Duane Morris Class Action Review - 2023 - Report - Page 315
objection and note whether the objection applies to the objector, a sub-set of the
class, or the whole class. Further, the rule directs that the Court must hold a
hearing, review the objection, and approve any payment in connection with an
objection (such as attorneys’ fees incurred by the objector in asserting a valid
objection).
The settlement approval process is far from a rubber-stamping process. While the
legal standards are rule-based, courts apply these standards in less than identical
fashion based on the case law of the federal circuit within which they are located.
What may pass muster in one courtroom may not in another.
Courts use a less rigorous standard for certification of a class for settlement
purposes as compared to non-settlement purposes. This is especially evident with
the Rule 23(b)(3) requirement of predominance.
As a result, settlement on a class-wide basis often poses strategic dilemmas for
plaintiffs and defendants alike. Issues include: (i) how much can the defendant concede
without compromising its ability to defend the case if the settlement falls through and is
not approved; (ii) can a settlement-only class be too cheap and therefore deemed
inadequate or unfair when reviewed by the court; and (iii) how extensive and broad can
a release be in covering the settling parties and class members.
Finally, Rule 23(h) provides that “the court may award reasonable attorney’s fees and
non-taxable costs that are authorized by law or by the parties’ agreement.” Part of the
process of approving class-wide settlements focuses on attorneys’ fees sought by class
counsel. Typically, courts have discretion to apply either the percentage of the fund
method or the lodestar method. When a court calculates a “lodestar” amount, it
examines the number of hours reasonably expended multiplied by the prevailing hourly
rate in the community for similar work. Although the lodestar calculation is presumed
reasonable, the court can enhance or decrease it after consideration of the 12 factors
detailed in Johnson, et al. v. Georgia Highway Express, Inc., 488 F. 2d 714, 717-19 (5th
Cir. 1974), the most critical of which is the degree of success obtained. Further,
attorneys’ fees may not be awarded for work on unsuccessful claims, but “when claims
… share a ‘common core of facts’ or ‘related legal theories,’ a fee applicant may claim
all hours reasonably necessary to litigate those issues.” Hensley, et al. v. Eckerhart, 461
U.S. 424, 434-35 (1983). As awards of attorneys’ fees can involve significant amounts
of money, rulings on the award of fees also create a vast array of procedural and
substantive issues.
In 2022, these issues and others were the subject of numerous court rulings on class
action settlement approval issues.
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Duane Morris Class Action Review – 2023
