Court Utilizes “Sliding Scale” Percentage of Fund Approach, Checked by Lodestar With Multiplier.
The Price? Priceless.
After approving a settlement producing a $5.7 billion settlement fund in a class action case brought by merchants against Visa, MasterCard, and several banks relating to certain interchange rates, U.S. District Judge John Gleeson then had to deal with the motion for an award of attorney’s fees and expenses in In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., Case No. 1:13-cv-03059-JG-JO (E.D.N.Y. Jan. 10, 2014, Doc. No. 18) (for publication). He produced a published decision with an interesting approach, after noting there were few comparators to help guide judges in these types of mega-cases.
He eventually awarded $544.8 million in fees and a little over $27 million in expenses, although class counsel had requested a fee of $570 million (about 10% of the common fund).
District Judge Gleeson primarily relied on the percentage of fund approach, but decided that a graduated decreasing schedule was in order, going from 33% of the initial zero-10 million tranche and then winding down in intervals to 6% for the $4-5.7 billion tranche. He observed that this was in keeping with cases finding that the percentage of fund fees should decrease as the size of the fund increases. A lodestar “check” also confirmed the propriety of the award--$160 million was expended in fees, such that the eventual award was one with a 3.41 multiplier—well within the acceptable range for mega-cases.
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