February 15, 2019
A recent Law 360 story by Rick Archer, “Attys Want $650K in Fees in New Balance ‘Made in USA’ Suit,” reports that class counsel in a suit accusing New Balance Athletics Inc. of falsely marketing its athletic shoes as being “made in the U.S.A.” are asking a California federal court for $650,000 in fees and costs for the $750,000 settlement they won for the class. In a motion, class counsel Schneider Wallace LLP argued the settlement involved “extensive” work and also included “substantial injunctive relief,” making their request for nearly $228,000 in expenses and close to $422,000 in attorneys' fees — split between the monetary award and the injunctive relief — reasonable.
“In common fund cases, the Ninth Circuit Court of Appeals’ benchmark for attorneys’ fees is 25 percent of the fund created for the benefit of the class, plus recovery of costs,” they said. “Here, if half the attorney fee is (conservatively) allocated to the monetary portion of the settlement, the fee sought by class counsel is close to the 25 percent benchmark.” Under the settlement, customers who bought the shoes in California can receive $10 per pair of shoes, with individuals receiving up to $50 for five pairs and families receiving up to $100 per household, with unused settlement funds going to the Public Justice Foundation and Consumer Federation of California. Also under the settlement, New Balance must more accurately disclose where the parts of its shoes are made.
New Balance consumers filed the proposed class action in California state court in December 2017, alleging the company falsely advertises that its shoes are made domestically even when as much as 30 percent of the value of the shoes comes from foreign parts or labor, purportedly violating California’s consumer protection statutes. New Balance and the customers first proposed the settlement in April after the judge halted proceedings the month before to allow them to pursue negotiations.
U.S. District Judge M. James Lorenz initially denied approval in October, saying there would need to be an “abysmally low” participation rate of 5 percent for each class member to receive the $10 the settlement proposed. In November, the proposed class responded, saying the $10 represented the maximum recovery possible and that the $3 to $5 class members would receive if 10 to 15 percent participated still represented a good percentage of recovery. Judge Lorenz agreed and granted preliminary approval in January. The final approval hearing has been scheduled for June.
In their fee motion, counsel argued the fees and expenses were reasonable, saying they conducted “extensive” investigation and discovery. They also argued that for purposes of comparison the fee award should be split between the monetary and injunctive relief. “A 50 percent allocation between the two forms of relief for this limited purpose is reasonable — if not conservative — because injunctive relief is the primary remedy under the California consumer protection statutes that formed the basis of plaintiffs’ claims,” they said.
The case is Sheila Dashnaw et al. v. New Balance Athletics Inc., case number 3:17-cv-00159, in the U.S. District Court for the Southern District of California.