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Class Counsel Denied $12M in Fees in Nonmonetary Settlement

May 8, 2021 | Posted in : Billing Record / Entries, Expenses / Costs, Fee Award Factors, Fee Denial, Fee Dispute, Fee Entitlement / Recoverability, Fee Expert / Member, Fee Request, Fees & Judicial Discretion, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Dave Simpson, “Attys Denied $12M Fees From ‘Modest At Best’ Facebook Deal,” reports that a California federal declined a bid for $12 million in fees for lawyers representing a class of Facebook users that reached a non-monetary settlement over a data breach suit, calling the outcome "modest as best and cosmetic at worst."  U.S. District Judge William Alsup gave final approval to the settlement but nixed the present bid for fees from counsel at Tadler Law LLP, Cohen Milstein Sellers & Toll PLLC and Morgan & Morgan Complex Litigation Group, instead tasking a special master with reviewing the attorneys' billing information and reducing fees to a "reasonable amount," noting that they would not be receiving a bonus.

"The settlement is really little more than what Facebook would have done anyway," Judge Alsup said.  "In the preliminary settlement approval and in their supplemental briefing, both parties explained that Facebook voluntarily adopted most of the security measures upon the recommendation of a working group created in 2018."  The users sued Facebook in California federal court in 2018 following a data breach that affected roughly 29 million individuals, alleging the company negligently allowed the cyberattack.

In 2019, Judge Alsup certified a class of users who sought to change Facebook's security practices to avoid further harm to users but denied two other classes seeking monetary compensation.  A non-monetary settlement resolved the case last year, and Judge Alsup gave it his blessing in November.

Under the deal, Facebook has agreed to take a series of steps that the court believes will help the company avoid a repeat of the 2018 cyberattack, in which hackers exploited a security flaw in Facebook's "View As" feature, which allows users to preview how their profiles appear to the public or other users, to access personal data.  Facebook agreed to reform its security protocols and allow an independent third party to both monitor its compliance through 2026 and provide class counsel and the court with annual reports.

"Two of the settlement terms were practices Facebook had been using even before the breach occurred," Judge Alsup said.  "The only truly novel element of the settlement agreement is the involvement of the court, class counsel, and an independent monitor in ensuring that Facebook maintains the security measures they would have implemented anyway."

Facebook slammed the attorney fee bid in March, saying that the class' attorneys refused to provide detailed time records and that the figures they did provide show that their side of the litigation wasn't handled efficiently.  Facebook also slammed class counsel for including time spent on unsuccessful litigation efforts.  At a hearing in late April, Judge Alsup said he was disturbed that class counsel "farmed out" work in the litigation, telling them to trim their $12 million request for attorney fees and expenses or he wouldn't approve it.

But earlier this month, class counsel moved forward with their bid anyway.  The attorneys asked Judge Alsup to approve their bid for nearly $12 million in fees and costs, including a $2.1 million bonus, arguing that the non-monetary settlement provides a significant benefit to the public, as it requires the world's largest social media platform to improve its security practices and be subject to independent oversight for five years.

Judge Alsup ripped into their argument.  "Class counsel waxed poetic about the complexity, technicality, and novelty of the data security issues presented in this case, but note well the settlement calls for only pocket change to the monitor who will ensure that Facebook abides by the settlement terms," he said.  "That amount is merely $15,000 over five years.  This is further evidence of a cosmetic settlement."

In a companion order, Judge Alsup appointed a special master and gave instructions as to how billing should be reviewed.  He'd previously threatened the attorneys with such an appointment, saying their $12 million ask was too much money to not go over with "bone-crushing" thoroughness.