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Posts Tagged ‘fee award’

Reuters contributor Alison Frankel authored an insightful column published August 20, 2012 entitled Foretelling the End of Money-for-Nothing Class Actions, that touches on issues similar to those raised by Brian Wolfman in two recent articles summarized in this August 15 CAB post.  In her column, Frankel comments on a recent trend, particularly in data privacy class actions, where large fee awards are requested in settlements for which no meaningful relief is provided to class members.  Oftentimes, the fee awards are justified by the value of prospective injunctive relief or by the fact of a large cash payment to charity in the form of a cy pres award, but not by any direct benefits to the class members themselves.

Frankel predicts that we have seen the “high point” in what she terms “money-for-nothing” class action settlements, pointing to a growing skepticism among judges who are asked to approve them.  While it remains to be seen if this prediction will come true, Frankel’s article, like Wolfman’s articles, should at least give pause to class action attorneys who are willing to sell out a class for personal gain: you may be getting away with this now, but at some point the courts will begin to look beyond the desire to clear their dockets and begin to question the societal value of these settlements.

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Last July, in an entry titled Incentive Awards Ok, but Not Incentive Agreements, I commented on the Ninth Circuit Court of Appeals’ decision in Rodriguez v. West Publishing Corp.   In Rodriguez, the Ninth Circuit panel condemned the use incentive agreements in class actions.  The incentive agreements were engagement agreements between the law firm and the named class representatives that called for the attorneys to seek successively higher incentive payments to the class representatives in the event of class settlements or verdicts in successively higher dollar amounts.  As the court in Rodriguez  noted, incentive agreements are to be distinguished from incentive awards, which if reasonable in amount are widely accepted as compensation for the named plaintiff’s assistance with and risk assumed in prosecuting the case.  The incentive agreements at issue in Rodriguez had not been disclosed prior to preliminary approval of the settlement or notice to the class.  As noted in the July entry, the Ninth Circuit nonetheless upheld approval of the settlement as fair and reasonable, but remanded to the trial court for further proceedings regarding the requests by plaintiffs’ counsel for an award of attorney’s fees.

Earlier this month, the trial court entered a final order on attorney’s fees and costs requested by attorneys for the representative plaintiffs and objectors.  The court held that in light of the Ninth Circuit’s opinion, and under California law, one of the firms representing the plaintiffs, McGuire Woods, had forfeited any right to recover attorney’s fees because it had performed the legal services on behalf of different clients, the class and the class representatives, that had a conflict of interest.  As a result, the firm will receive no attorney’s fees at all, as compared to the $15 million that the firm had requested for its part in obtaining the $49 million settlement for the benefit of the class.  The court awarded approximately $1.5 million each in attorney’s fees to two additional firms that it concluded were not involved in the conflict of interest.

Ashby Jones of the WSJ Law Blog, has authored a comprehensive article discussing the recent trial court decision and the history of the case, entitled The Class Gets $49 Million, But the Lawyers Get Nothing.

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In another I must be living under a rock moment, for the first time this evening I came across Octagon Publishing’s Class Action Attorney Fee Digest Blawg.  The Blawg, which supplements Octagon’s subscription service, Class Action Attorney Fee Digest, focuses exclusively on orders, decisions, and trends in attorneys’  fee awards in class actions.  The publication’s key contributor is Harvard Law Professor William B. Rubenstein, who does expert witness work on class action fee issues.  If you’re about to submit a fee petition or are working on a class action settlement, you’d be wise to check out this great class action resource.

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According to SCOTUS Blog, the ABA Journal, and other sources (see the citations within Debra Cassens Weiss’s ABA Journal article), the U.S. Supreme Court has accepted certiorari in Perdue v. Kenny A., et al., Case No. 08-970.  The appeal involves an attorneys fee award to attorneys who successfully prosecuted a class action on behalf of thousands of foster children in Georgia’s two most populous counties, Fulton and DeKalb.  The lawsuit resulted in consent decrees that require significant reforms to the State’s and counties’ foster care systems.  Although the case involves an action brought by attorneys for a non-profit public interest organization and their cooperating counsel, the outcome of the Supreme Court case could have broad repercussions on the attorneys fees awardable in a variety of cases in federal court, including run-of-the-mill class actions.   The Court accepted review of the following question:

Can a reasonable attorney’s fee award under a federal fee-shifting statute ever be enhanced based solely on qualify of performance and results obtained when these factors already are included in the lodestar calculation?

For more information on the history of the case with links to key documents, see childwelfare.net:

http://childwelfare.net/activities/kennya/kenny_a_case_overview_20060718.html

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