August 31, 2015 Practice Points

Scrutiny of Class-Counsel Fee Awards Continues

Two recent cases are the latest in a long line of recent precedent addressing the appropriate fee to be paid to class counsel.

By Greg S. Hearing

On August 27, 2015, class counsel for current and former CVS employees in Ceja-Corona v. CVS Pharmacy Inc., filed a motion seeking a reduction in their previously requested attorney fees. CVS had agreed to a $900,000 settlement to compensate class members for “off-the-clock” work time. In late July, U.S. magistrate judge Stanley A. Boone of the U.S. District Court for the Eastern District of California refused counsel’s fee request, which sought 30 percent of the common fund secured for the class. Judge Boone had previously warned counsel for the class that additional evidence would be required to overcome the 25 percent benchmark regularly used in common fund cases and suggested that final approval would only be granted in that amount. The revised fee request seeks 25 percent of the total settlement.

Judge Boone’s scrutiny of counsel’s fee request is the latest in a long line of recent precedent addressing the appropriate fee to be paid to class counsel. As the Seventh Circuit noted last year, intense judicial scrutiny is required as a check on the commonly inflated attorney fees requested by class counsel. As Judge Posner noted in Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014), many class-settlement proposals “flunk the ‘fairness standard’” and rely on inflated claims of class participation or inflated claims of the total benefit to the class. Following the Eubank decision, and its call for intense scrutiny of the bases for class-counsel fee awards, a number of other decisions have followed in which fee awards receive sharp scrutiny from the reviewing court. In resolving complex class actions, counsel for the parties, and in particular class counsel, must be prepared to heavily defend the foundation of the requested fee award to secure final approval of the class settlement.

 Greg S. Hearing, Gordon & Rees LLP, Denver, CO

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