Over the past 30 years, trial courts have routinely approved incentive awards for class action plaintiffs. But these awards face increasing scrutiny after the Eleventh Circuit recently struck one down for violating Supreme Court precedent. Before recruiting a class representative, practitioners should understand that an incentive award may not be available and factor this into how they handle the case.
For years, federal trial courts have routinely permitted incentive awards for class action plaintiffs. See Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 958 (9th Cir. 2009). Such awards are discretionary and are “intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general.” Id. at 958–59; see also Cont’l Ill. Sec. Litig., 962 F.2d 566, 571 (7th Cir. 1992) (incentive awards may be necessary to induce someone to act as class representative).
Case law shows that objections to incentive awards are commonly asserted; for instance, some objectors contend that incentive awards create problems when they are agreed to at the beginning of the litigation or where they are conditioned on the class representative’s support for a settlement. In such instances, incentive awards raise concerns that the class representative might “compromise the interest of the class for personal gain.” Berry v. Schulman, 807 F.3d 600, 613 (4th Cir. 2015); see also Gortat v. Capala Bros., 949 F. Supp. 2d 374, 378–79 (E.D.N.Y. 2013) (rejecting incentive awards for named plaintiffs where amounts requested were unreasonably high). Others argue it is unfair for class representatives to receive incentives while unnamed class members receive “only perfunctory relief.” See Vassalle v. Midland Funding LLC, 708 F.3d 747, 755 (6th Cir. 2013).