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$18M in Fees Sought in Home Depot Data Breach Deal

September 1, 2017 | Posted in : Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Calculation Method, Fee Request, Lodestar

A recent Law 360 story by Kat Greene, “Home Depot Data Breach Attys Seek $18M Fees on $27M Deal,” reports that attorneys who scored just more than $27 million in settlements from The Home Depot Inc. for banks suing over the 2014 data breach asked a Georgia federal court to approve $18 million in fees, arguing their work spurred other payouts for would-be class members out of court.

The lawyers that represented a proposed class of financial institutions after the breach that compromised 56 million credit and debit card numbers said their work had resulted not only in a $25 million deal to cover financial institutions’ losses and another $2.25 million for those whose claims had been released by a sponsor in connection with a recovery program launched by MasterCard, but also further financial benefits and security changes, according to the filing.

For example, Home Depot had also separately solicited financial institutions that would have been part of the class and paid them $14.5 million to release their claims, and shelled out another $120 million to Visa Inc. and MasterCard Inc. as part of a negotiation to cover losses through their card brands to some of the banks, according to the filing.

The court should count the $14.5 million in the settlement total when determining the reasonableness of the fee request, the attorneys said, because those payments wouldn’t have been made without this litigation and the lawyers were directly involved in advising financial institutions on their decisions to release claims, including holding mass conference calls and conducting industry outreach, they said.

“There is no doubt this litigation was the impetus for the $14.5 million that Home Depot paid for releases,” the attorneys said in the request. “Home Depot admits its goal in soliciting releases was to avoid legal exposure, including exposure for attorneys’ fees that might have to be paid in a settlement.”  The company shouldn’t be allowed to circumvent the multidistrict litigation process, thereby cutting into the plaintiffs’ lawyers’ compensation for their work, the attorneys argued.

Counting the on-paper settlement amount and the additional payment for releases, the $18 million fee request is just under 30 percent of the settlement amount, class counsel said.  A year ago, U.S. District Judge Thomas W. Thrash granted final approval to a $13 million deal between Home Depot and consumers in the litigation, awarding the attorneys representing those class members $7.5 million in fees, court records show.

Although the consumers’ attorneys sought approval of attorneys’ fees of $8.5 million, or 1.46 times the lodestar calculation of reasonable fees multiplied by the amount of time the consumers’ legal team spent on the case, the judge said a multiplier of 1.3 was appropriate given the amount of time spent by the consumers’ attorneys as well as the risks they took in bringing the suit.  Home Depot had objected to that fee bid, saying it was excessive.  The company has not agreed on a fee amount with the financial institution class attorneys either, court records show.

The case is In Re: The Home Depot Inc., Customer Data Security Breach Litigation, case number 1:14-md-02583, in the U.S. District Court for the Northern District of Georgia.