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Category: Class Incentive Awards

Judge to Award $1.5M in Fees in Walgreens Wage Settlement

November 26, 2020

A recent Law 360 story by Lauren Berg, “Calif. Walgreens Workers Bag $4.5M Wage Deal,” reports that Walgreens and a class of workers have received a California federal judge's approval for their $4.5 million settlement to resolve claims that the pharmacy chain broke Golden State labor law by not paying all wages to employees at its distribution centers.  U.S. District Judge William B. Shubb granted preliminary approval to the class action settlement that will see about 2,600 workers split $2.8 million, finding that the deal is fair and gives the workers a good recovery that might have been at risk had the case gone to trial.

Lucas Mejia, who worked as an hourly stocker for about seven years at a Walgreens distribution center in California, launched the class action in November 2018 in the Superior Court for the County of Yolo, alleging that the company failed to pay employees for all of the compensable time they worked.  Mejia said Walgreens rounded down employees' hours on their timecards, required employees to pass through security checks before and after their shift without paying them for that time and didn't pay premium wages to workers who were denied meal breaks.

The suit also included a claim for civil penalties under the Private Attorneys General Act based on Walgreens' alleged violations of California labor law.  The case was eventually removed to federal court in Sacramento.  In December, the parties started talking with a mediator, which produced the current settlement.

In exchange for releasing all of the claims, Walgreens has agreed to pay up to $4.5 million to create a common fund, from which $2.8 million will be distributed to the estimated 2,648 class members, according to the order filed.  Each class member who does not opt out is estimated to receive about $1,200, the judge noted.

Also out of the pot, $1.5 million, or 33% of the fund, will be set aside for attorney fees, while $150,000 will go to pay PAGA penalties and $7,500 will be used as an incentive award for Mejia.  Another $50,000 will be used to pay litigation costs incurred by class counsel and settlement administration costs, according to the order.  Judge Shubb gave preliminary approval to the deal, finding that it is in the best interest of the class.

While Mejia's counsel said the labor claims could be worth up to $20.2 million and the PAGA claim up to $16 million, they said Walgreens had legitimate defenses that risked reducing the amount Mejia and the class could recover at trial, according to the order.  With that in mind, the settlement is a strong result for the class, the attorneys said, with the $4.5 million representing 22% of the potential damages.

The judge also noted that, while the deal sets aside 33% of the fund for attorney fees, Mejia's counsel said they will seek 25% of the fund in a separate motion for fees.  "The court will defer consideration of the reasonableness of counsel's fees until the fee motion is filed," the judge wrote.  "Class counsel is cautioned that the reasons for the attorney's fees should be explained further in that motion."

Full Eleventh Circuit Urged to Buck Ban on Class Incentive Awards

October 28, 2020

A recent Law 360 story by Allison Grande, “Full 11th Circ. Urged to Buck Ban on Class Incentive Awards,” reports that the full Eleventh Circuit is being pressed to review a panel decision in a dispute over a $1.4 million robocall settlement that found class representatives can't recover routine incentive awards, with the lead plaintiff arguing that this categorical ban would hobble class action litigation and an objector to the deal taking issue with the calculation of class counsel's fees.

Lead plaintiff Charles Johnson and objector Jenna Dickenson in separate petitions filed seized on differing rationales in attempting to convince the appellate court to reconsider a panel ruling handed down last month that directed the lower court to revisit its approval of the contested class action settlement in a dispute accusing medical debt collector NPAS Solutions LLC of violating the Telephone Consumer Protection Act.

In a divided decision, the panel concluded that a pair of U.S. Supreme Court rulings from the 1880s prohibited Johnson from being awarded $6,000 for his role in the litigation and that the district court had failed to provide a sufficient explanation for signing off on the deal or class counsel's request to recover 30% of the settlement fund.

Johnson argued that the panel's clearly incorrect decision to categorically prohibit the common practice of awarding incentive payments to named plaintiffs established a precedent that not only conflicted with every other circuit but also upended long-standing class action practice.

"No court in the last century has ever held that incentive awards are categorically impermissible," Johnson argued.  "That incentive awards are a universally accepted practice provides ample reason for the full court to consider whether such an established aspect of class-action settlements should be held per se unlawful."

