y. July 31, 2008) (emphasis in original). Here, the Class faced substantial obstacles to proving damages, having the Class certified for trial and establishing the defendant’s liability. These risks weigh in favor of settlement. As to establishing damages, the parties acknowledge that each plaintiff may be required to prove actual damages in order to trigger statutory damages. See Doe v. Chao, 540 U.S. 614, 124 S.Ct. 1204, 157 L.Ed.2d 1122 (2004). In Chao, the Supreme Court held that under an analogous provision of the Privacy Act of 1974, 5 U.S.C. § 552a, a claimant may not recover the minimum statutory amount of $1,000 without making a showing of actual damages as a result of the violation. Id. at 616, 124 S.Ct. 1204. A showing that a violation of the Cable Act caused actual damages to any particular Class Member is made extremely difficult by the fact that no records were kept as to which names from the LSDB were sold and which ones were not. (2006 Joint Mem. 13.) “Having one’s name on an LSDB does not necessarily indicate that the person’s information had been sold, since third parties purchased PII based upon sorting criteria, not the entire list.” 2007 Order, 239 F.R.D. at 339, n. 28. The 2006 Joint Memorandum, upon which the parties rely, identifies several risks to establishing and maintaining the action as a class action for litigation. This Court has previously rejected certification for trial, and its concerns about the propriety of certifying such a class in the future have already been aired. See § II.A.l.c.ii supra. The Second Circuit “acknowledge^] Judge Glasser’s legitimate concern that the potential for a devastatingly large damages award, out of all reasonable proportion to the actual harm suffered by members of the plaintiff class, may raise due process issues.” Parker v. Time Warner, 331 F.3d 13, 22 (2d Cir.2003). Furthermore, the absence of litigated cases under the Cable Act means that there was little in the way of established precedent. In the lone reported case where class certification was sought, Wilson v. Am. Cablevision of Kansas City, 133 F.R.D. 573 (W.D.Mo.1990), the court denied certification where violations of the Cable Act’s notice provisions were deemed “technical in nature”. {See 2006 Joint Mem. 10.) Further, the defendant asserts that in the absence of the settlement agreement, it would have opposed class certification. Although the plaintiffs survived a motion to dismiss the action, the hurdle of establishing the defendant’s liability remains to be cleared. The defendant’s interpretation of the Cable Act validated all of its actions. Time Warner maintains that the only data taken directly from its subscribers and sold to third parties were names and addresses, which is permitted by § 551 (c) (2) (C) (i). According to Time Warner, the additional subscriber information was not obtained from subscribers, but from outside vendors, and subscribers were offered the opportunity to opt out of the LSDB. Therefore, Time Warner argues, the dissemination of such additional subscriber information required neither the notification nor the consent of subscribers. “Because Congress was concerned with regulating only the use of information obtained from subscribers, the defendant argues that Congress could not possibly have intended to require a cable company to provide any notice regarding the nature and use of information collected from third parties.” 1999 Order, 1999 WL 1132463, at *5. (7) Ability of Defendant to Withstand a Greater Judgment Whether or not it would be warranted, the defendant could withstand a greater judgment. This factor weighs against approval of the settlement. However, “[t]he fact that a defendant is able to pay more that it offers in settlement does not, standing alone, indicate the settlement is unreasonable or inadequate.” In re PaineWebber Ltd. P’ships Litig., 171 F.R.D. 104, 129 (S.D.N.Y.1997). (8-9) Range of Reasonableness of the Settlement Fund in Light of the Best Possible Recovery and All the Attendant Risks of Litigation As the parties noted, the “outer limits of recovery in this litigation were very great.” (2006 Joint Mem. 16.) It was these outer limits that gave this Court pause when asked to certify a class at an earlier stage in this action and these outer limits which ran the risk of running afoul of the Due Process Clause. 