Seventh Circuit Disagrees With Contrary Conclusion By Ninth Circuit In In re HP Inkjet.
The Seventh Circuit Court of Appeals has authored an important opinion in the class action fee area.
In In re Southwest Airlines Voucher Litig., Nos. 13-3264 et al. (7th Cir. Aug. 20, 2015), the Seventh Circuit construed several coupon settlement provisions in the Class Action Fairness Act (CAFA), 28 U.S.C. § 1712, concluding that the lodestar method may be used to award class counsel a fee rather than utilizing instead the value of redeemed coupons. In doing so, it departed company from the divided Ninth Circuit majority in In re HP Inkjet Printer Litig., 716 F.3d 1173, 1183-1185 (9th Cir. 2013) and instead sided with Circuit Judge Berzon’s dissent.
The Southwest Airlines Voucher court found that CAFA allows three approaches to fee awards: (1) percentage-of-recovery, which cannot be based on just the face value of coupons; (2) lodestar, a permissible alternative to the percentage-of-recovery method; or (3) a combination of the two, where cash and equitable relief is involved in the settlement.
In this case, the class got everything it wanted—a renewed drink voucher which was good for up to another year and one which was obtained through a simple claims process. This resulted in class counsel receiving lodestar fees, augmented by a 1.5 positive multiplier, to the tune of $1.65 million (plus expenses of $18,522.32).
The Seventh Circuit reaffirmed the notion that “clear sailing” provisions (where the defense agrees not to object to requested fees of a certain amount) and “kicker “ clauses in settlement (where any decrease in fees goes back to the benefit of the defendant rather than the class) should be scrutinized intensely, but found no cause for alarm given that the class got everything it wanted such that the settlement was fair.
However, for all litigators, there is a footnote in the opinion to pay attention to. The panel chastised class counsel for using an ellipsis to distort the meaning in a quote, especially where over 1,000 words were deleted by the ellipsis. . . .
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