Thursday, September 3, 2015

Friday, May 8, 2015

In re Capital One TCPA Litigation Seventh Circuit appeal

Litigation over whether Capital One and its affiliates violated the Telephone Consumer Protection Act settled for $75.5 million—about $4 for each of the 17.5 million class members who allegedly had a statutory claim for $500 or more. Six law firms asked for 30% of that, or over $22.6 million. We objected on behalf of a class member, Jeffrey Collins, introducing evidence showing that something more in the 4.6% range would more than fully compensate class counsel for the risk they incurred. The district court did not adopt our arguments, but agreed with us that there should be a declining percentage as the fund grew larger, and awarded "only" $15,668,265. That's for 4,268 hours of work by six law firms, including associates and paralegals, or over $3,671/hour. Other TCPA cases have awarded over $5,000/hour for similarly mediocre results.

This award is not because the underlying TCPA action was extraordinarily risky: the evidence showed that class counsel won settlements in 16 out of 38 TCPA class actions over the last four years and collected handsome fees for 64% of the hours they devoted to TCPA litigation. Moreover, the court found only that this case was “slightly” more risky than typical TCPA litigation. Nor did it reflect extraordinary litigation efforts: the case settled immediately after the filing of the MDL complaint. Nor did it reflect above-average efficiency: six firms claimed a right to fees, though only three had been appointed in the district court’s original Rule 23(g) order, and the lodestar was substantially higher than in other TCPA cases. Nor is this an extraordinary settlement: as mentioned, class members’ multiple $500 statutory claims were settled for about $4/class member before attorneys’ fees.

We do not contend that a court can never award such a generous hourly rate. But the Seventh Circuit has “held repeatedly that, when deciding on appropriate fee levels in common-fund cases, courts must do their best to award counsel the market price for legal services, in light of the risk of nonpayment and the normal rate of compensation in the market at the time.” We do not believe a sophisticated arms-length transaction would produce this sort of windfall for these sorts of results, and we have appealed, filing our opening brief Monday.

The case presents another interesting issue: can class counsel agree not to compete for lead-counsel status, and then divvy up a lump-sum fee request in a secret side agreement without approval or review of the court and the class? We think Rule 23(h) and Rule 23(e)(3) do not permit that.

Daniel Fisher has a great summary of the appeal on

Tuesday, March 17, 2015

In re Online DVD Antitrust Litigation: adverse decision and en banc petition

You might recall the settlement approval in Online DVD Antitrust Litigation we briefed back in 2012. A district court held that the Wal-Mart $12.03 "gift cards" the settlement awarded weren't "coupons," refused to apply the Class Action Fairness Act, and awarded fees based on the face value of the coupons.

On February 27, the Ninth Circuit, in a Judge Sidney Thomas opinion, affirmed.

Wait a second! careful readers exclaim, Didn't you already win that exact issue on appeal?!

Yep. Appellees made the same arguments about "settlement vouchers" and attorney-fee calculations in Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014), and that court, in a Judge Posner opinion, rejected them in a lengthy and lively discussion that was widely discussed.

So what did the Ninth Circuit say to reject the contrary Seventh Circuit case?

Absolutely nothing. They didn't mention it once, though we filed a Rule 28(j) letter in September.

Was there another appellate precedent that they followed instead?

Nope. Some district courts make the same mistake that Redman criticized (though some don't), and the Ninth Circuit followed those cases without mentioning the others while creating a circuit split.

What now?

Well, we've asked for rehearing or rehearing en banc. If we don't get correction, we have an interesting circuit split to put before the Supreme Court in a certiorari petition.

Thursday, January 8, 2015

Big cy pres victory in 8th Circuit: Oetting v. Green Jacobson

For years, parties have used cy pres—the practice of giving settlement money to charity instead of the class—in abusive ways. When proposed by defendants, cy pres can be used to create the illusion of relief to justify greater attorneys' fees at the expense of the class when in fact all that is happening is that the defendant is changing accounting entries on charitable donations it would have made anyway. When cy pres is used to justify attorneys' fees, it takes away the incentive of class counsel to prioritize direct recovery to the class: after all, it's much more satisfying to hold a ceremony giving away an oversized $3 million check to a local charity run by a friend than to issue a million $3 checks to ungrateful class members. And I've discussed other problems with cy pres in Congressional testimony and an article for the Federalist Society.

So cy pres was one of the issues that provoked the founding of the Center for Class Action Fairness. The Center has won a number of victories on the cy pres issue over the years, most notably in the Third and Ninth Circuits. A cert petition we filed in a case we didn't handle below got some attention. Though it was ultimately denied, a separate statement by Justice Roberts sent a strong message. And the Rules Committee is considering the issue.

In 2013, a class representative in securities litigation in St. Louis complained that class counsel was planning to give away $2.7M of the class's money to local charities instead of to class members in a nationwide class. The district court signed off on the distribution, and the Center agreed to assist the class representative, David Oetting, on the appeal to the Eighth Circuit. The argument resulted in an entertaining column by Bill McClellan. And today, we won a landmark victory where a divided panel adopted our arguments in full. (That's eight straight CCAF intermediate appellate wins since the begining of 2013.) The precedent will do much to protect class members against abusive cy pres in the future—and, if adopted by other courts, may well moot the need for the Rules Committee to opine on the issue. We have a Ninth Circuit appeal on the cy pres problem scheduled for argument in Pasadena February 2.

The case is David Oetting v. Green Jacobson, P.C., No. 13-2620 (8th Cir. Jan. 8, 2015).

Press coverage: Reuters, Litigation Daily, Alison Frankel @ Reuters.