2001 Order, 198 F.R.D. at 384. Here, the plaintiffs have sought to certify a class consisting of all persons appearing on a recoverable LSDB, or approximately 7.2 million people. Even constraining the outer limits of damages to the $1,000 statutory minimum per class member, the total would be in excess of $7 billion. With the benefit of knowing that 459,105 claims have been filed, and assuming that the number of claims may have risen as high as 550,000 by the end of the claims period in March 2009, that outer limit is still an exorbitant $550 million. The value of the settlement is discussed at length in connection with the award of attorneys fees. See § II.E.l, infra. Here, it suffices to say that the Court values the settlement at $6.75 per claimant, the estimated cost to the defendant of providing claimants with a $5 check. A recovery of $6.75 is less than one percent of the $1,000 minimum statutory award. The settlement consideration, relative to the minimum statutory damages, is therefore very small. However, it is not small relative to whatever negligible harm was imposed upon some portion of the Class by some additional amount of junk mail or unwanted phone calls. “The fact that a proposed settlement may only amount to a fraction of the potential recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate and should be disapproved.” Grinnell, 495 F.2d at 455. “In fact there is no reason, at least in theory, why a satisfactory settlement could not amount to a hundredth or even a thousandth part of a single percent of the potential recovery.” Id. at 455, n. 2. When considering the small settlement amount, it is also worth remembering that under § 551(c) of the Cable Act, it was not unlawful for Time Warner to sell the names and addresses of subscribers of “any cable service” (i.e. HBO, Disney, Playboy, etc.) so long as subscribers were alerted to this possibility. Nor was it unlawful for the purchasers of such lists to obtain information from third parties, such as telephone numbers and demographic information to go with those names and addresses. The only actions that were arguably in violation of the Cable Act were the enhancement of lists of the names and addresses of their subscribers by Time Warner without notice to those subscribers, and Time Warner’s sale of those enhanced lists without subscriber consent. It is entirely possible that squarely within the four corners of the law the Class Members would have had their names and addresses sold by Time Warner and enhanced with publicly available information by third parties, had Time Warner not elected to augment the lists on its own. Therefore, the damage to Class Members resulting from technical violations of the Cable Act is almost certainly negligible. When the benefit is further placed in the context of the risks and delay of continued litigation detailed above, it is clearly within the range of reasonableness. In considering the Settlement Agreement, the Court is mindful of the “strong judicial policy in favor of settlements, particularly in the class action context.” In re PaineWebber Ltd. P’ships Litig., 147 F.3d 132, 138 (2d Cir.1998); Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir.1982) (“The settlement of complex class action litigations are clearly favored by the courts.”). Accordingly, upon weighing the Grinnell factors, the Court finds the settlement amount to be fair and reasonable. D. Distributional Fairness: The Plan of Allocation “To warrant approval, the plan of allocation must meet the standards by which the ... settlement was scrutinized— namely, it must be fair and adequate.” Maley v. Del Global Techs. Corp., 186 F.Supp.2d 358, 367 (S.D.N.Y.2002). “Indeed, where a proposed settlement provides favorable treatment to some segment of the class, careful judicial scrutiny is required to prevent injustice and to ‘ensure that the burden of settlement is not shifted arbitrarily to a small group of class members.’ ” 2007 Order, 239 F.R.D. at 337 (quoting Holmes v. Continental Can Co., 706 F.2d 1144, 1148 (11th Cir.1983)). In the 2007 Order, this Court considered the differential treatment of persons in Categories I, II, III and IV, and held that the failure of the Prior Agreement to provide for consideration for the Category IV Class Members did not raise questions of distributional fairness because the Category IV Class Members could show no damages as their names were not found on any iteration of the LSDB. 2007 Order, 239 F.R.D. at 339. (“A claim which cannot be proven is worth essentially nothing. Consideration of nothing for releasing a worthless claim is therefore fair, reasonable, and adequate.”) In the same order, this Court held that the benefit accorded to Category III Class Members prevented a finding of distributional fairness. Pursuant to the Prior Agreement, the Category III Class Members — persons whose names appeared in the LSDB but who no longer lived in an area serviced by Time Warner — would only receive the right to transfer the services benefit to someone who was living in an area serviced by Time Warner. The Court explained, that the Category I, II and III Class Members are differentiated only by two characteristics — whether they are current or former subscribers, and whether they live in or outside an area currently serviced by Time Warner. These differences have absolutely nothing to do with the merits of their claims. There is absolutely no way to rationally distinguish between the claims of these three categories of plaintiffs.... Even if the right to transfer a benefit is a benefit, it is clearly less valuable than the benefit itself. 