Contending that the panel's decision "effects a sea change in class action practice," Johnson stressed the importance of incentive awards in encouraging plaintiffs to step forward to lead lawsuits that enable redress for widespread harm that's "inflicted in small increments" on a large group of individuals that aren't willing or able to bring claims separately.

 "If few plaintiffs would suffer litigation for the hope of a tiny recovery, fewer still would do so for the same possible award alongside the added burdens — including, potentially, paying a defendant's costs — and fiduciary responsibilities that attend litigating on behalf of a class," Johnson argued.  "Incentive payments help attract class representatives willing to shoulder those burdens."

Johnson urged the full Eleventh Circuit to order the parties to provide "full, targeted briefing" on this "vital issue," noting that the parties have barely addressed the topic to date since courts have repeatedly approved incentive awards without incident.  He also argued that the more than century-old Supreme Court cases on which the panel relied to buck this trend "provide no authority" for its novel conclusion.  "The panel majority broke from all other circuits and remade the landscape of class-action litigation on the premise that Supreme Court precedent so required," Johnson added.  "That precedent — if it applies — requires nothing of the sort."

Dickenson, who was the lone objector to the TCPA deal and appealed its approval to the Eleventh Circuit, asserted in her own brief that the full appellate should take a look at the case to clarify the appropriate standard for calculating attorney fees in such disputes.  While the panel held that the lower court hadn't provided enough information about why the fee request was reasonable, it backed the method of calculating and awarding fees as a percentage of the settlement fund, concluding that an Eleventh Circuit case from 1991 that endorsed this practice was still "good law."

Dickenson argued that this holding conflicts with Supreme Court precedent, most notably its 2010 holding in Perdue v. Kenny A. ex rel. Winn, which "directly repudiated" the use of the factors relied on by the Eleventh Circuit and directed lower courts "to recognize a strong presumption that attorneys' unenhanced lodestars — i.e., their hourly rates times the hours expended — provide them a reasonable fee that is sufficient both to attract capable counsel and to equitably compensate them."

Therefore, it's imperative for the full Eleventh Circuit to step in to clearly announce whether lower courts should award class counsel fees based on attorneys' actual time and billings or as a percentage of the common class settlement fund, according to Dickenson.  "Attorney's fees are a critical issue in class-action litigation, and uniform rules governing their calculation are a matter of overriding national importance," Dickenson argued.

Eleventh Circuit Bans Class Action Incentive Awards

September 22, 2020

A recent Law 360 story by Allison Grande, “11th Circ. Says Class Reps Can’t Get Incentive Awards,” reports that the Eleventh Circuit said a Florida federal judge made several errors that "have become commonplace in everyday class-action practice" when approving a $1.4 million settlement and $6,000 incentive payment for the lead plaintiff in a robocall suit, finding that U.S. Supreme Court precedent prohibits such routine incentive awards.

Jenna Dickenson, who was the lone objector to the deal that resolved a proposed class action accusing medical debt collector NPAS Solutions LLC of violating the Telephone Consumer Protection Act, brought her challenge to the Eleventh Circuit after U.S. District Judge Robin L. Rosenberg granted final approval to the settlement in May 2018.  Dickenson argued that the settlement amount should have been higher, that class counsel should not be permitted to recover 30% of the settlement fund and that class representative Charles Johnson shouldn't get a $6,000 incentive award.

The Eleventh Circuit panel held that the federal court had erred in awarding Johnson for his role in the litigation, in setting a deadline for class members to file objections that fell more than two weeks before class counsel had filed their fee petition and in offering only "rote, boilerplate pronouncements" in its order granting final approval to the proposed settlement and class counsel's fee request.

"The class-action settlement that underlies this appeal is just like so many others that have come before it.  And in a way, that's exactly the problem," U.S. Circuit Judge Kevin C. Newsom wrote for the panel in a partially divided published opinion.  "We find that, in approving the settlement here, the district court repeated several errors that, while clear to us, have become commonplace in everyday class-action practice."

