For Noncoupon Relief, District Judge Bashant Grants $3.42 Million In Fees Based On Anticipated $10.5 Million Cash Fund Versus Class Counsel’s $5.7 Million Lodestar Request.
U.S. District Judge Cynthia Bashant’s decision in In re Easysaver Rewards Litig., 2020 U.S. Dist. LEXIS 77483 (S.D. Cal. May 1, 2020) contains an excellent discussion of the methodology to use in awarding attorney’s fees to class counsel in a mixed coupon/non-coupon settlement case.
In a mixed case, a district judge should more appropriately apply the percentage-of-recovery method to award fees for coupon relief and the lodestar method to award fees for only the non-coupon relief, citing CAFA, 28 U.S.C. § 1712 (which she labeled as having “puzzling” text). What happened in this case is that class counsel only sought fees for the non-coupon relief based on an anticipated $10.5 million cash fund such that the lodestar was the primary methodology to utilize. Class counsel requested a $5.7 million lodestar, plus an unspecified positive multiplier. However, District Judge Bashant determined that $3.42 million would be the granted fee award with a negative .06 multiplier because (1) the requested $5.7 million would amount to 54% of the $10.5 million fund based on a percentage-of-recovery check often used in lodestar analysis, too rich for the benefit returned to the class; (2) the $3.42 million award was 32.5% of the anticipated cash fund; (3) the settlement’s value had actually diminished over time; and (4) a higher percentage of the cash fund over the Ninth Circuit’s 25% benchmark test was justified because the case was risky and involved novel issues when it was filed. If the cash fund was more than $10.5 million, class counsel was allowed to return to the district court to file a request for a supplemental award of fees.
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