2007 Order, 239 F.R.D. at 340 (emphasis in original). To address this distributional inequity, the Settlement Agreement added the alternative of a $5 cash payment for all Category I, II and III Class Members. Therefore, the only difference in benefits among these groups is that Category III Class Members, because of where they live, can only transfer the services benefits. This alteration of the benefits mix is sufficient to alleviate the Court’s distributional fairness concerns. This method of allocation is fair and adequate, and is therefore approved. E. Class Counsel’s Fees and Expenses and Representative Plaintiffs’ Incentive Awards Class Counsel requests attorneys’ fees and expenses of $5,000,000. (Plaintiffs’ Memorandum in Support of Petition for an Award of the Negotiated Attorneys’ Fees and Expenses dated Dec. 4, 2008 (“Fee Mem.”), 1.) In addition, Class Counsel requests awards of $2,500 each for Representative Plaintiffs Parker and DeBrauwere. (Fee Mem. 13.) Any Class Counsel fees and expenses authorized by the Court will be paid by Time Warner. (Settlement Agreement ¶ 26). The requested fee award and awards for the Representative Plaintiffs are not opposed by Time Warner. 1. Class Counsel’s Fees Fed.R.Civ.P. 23(h) provides: “In a certified class action, a court may award reasonable attorney’s fees and nontaxable costs that are authorized by law or by the parties’ agreement.” The practical difficulties of balancing the vindication of the rights of class members and fairly compensating those attorneys that expend their time and labor to achieve that goal was recently described in its stark reality by Judge Posner: The class action is an ingenious device for economizing on the expense of litigation and enabling small claims to be litigated.... But the class action device has its downside, or rather downsides. There is first of all a much greater conflict of interest between the members of the class and the class lawyers than there is between an individual client and his lawyer. The class members are interested in relief for the class but the lawyers are interested in their fees, and the class members’ stakes in the litigation are too small to motivate them to supervise the lawyers in an effort to make sure that the lawyers will act in their best interests. The defendants in class actions are interested in minimizing the sum of the damages they pay the class and the fees they pay the class counsel, and so they are willing to trade small damages for high attorneys’ fees, especially since, as Judge Friendly put it, “a juicy bird in the hand is worth more than the vision of a much larger one in the bush, attainable only after years of effort not currently compensated and possibly a mirage.” Alleghany Corp. v. Kirby, 333 F.2d 327, 347 (2d Cir.1964). The result of these incentives is to forge a community of interest between class counsel, who control the plaintiffs side of the case, and the defendants. The judge who presides over the class action and must approve any settlement is charged with responsibility for preventing the class lawyers from selling out the class, but it is a responsibility difficult to discharge when the judge confronts a phalanx of colluding counsel. Thorogood v. Sears, Roebuck and Co., 547 F.3d 742, 744-45 (7th Cir.2008). This action exhibits the tensions described by Judges Posner and Friendly. To end the litigation, the defendant and Class Counsel negotiated a settlement that purported to give Class Counsel $5,000,000 and offered Class Members a small amount of cash or coupons for services that they either could not use (in the case of Category III Class Members) or would not pay for at retail prices (in the case of monthly services). To discharge its responsibility to the Class, the Court must discern the value of the settlement in order to avoid providing Class Counsel with outsized fees that are not commensurate with the small benefit provided to Class Members as compensation for the small harm they allegedly suffered. a. The Common Fund Doctrine and Valuing the Settlement Agreement “[A] party that secured a fund for the benefit of others, in addition to himself, may recover his costs, including his attorney’s fees, from the fund itself or directly from the other parties enjoying the benefit.” In re Holocaust Victim Assets Litig., 424 F.3d 150, 157 (2d Cir.2005) (citing Savoie v. Merchants Bank, 84 F.3d 52, 56 (2d Cir.1996)) (internal quotation marks omitted). This principle is known as the common fund doctrine. “The doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant’s expense.