The panel stressed that it didn't necessarily fault the federal court for its missteps, given that "it handled the class-action settlement here in pretty much exactly the same way that hundreds of courts before it have handled similar settlements."  "But familiarity breeds inattention, and it falls to us to correct the errors in the case before us," the panel held.

Michael L. Greenwald of Greenwald Davidson Radbil PLLC, who represents lead plaintiff Johnson, told Law360 that his side intends to seek en banc review from the full Eleventh Circuit, saying his client disagrees with the majority's opinion decision to strike down the incentive award.  "Incentive awards — when reasonable — are widely accepted as a means to recognize the effort it takes for consumers to bring class actions, the scrutiny and discovery to which they are subjected, and the ultimate benefits they obtain for others," Greenwald said.  "While class representatives necessarily put others before themselves when they bring a class action, this ruling, should it stand, could chill consumers' desire to bring meritorious cases against well-heeled corporations — cases that can take years to prosecute."

Debevoise & Plimpton LLP partner Maura Monaghan, counsel for NPAS Solutions, commented that the ruling demonstrates that courts are scrutinizing incentives that can lead to a proliferation of class actions.  "By eliminating the named plaintiff's incentive fee and questioning the attorney's fees, the Eleventh Circuit has made it significantly more challenging for plaintiffs' counsel to recruit plaintiffs to bring these actions," Monaghan added.

The contested deal stems from claims lodged by Johnson in 2017, when he filed a putative class action challenging NPAS Solutions' alleged practice of using an autodialer to call numbers that had originally belonged to consenting debtors but had since been reassigned to new owners who hadn't given the company permission to contact them.  Less than eight months after the suit was launched, the parties reached their $1.4 million settlement, which covered 9,543 class members who subsequently submitted claims for recovery.  No class member opted out, and Dickenson provided the only objection.

In a portion of its ruling that only two judges joined, the Eleventh Circuit agreed with Dickenson that the district court's approval of Johnson's $6,000 incentive award should be thrown out.  The majority held that such awards were prohibited by a pair of Supreme Court rulings from the 1880s, Trustees v. Greenough and Central Railroad & Banking Co. v. Pettus.

"Although it's true that such awards are commonplace in modern class-action litigation, that doesn't make them lawful, and it doesn't free us to ignore Supreme Court precedent forbidding them," Judge Newsom wrote.  "If the Supreme Court wants to overrule Greenough and Pettus, that's its prerogative.  Likewise, if either the Rules Committee or Congress doesn't like the result we've reached, they are free to amend Rule 23 or to provide for incentive awards by statute.  But as matters stand now, we find ourselves constrained to reverse the district court's approval of Johnson's $6,000 award."

The full panel also took issue with the timing of the deadline to file objections in the lower court, even though they concluded that the error was ultimately "harmless," as well as the district court's failure to include "findings or conclusions that might facilitate appellate review" in its final approval order.  As a result, the circuit judges remanded the case "so that the district court can adequately explain its fee award to class counsel, its denial of Dickenson's objections and its approval of the settlement."

In her partial dissent, U.S. Circuit Judge Beverly B. Martin wrote that she disagreed with her colleague's decision to take the incentive award away from Johnson.  "In reversing this incentive award, the majority takes a step that no other court has taken to do away with the incentive for people to bring class actions," Judge Martin wrote, arguing that the majority's decision "goes too far in deciding this issue" and goes against the circuit's binding precedent "that recognizes a monetary award to a named plaintiff is not categorically improper."

She noted that, in addition to spending time and money, class representatives must endure "all the slings and arrows that accompany present day litigation" in order for the class action system to operate.  The judge expressed concern that by prohibiting named plaintiffs from receiving "routine" incentive awards, "the majority opinion will have the practical effect of requiring named plaintiffs to incur costs well beyond any benefits they receive from their role in leading the class."  "As a result, I expect potential plaintiffs will be less willing to take on the role of class representative in the future," Judge Martin wrote.

