Class Actions Brief Blog

When a class action lawsuit ends, class counsel typically seek a fee award. Under Rule 23(h), the district court must make findings of facts and conclusions of law to support an award of “reasonable attorney’s fees and nontaxable costs” to the class counsel. Fed. R. Civ. P. 23(h). In calculating these fees, courts generally use one of two different methods: (1) the “lodestar” method; or (2) the “percentage of fund” method.

1. Lodestar Method. Under the “lodestar” method, the district court identifies a lodestar figure by multiplying the number of hours expended by ...

The Fourth Circuit’s opinion in Bell v. Brockett, No. 18-1149 (4th Cir. Apr. 25, 2019), posits that “[d]efendant class actions are so rare they have been compared to unicorns.” But what may be even rarer is an opinion, like Bell, in which a court opines on the fundamental and concerning nature of the district court’s clear errors regarding the appointment of class counsel, but nonetheless decides not to reverse. 

Bell arises from the ZeekRewards.com (“Zeek”) fraud scheme. Zeek offered participants the opportunity to share in revenues generated by Zeek’s supposed ...

Last year in this space, we reported on the continuing debate concerning the use of cy pres awards in class action settlements.  Since 2013, Chief Justice Roberts has provided cautionary comments about this practice.  See Marek v. Lane, 134 S. Ct. 8 (2013).  We also reported on the Ninth Circuit’s approval of a cy pres settlement in In Re Google Referrer Header Privacy Litigat., 869 F.3d 737 (9th Cir. 2017), which awarded plaintiffs’ counsel $3.5 million and six nonprofits/educational institutions another $5.3 million, all while awarding class members the proverbial goose egg.

In a December order, Judge Eagles awarded $20.4 million in attorneys’ fees to Class Counsel in Krakauer v. Dish Network. The motion for fees was unchallenged by Dish Network, and all but a handful of the 18,000 class members approved of the amount.

The facts of Krakauer are familiar to longtime readers of Class Actions Brief. Plaintiffs sued Dish Network under the Telephone Consumer Protection Act (“TCPA”) for allowing their agent to repeatedly call plaintiffs despite their listing on the Do Not Call Registry. As we previously reported, after a trial in January 2017, a jury ...

Those who follow class action law probably will be familiar with In re Trulia (2016), the seminal decision of the Delaware Court of Chancery that put the brakes on disclosure-only settlements.  Before Trulia, these controversial settlements were ubiquitous in deal litigation, in which shareholders of a company file a class action lawsuit seeking to stop the company from engaging in a merger or acquisition on the ground the company failed to disclose sufficient information about the transaction.  Under a typical disclosure-only settlement, the company agrees to supplement its ...

A good while ago, we reported in this space, about so-called “cy pres” settlements. We highlighted the Chief Justice’s cautionary comments about this practice – under which third parties, not class members, are compensated by defendants. See Marek v. Lane, 134 S.Ct. 8 (2013). After the Ninth Circuit recently approved a cy pres settlement, In Re Google Referrer Header Privacy Litigat., 869 F.3d 737 (9th Cir. 2017), which awarded plaintiffs’ counsel $3.5 million, and six nonprofits/educational institutions another $5.3 million – all while awarding class members the ...

For what appears to have been a frivolous lawsuit, In re: Subway Footlong Sandwich Marketing and Sales Practices Litigation generated an interesting opinion from the Seventh Circuit full of class-action issues. The case originated when an Australian teenager posted a photo of an 11-inch Subway sandwich, with a tape measure, on his Facebook page. Coming in the midst of Subway’s $5 Footlongs^TM campaign, the picture went viral, and class-action cases were soon pending.

After early discovery showed that most “footlongs” were, in fact, 12 inches long, plaintiffs’ counsel ...

Rep. Bob Goodlatte (R-Va.), the Chairman of the House Judiciary Committee, recently introduced a bill that would make significant changes to federal class action litigation. The Fairness in Class Action Litigation Act of 2017 (H.R. 985) states that it is intended to allow prompt recoveries to plaintiffs with legitimate claims and “diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system.”

In its current form, the draft bill would likely eclipse the 2005 passage of the Class Action Fairness Act as the most significant ...

We have previously commented about “disclosure only” settlements in class action merger cases, and the increasing scrutiny provided to them by courts here and in Delaware. Judge Bledsoe entered the fray yesterday, approving a settlement of litigation involving the merger of Yadkin Financial Corporation and NewBridge Bancorp in a 44-page order. In a stark preamble to his findings, Judge Bledsoe gave warning that the Business Court would likely be joining their brethren in Delaware in strictly reviewing such settlements in the future. The Court characterized such a shift as a ...

Last month, we previewed the challenge to a settlement of litigation involving the Reynolds-Lorillard merger. The Business Court has helpfully made available the transcript of the hearing on approval of the settlement, which took place on February 12. At the hearing, the Court made clear that it was quite familiar with recent changes in merger litigation in Delaware, including the Trulia case, and stated that it was reviewing the settlement under “strict scrutiny,” not a “rubber stamp standard.” Notwithstanding a shareholder objection supported by Professor Sean ...

When two public companies announce an intention to merge, class litigation follows like the night the day. These complaints usually request some sort of preliminary injunctive relief which, if successful, can derail the merger. Rarely, however, do plaintiffs press for this relief. Instead, they opt to resolve the claims, which requires court approval under Rule 23. The resolution can involve the payment of money to shareholders, but many times it does not and instead takes the form of “programmatic relief,” consisting principally of additional disclosures to the class ...

Can a class action settlement agreement contain a fee-shifting provision that provides for a payment of attorneys’ fees? In a question of first impression, the North Carolina Court of Appeals said yes, subject to a trial court’s approval of the settlement at a fairness hearing.

In the long-running Ehrenhaus v. Baker case, the Plaintiff brought a class action challenging the merger of Wells Fargo and Wachovia. The parties ultimately entered into a settlement agreement that also provided for a payment of attorneys’ fees to Plaintiff’s counsel. The trial court approved the ...

In Mitchell v. Smithfield Packing Co. Inc., No. 4:08-CV-182, 2013 WL 3819935 (E.D.N.C. July 23, 2013), Magistrate Judge Gates had to decide how to deal with putative class counsel who were having trouble communicating: “Communications between [co-counsel] appear to have completely broken down, and the court cannot envision any scenario in which they could continue to work together.” In the face of this, the Court had to choose which counsel to appoint as sole class counsel under Rule 23(g). Rule 23(g)(2) provides that “[i]f more than one adequate applicant seeks ...