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American Airlines' 11th-Hour Demand to Cap Attorney Fees in Class Action

November 28, 2018 | Posted in : Class Action, Fee Caps / Fee Limits, Fee Dispute

A recent Daily Business Review story by Raychel Lean, “Documents Reveal American Airlines’ Alleged ‘11th Hour Campaign’ to Dodge Attorney Fees,” reports that a class action lawsuit in the Southern District of Florida against Texas-based American Airlines Inc. has reached new heights after a last-minute disagreement over attorney fees sent a $25 million settlement agreement into limbo.

Named plaintiff Kristian Zamber sued AA in 2016, alleging that it encouraged consumers to buy travel insurance from third-party company Allianz Global Assistance, while quietly receiving commission for each sale.  According to the complaint, AA’s website encouraged customers to purchase the insurance by forcing them to click “yes” or “no” before continuing with their booking, and by including a bright-green checkmark with the words “highly recommended” next to the policy.

In September, AA agreed to establish a $25 million common fund, allowing anyone affected to submit a claim and receive $11, and agreed to disclose its financial interest in Allianz on it website.  Allianz, under its contract with AA, would be responsible for footing the bill.  But on Oct. 17 — deadline day — AA and Allianz tried to bring additional baggage aboard the settlement, claiming they’d back out unless attorney fees were capped at $2.5 million — 10 percent of the $25 million fund.

Plaintiffs attorney Alec Schultz of Leon Cosgrove in Coral Gables filed a motion to enforce the settlement agreement, prompting U.S. Magistrate Judge Jonathan Goodman on Nov. 20 to unseal all documents related to the settlement that AA had asked remain sealed.  “American resolved this case, and it knows it,” the motion said.  According to Schultz’ motion, AA and Allianz’s “eleventh hour campaign” was aimed at “forcing plaintiff’s counsel to collude with them on an attorney’s fees award.”  AA denied any wrongdoing throughout the proceedings.

Though AA has the right to object to attorney fees, Schultz argued that only a judge can decide on the amount awarded — after the terms of a settlement have been agreed, not before.  “American does not, and it cannot usurp this court’s power to try and leverage a better deal for itself,” the motion said.  The unsealed documents include declarations from Zamber and his attorney Schultz about the agreement and the alleged eleventh-hour demand, as well as email chains between the defense and plaintiffs attorneys arranging settlement discussion.