November 18, 2015
A recent NLJ story, “$40.5M Fee to Plaintiffs Firms Upheld Against Western Union” reports that a federal appeals court has upheld $40.5 million in attorney fees in a settlement with the Western Union Co. over unclaimed money transfers. The U.S. Court of Appeals for the Fifth Circuit found that Western Union, which had agreed to return an estimated $135 million in unredeemed money transfers as part of the settlement, did not have standing to sue over legal fees that came out of a class fund and not its own pockets.
“A lot of times the defendants pay the fee, or agree to pay the fee, and in that case, they have standing because the fee is coming out of their pockets. But in this case, the defendant is not paying any of the fee,” said lead plaintiffs attorney Richard Burke, a partner at Highland Park, Illinois-based Quantum Legal who works in St. Louis, Missouri. “That wasn’t their money. That’s the whole point of the lawsuit.”
According to the suit, filed in 2009, Western Union failed to notify customers that their transfers hadn’t been redeemed until three or more years following the transaction, during which it charged monthly administrative fees and interest. Only about 15 percent of its customers responded to the notices and got refunds. If Western Union got no response, the money was escheated to states as unclaimed funds.
As part of the settlement, which covers more than 1 million people, Western Union agreed to set up a fund of unredeemed money transfers. It also reimbursed the class for interest and agreed to notify customers about unredeemed transfers within 60 to 90 days.
But Western Union challenged a request to allocate 30 percent of the fund for attorney fees. In 2013, a federal magistrate judge found that class counsel probably only got about $19 million in interest payments and some nonmonetary relief for the class and recommended that they be entitled to less than $23 million in fees. But U.S. District Judge John Kane in Colorado disagreed with that finding, and last year granted the original fee request.
On appeal, Western Union argued that it had standing to object because the fees would deplete a second fund in the settlement that was designed to indemnify it for anticipated threats of enforcement action from disgruntled states. But the Tenth Circuit found that fund wasn’t set in stone and that enforcement actions by the states were speculative.
“Western Union has not demonstrated any concrete and particularized and actual or imminent injury it will suffer as a result of the district court’s approval of the attorney fee award to class counsel,” the panel wrote.