A recent Thomson Reuters story, “Courts Voids HP Printer Settlement, Cites Legal Fees,” reports that a divided federal appeals court voided a class action settlement between Hewlett-Packard Co. and millions of consumers who brought its inkjet printers over nearly a decade, saying the fee award was too high.  In the HP case, Ninth Circuit Judge Milan Smith wrote for a 2-1 majority that fees should take into account the value of coupons actually being redeemed, not the total coupon relief offered.

The settlement was intended to resolve claims that consumers who brought HP printers between September 2001 and September 2010 were misled into spending too much on or misusing ink cartridges.  HP agreed to provide up to $5 million of coupons, known as “e-credits,” for future printers and printer supplies on its website, and improve disclosure.  The district court awarded plaintiffs’ counsel $1.5 million in fees and $597,000 in costs.

Ted Frank, serial fee objector and tort reformer, said the settlement was the product of collusion between lawyers for HP and consumers, and violated portions of the federal Class Action Fairness Act that governs attorney fees in class action settlements.  “By trying attorney compensation to the actual value of the coupon relief, Congress aimed to prevent class counsel from walking away from a case with a windfall, while class members walk away with nothing,” Smith wrote, in an opinion joined by Circuit Judge Ronald Gould.

Circuit Judge Marsha Berzon dissented.  She said the majority erred in demanding that a court “must award fees as a percentage of the coupon actually redeemed,” rather than taking into account the time reasonably spent by lawyers on the matter.”