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Trends of Cutting Class Action Attorney Fees Continues

December 8, 2015 | Posted in : Article / Book, Billing Practices, Billing Record / Entries, Expenses / Costs, Fee Award, Fee Jurisprudence, Fee Reduction, Fee Request, Fee Scholarship, Fee Shifting, Prevailing Party Issues

A recent ABA Litigation News story, “Trend of Cutting Class Action Attorney Fees Continues” reports that the trend of cutting attorney fees in class actions continues. The article states:

Class counsel cannot assume that courts will rubber stamp their fee requests. This point was again emphasized in Reid v. Unilever United States, Inc., where a district court rejected more than half of the requested attorney fees.  In doing so, the district court focused on overly redacted billing entries, time spent writing press releases and inquiries from television outlets, and clerical tasks performed by attorneys.

Fee Request after Class Action Settled

In 2012, the plaintiffs filed a class action suit in the U.S. District Court for the Northern District of Illinois against the defendants. The plaintiffs alleged that the Suave Professionals Keratin Infusion 30 Day Smoothing Kit sold by the defendants caused their hair to melt and fall out.  The plaintiffs contended that the defendants breached, among other things, express and implied warranties; the Magnuson-Moss Warranty Act (MMA), 15 U.S.C. § 2301; and consumer fraud laws in Alabama, Illinois, Wisconsin, and Nevada.

Following 18 months of extensive negotiations, the parties reached a $10.25 million settlement.  The MMA, in 15 U.S.C. § 2310(d)(2), permits prevailing parties to be awarded costs and expenses, including attorney fees.  After approval of the settlement, the plaintiffs’ counsel filed a motion seeking fees in the amount of $3.4 million.  The defendants requested that the fees be limited to an amount not exceeding $1.1 million.

Less Than Half of the Requested Fees Awarded

Closely examining the fee request, the court explained that it must exclude time “inadequately documented or not reasonably expended on the litigation.”  Ultimately, the court rejected 1,100 hours billed by the plaintiffs’ counsel and awarded only $1.5 million in fees.

In reducing the time expended by counsel, the court first examined billing entries including redactions and vague terms such as “email,” “factual investigation,” “calls,” and “research.”  The court held that these entries were “in their entirety so redacted” that it could not determine if the services provided by counsel were reasonable and necessary.  Noting that additional un-redacted information was not provided for its review, the court struck over 950 hours billed by the plaintiffs’ counsel.

Next, the court held that time the plaintiffs’ counsel spent communicating with the media was not compensable.  Thus, the court struck approximately 50 hours expended finalizing and distributing press releases, and fielding inquiries from media outlets such as Inside Edition and ABC’s Good Morning America.  In doing so, the court pointed to precedent from the Northern District of Illinois, finding that attorneys were not entitled to fees for time spent on media appearances and out-of-court media activities.

In addition, the court struck time related to clerical tasks, including shipping materials, rescheduling meetings, and updating retainer files.  The court also declined to compensate attorneys for time spent on pro hac vice motions, explaining that the motions consisted of form documents requiring “little effort.”

On the other hand, the court rejected the defendants’ argument that the plaintiffs unreasonably assigned multiple attorneys to work on tasks that could have been handled by only one attorney.  Similarly, the court held that the plaintiffs did not rely too heavily on law firm partners rather than attorneys with less experience.  Citing the “complexity” of the lawsuit and the need to coordinate litigation, the court concluded that the work of the plaintiffs’ counsel was not excessive or redundant.

Part of a Trend

The decision follows “a trend in class action cases to scrutinize attorney fees awards,” explains Jeffrey D. Gardner, Phoenix, AZ, co-chair of the ABA Section of Litigation's Class Actions & Derivative Suits Committee.  Further, the decision is in line with “two recent Seventh Circuit cases, where Judge Posner focused on striking unreasonable fees in class action suits.”

“The decision is consistent with the billing guidelines that clients may have,” offers Lisa C. Wood, Boston, MA, co-chair of the Section of Litigation’s Access to Justice Committee.  It highlights several issues that are of concern to clients, including “clerical tasks, work performed by multiple attorneys, and extensive billing entries,” she notes.

How to Avoid a Haircut to Your Fee Request 

“There is always a tension between wanting to protect privileged information and the need to impart enough information to enable the judge” to make a determination about whether to award fees, explains Gardner.  But “attorneys need to be prepared to provide enough detail” in their billing records, he says.  “They should have this in mind when filling out time entries from the very start of the case.”

Attorneys “should assume that a very bright district court judge is going to be looking at their entries” to see if they are reasonable, cautions Gardner.  Similarly, “if you think that you need to talk to the media, you need to demonstrate to the court that it would be in the client’s interest,” recommends Wood.

In short, the decision provides “a nice list of the things you should think about, when sending anyone a bill,” says Wood. After all, it is important to “figure out a way to do good work in an efficient manner.”