$11M in Attorney Fees Sought in BRF Food Fraud Class Action

September 21, 2020

A recent Law 360 story by Emilie Ruscoe, “Robbins Geller Seeks $11M in Fees for BRF ‘Food Fraud’ Suit,” reports that a Robbins Geller Rudman & Dowd LLP counsel team wants a little under a third of the $40 million settlement they earned for a proposed class of investors who had accused Brazilian meat and food processing giant BRF SA of fraud and bribery, the firm told a New York federal judge.  In a Sept. 18 memorandum laying out its request for attorney fees, litigation expenses and an award for lead plaintiff the City of Birmingham Retirement and Relief System, the four-lawyer Robbins Geller legal team told U.S. District Judge P. Kevin Castel that the firm seeks 27.5%, or $11 million, of the settlement total.

The firm also asked for $94,821.84 to reimburse the expenses they incurred fighting the case, and said the institutional investor lead plaintiff should get "a modest award of $2,889.15" for its work representing the proposed class.  "The settlement is an outstanding result for the class given the serious obstacles to recovery; the numerous credible defenses to liability and damages that defendants have articulated, the fact that the court might have accepted defendants' arguments at the motion-to-dismiss stage, the difficulty in obtaining documentary and deposition evidence from Brazil, and the recovery relative to the amount of estimated recoverable damages suffered by the class," the plaintiffs' counsel told Judge Castel.  The firm added that over two years, its team spent 3,200 hours working the case.

BRF and its shareholders told the court in May they had reached the multimillion-dollar settlement after a little more than a month of negotiations. According to the settlement terms, the company and some of its executives, who are also named in the suit, "have denied, and continue to deny, any and all of the claims alleged in the litigation, including any allegations of fault, liability, wrongdoing, or damages whatsoever."

The investors' suit launched in March 2018, and in the most recent version of the allegations, filed in November 2019, the investors accused the company of engaging "in an unprecedented and massive case of food fraud."  The shareholders alleged that the the trading price of the company's American depositary receipts fell by $0.99, or 7.73%, in March 2017 following the arrest of several BRF employees and "numerous public officials" in connection with a yearslong investigation by Brazilian authorities called "Operação Carne Fraca," or "Operation Weak Flesh."

Attorneys Seek $2.6M in Fees in Wholesaler Antitrust MDL

September 3, 2020

A recent Law 360 story by Julia Arciga, “Attys Seek $2.6M Fees for Wholesalers Antitrust MDL,” reports that three law firms who served as co-lead counsel in multidistrict litigation over anti-competitive agreements between several grocery companies asked a Minnesota federal court to award them over $2 million in attorney fees after their clients were able to reach a settlement that totaled nearly $9 million.  Attorneys from Boies Schiller & Flexner LLP, Lockridge Grindal Nauen PLLP and Kotchen & Low LLP requested that over $2.6 million be handed to them — or 30% of the $8.75 million settlement — after they litigated a case against wholesale grocers Supervalu Inc. and C&S Wholesale Grocers Inc. on behalf of Iowa grocery store D&G Inc. and the class of Midwest stores that purchased goods from Supervalu.

The lawyers said they were entitled to a portion of the 2017 settlement between D&G and Supervalu because they spent over 66,000 hours on the case, which resulted in a "substantial benefit" for class members.  They also claimed they sustained "significant risk" throughout the nine years, litigating through "multiple motions to dismiss" and multiple appeal efforts to the circuit courts and the U.S. Supreme Court.

"The $8.75 million settlement represented an excellent recovery for the class in a challenging lawsuit," the filing said "It was achieved through the skill, tenacity and advocacy of co-lead counsel, who litigated this action on a strictly contingent basis against skilled defense counsel."  The attorneys said the 30% cut they requested was well within the range of awards typically doled out by the court and that their clients support their proposed fee and had an "overwhelmingly positive" reaction to their request.

On top of the over $2 million fee, the lawyers also asked if they could be given $150,000 for reimbursement of expenses they occurred throughout the nine years, including "expert fees, costs of maintaining a database for the millions of pages of documents produced during discovery and computerized legal research."  While firms were awarded $1.5 million after the settlement was inked in 2017 for reimbursement, the attorneys say the sum was only a partial payment and they are now seeking the remainder of the reimbursement.  The lawyers also called for the named plaintiff in the matter, D&G, to be awarded a "modest payment" of $10,000 for the "considerable time" and work they put into the case as the class' representative plaintiff.