Duane Morris Class Action Review - 2023 - Report - Page 323
district court’s order on the fee award. It held that, when an attorneys’ fee requested by
class counsel is supported by time spent on both successful claims and unsuccessful
claims, the district court “must address the ‘common core of facts’ and ‘common legal
theories’ sufficiently so that no fees are awarded on unsuccessful theories.” Id. at 418.
The Fifth Circuit based its ruling on Rules 23(h) and 52(a), which require a district court
to “find the facts specifically and state its conclusions of law separately” when awarding
reasonable attorneys’ fees in a class action settlement. For these reasons, the Fifth
Circuit vacated the attorneys’ fee award and remanded the case to the district court to
“consider the amount of damages and non-monetary relief sought compared to what
was actually received by the class.” Id. at 419.
The Seventh Circuit also reversed an attorneys’ fee award in the context of a class
action settlement in 2022 in the case of In Re Stericycle Securities Litigation, 35 F.4th
555 (7th Cir. 2022). Plaintiffs filed a securities fraud class action suit against the
defendant after its stock price had fallen, and alleged that it made misleading
statements about its billing practices. Following two years of motion practice and while
motions to dismiss were pending, the parties settled the case on a class-wide basis.
Subsequently, a class member filed objections to the attorneys’ fee award of 25% and
requested discovery into potential “pay-to-play” arrangements between class counsel
and the named plaintiff. The objector argued that the fee award was too high
considering the low risk of litigation and the early stage at which the case settled. The
district court denied the objection on the grounds that the award was reasonable based
on the nature of the case and that it amounted to a percentage of the settlement as
opposed to billable hours or a lodestar calculation. The district court also denied the
discovery request given the lack of any evidence of wrongdoing. On appeal, the
Seventh Circuit reversed. It found that the district court’s fee award analysis was
incomplete, as it failed to consider an ex ante fee agreement in place for one named
plaintiff, did not properly account for the risk of non-payment due to prior litigation
involving the defendant, and gave inadequate weight to the early stage at which the
case settled. The Seventh Circuit opined that the district court failed to abide by the
market-based approach for calculating fee awards. The Seventh Circuit, however, did
not reverse the district court’s discovery ruling. Although securities litigation “involves
unique pay-to-play concerns,” the Seventh Circuit determined that the value of the
discovery the objector sought did not outweigh the intrusiveness of the request. Id. at
569.
The Eleventh Circuit also addressed the issue of attorneys’ fees in common fund
settlements this past year in Arkin, et al. v. Pressman, Inc., 38 F.4th 1001 (11th Cir.
2022). In this case, Arkin, a Florida resident, received an unsolicited fax from Smith
Medical Partners in September 2017. Arkin filed suit in the U.S. District Court for the
Middle District of Florida individually and on behalf of a putative class of persons or
companies that allegedly received unsolicited advertisements via fax from Smith
Medical in violation of the Telephone Consumer Protection Act (TCPA). The Wanca law
firm represented Arkin and filed suit on behalf of the putative class. In the ensuing
litigation, the parties became embroiled in a discovery dispute that resulted in an order
requiring Smith Medical to produce various documents for review and the parties to
mediate and report back to the district court. In mediation, the parties reached a
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Duane Morris Class Action Review – 2023
