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Judge Slams $32M Wells Fargo Fee Request as Unreasonable

March 18, 2021 | Posted in : Class Fee Objector, Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Request, Lodestar, Lodestar Multiplier, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Dorothy Atkins, “Wells Fargo Judge Slams $32M Atty Fee Bid As Unreasonable,” reports that a California federal judge said she'll preliminarily approve Wells Fargo's $95.7 million deal to resolve certified class claims that the bank stiffed thousands of mortgage consultants' wages, but told class counsel "nothing" about their $31.9 million attorney fees request "looks reasonable to me."  During a hearing held via Zoom, U.S. District Judge Beth Freeman asked the parties to make minor revisions to the settlement notice and said the proposed deal, which gives out roughly $11,500 per class member, is "very solid" for the class.

She took issue, however, with class counsel's proposed fee award, which asks for a third of the settlement, or $31.9 million, reflecting an hourly lodestar calculated with an 8.9 multiplier.  "Nothing about this looks reasonable to me," she said.  "And it appears to me it doesn't seem reasonable to you, because you reserve your right to appeal [the settlement's approval]. I have never seen that."  Judge Freeman said by reserving their right to appeal, the attorneys seem to expect to lose their fee bid and appear to plan to appeal unless she gives them everything they want.

Class counsel Joshua H. Haffner of Haffner Law PC noted that they haven't fully briefed their reasoning for their requested fee award yet, but he argued that the litigation has been hard fought for years, making it through motions for summary judgment and a trip to the Ninth Circuit.  He added that the lodestar is still in the range of what is acceptable, albeit the higher end.  She told the attorneys to be sure to cite cases in which class attorneys were awarded fees that reflected a lodestar with a multiplier greater than eight in their motion for attorney fees.  "I just about jumped out of my chair when I saw the 8.9 multiplier," she said, adding "I think you invite objectors."

The judge's comments came during a hearing on a motion to preliminarily approve a global $95.7 million settlement that would resolve meal and rest claims, as well as derivative wage and hour claims on behalf of a class of roughly 5,377 California home mortgage consultants employed by the bank between 2013 and 2019.  If approved, the deal would include $25 million that the San Francisco-based bank already paid in a consolidated case called Ibarra, plus another $70 million for follow on cases alleging the bank claws back hourly wages and vacation time from the consultants' earned sales commissions.  Wells Fargo has since discontinued the pay practices underlying the plaintiffs' claims in the cases, according to court documents.

Judge Freeman acknowledged that her concern about the requested fee award doesn't "hold us up" with the final approval process and class notice, and the settlement agreement itself doesn't need to go back to the bargaining table.  She did, however, question how class counsel plans to pay for their appeal if she approves the settlement with a lesser fee award.