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980) (internal citations omitted). In this Circuit, courts may calculate reasonable attorneys’ fees from a common fund based either on the percentage of the recovery method or the lodestar method. Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 50 (2d Cir.2000). Under the percentage method, attorneys’ fees are set by the court as a percentage of the fund. Under the lodestar method, the lodestar is arrived at by multiplying the hours expended by class counsel by appropriate hourly rates, and may then be adjusted by a multiplier determined at the discretion of the court, taking into consideration the contingent nature of payment, the quality of representation and the results achieved. In re Arakis Energy Corp. Sec. Litig., No. 95 Civ. 3431(ARR), 2001 WL 1590512, at *15 (E.D.N.Y. Oct. 31, 2001). A Second Circuit panel recently held that attorneys’ fees awarded as a percentage of a common fund must take into consideration the entirety of the fund, not only that portion received directly by class members. Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 437 (2d Cir.2007). In Masters, a fund of nearly $22 million was established, but only $9.34 million was claimed by class members. Id. at 428, 431. The settlement agreement left disbursement of the remainder of the fund to the discretion of the court. Id. at 428. Class counsel’s request of fees and expenses was nearly $8.9 million. Id. The district court awarded $3.76 million in fees based on 40% of the value of claims made, rather than the entirety of the fund, separately allowing $1.6 million in expenses. Id. The Court of Appeals reversed, holding that: “The entire Fund, and not some portion thereof, is created through the efforts of counsel at the instigation of the entire class. An allocation of fees by percentage should therefore be awarded on the basis of the total funds made available whether claimed or not.” Id. at 437. In the typical common fund case such as Masters, there is an actual fund, or at least a fixed amount of money representing the extent of the defendant’s liability. Here, the Settlement Agreement establishes neither; it simply provides that Time Warner will satisfy those claims that are made by eligible class members, while retaining any unclaimed benefits. In a similar case, the court in In re TJX Cos. Retail Security Breach Litig., distinguished Masters and decisions like it, noting that in such cases, “there was an actual common fund — -whether created by settlement or judgment of the court — to which the pereentage-of-the-fund method of determining attorneys’ fees was applied. In contrast, the Agreement here creates no fund; it simply provides that TJX will pay claims on an as-made basis, subject to certain caps.” 584 F.Supp.2d 395, 403 (D.Mass.2008). The heart of the concern articulated by the TJX court is the risk that settlement agreements will be designed to give the appearance of the creation of a very large fund upon which fees may be based, frequently combined with low participation rates. Id. at 404-405. In any given case, class member nonparticipation may be attributed to a variety of factors: an ineffective notice program that fails to make class members aware of their rights, unappealing benefits that do not provide sufficient incentive for class members to invest the effort to submit a claim, or a claims process that is confusing, time-consuming, or requires class members to submit documentation or information they are unlikely to have in order to obtain relief .... in a reversionary common fund or claims-made settlement, the defendant is likely to bear only a fraction of the liability to which it agrees. Id. Many of the concerns raised in TJX regarding the small likelihood that claims would be filed are present here. Chief among them is the difficulty of contacting Category II and III Class Members, the former Time Warner Subscribers. Of the 7.2 million Category I, II and III Class Members, current addresses were found for only 1.8 million. The remaining class notifications were mailed to addresses where former subscribers lived at least a decade ago because their information could not be updated. On this basis alone, it was clear from the outset that the response rate would only be a small fraction of the 7.2 million Class Members entitled to a direct benefit. Here, as in TJX, the extent of the defendant’s liability is wholly dependant upon the number of claims, the cost of administering the settlement and such fees and expenses as are assessed by the Court. Class Counsel characterizes the Settlement Agreement as having created a common fund, the size of which is a function of the number of claims and the value of such claims. (Fee Mem. 4.) This conception of a common fund does not indulge the temptation to claim fees as a proportion of the full recovery that could theoretically be made by al